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COSATU Today  |  COSATU Press Statements

COSATU and NACTU memorandum on labour brokering

7 March 2012

On behalf of over two million members of COSATU, the broader South African working class and the poor, we are here assembled to demand the complete banning of labour brokers in South Africa.

Our campaign against labour brokering is part and parcel of the war we are waging to salvage the working class from a further assault on its living standards.

Despite the political and social gains scored since 1994, the working class in this country continues to reel under the pressure of neoliberalism and the legacy of apartheid/colonialism. Poverty, unemployment and inequality are the three principal challenges facing the working class in the current period.

We recognise the major advances our country has registered under the ANC government. This includes delivery of basic needs, which has meant millions having access to housing, water, electricity, education and healthcare, etc.

However, most of these gains have been undermined by the slow pace of transformation in the economy as well as the rampant commodification pursued through privatisation and other neo liberalism programmes including the user-pay principle.

Today, South Africa takes the first prize in terms of being the most unequal society in the world. The richest decile is earning about 94 times more than the poorest decile. Africans, who constitute 79, 4% of the population, account for 41, 2% of the household income from work and social grants, whereas whites, who account only for 9, 2% of the population, receive 45, 3% of income. The poorest 10% of the population share R1, 1 billion whilst the richest 10% share R381 billion. Our country is trapped in a developmental paradigm that has simply reproduced these conditions for 18 years now.

In terms of the expanded definition unemployment is currently at 35.4%. Income inequality in South Africa is the highest in the world and half of our population survives on 8% of national income while the other half enjoys 92%. In 2007 approximately 71% of African female-headed households earned less than R800 a month and 59% of these in fact had no income, while 58% of African male-headed households earned less than R800 with 48% with no income. The educational profile of the unemployed reflects that over 60% of the unemployed have not completed matric level education.

One of the foremost indicators of the inequality characterising or society is unemployment, which discriminates according to race, gender and geographical location. Almost 25% of South African household experience hunger on a daily basis. An average member of a working class household lives on R18 a day, but many actually live on less. 44% of workers - 6 million workers - live on less than R10 a day.

The rate of exploitation is increasing and business is raking even more profits than ever. Atypical forms of employment increased tremendously with 30% of the work force being casualised.

Labour brokers are the main drivers of the casualisation of labour. Their practices are the absolute contradiction to the principle of decent work. They have driven down workers’ wages and conditions of employment. They do not create any jobs but sponge off the labour of others and replace secure jobs with temporary and casual forms of employment.

The National Association of Bargaining Councils (NABC) suggests that there are 979, 539 labour broker workers in the country, significantly larger than suggested thus far.

Whilst most workers under Labour Brokers take home a pittance as a salary, their bosses reward themselves with millions.

Whitey Basson CEO of Shoprite earned the highest-ever annual earnings ever recorded in a single year in 2010 – an unbelievable R627.53 million in salary, perks and share options. This contrasts sharply with the situation of many workers at Shoprite who take home peanuts on payday. Shoprite is but one example of a company that makes extensive use of labour brokers.

Shoprite Checkers have a staff compliment of about 73 000, of this 35% are full time with 5% being what is termed 40 hour full timers/flexitimers and 60% comprised of various categories of variable time employees or casuals. Expansion or growth of Shoprite Checkers does not translate into employment growth but increase in the intake of workers supplied by Labour Brokers.

Minimum wages at Shoprite Checkers are:

Full-time – R4000
40hr full-time – R3000
Part-timers – R1800
Overall average - R2933

At Pick n Pay there are 36 538 workers. Of this 16 000 are full time with almost 20 000 being varies categories of variable time employees (VTE) or casuals supplied by the Labour Brokers. The wage rates are:

Full-time – R4500
85-hour VTE – R3000
60hr VTE - R2000
Overall average – R3167

At Woolworths it is estimated there is a ratio of 70% casuals and only 30% so-called permanent workers. In smaller retail companies the situation is much more dire.

To make this situation even worse, the face of casualisation is predominantly the black working class youth that is employed by labour brokers. The industry is an exploitative businesses designed to circumvent labour laws and regulations.

We demand a total ban of the labour brokers, a system we have described as human trafficking and modern day slavery.

COSATU notes the proposals made by government which include the following elements:

  • Limiting usage of labour brokers to temporary work not exceeding six months or to situations where employees work as substitutes, or in categories of work determined by the Minister of Labour in consultation with NEDLAC;
  • Immediate application of the principle of joint and several liability where the employee could cite both the client and the labour broker in CCMA and/or Labour Court proceedings;
  • Application of the principle of equal pay for work of similar value to employees of labour brokers, in relation to employees of the client company;
  • Amending Section 21 of the LRA to consider the extent of engagement of employees in atypical forms of employment in determining sufficient representativity.

We also note that Business seeks to dilute these proposals, especially the application of the principle of equal pay for work of equal value and have proposed 18 months as duration for temporary work. COSATU and NACTU are still adamant that one day under a labour broker is one day too long!

Why Labour Brokers must be banned?

  • Labour brokering is equivalent to the trading of human beings as commodities. Generally the main commercial contract is agreed to between the labour broker and the so-called “client” enterprise, which sets out the various stipulated labour services to be supplied and the price at which these services are to be supplied, whereas the true suppliers of labour (namely the workers) are excluded from this process, thereby undermining their rights to negotiate their wages and employment terms. The Constitution of South Africa guarantees a right to fair labour standards and the right to collective bargaining. The practise of labour brokering tramples both of these Constitutional protections of workers.
  • Labour Brokers do not create jobs but merely act as intermediaries to access jobs that already exist, and which in many cases would have existed previously as permanent full-time jobs
  • Labour Brokers destroy permanent jobs as they lead to insecure contractual relations and downgrading of wages and employment terms
  • Labour Brokers do not practise the principle of equal pay for work of equal value. Workers employed by the Labour Brokers work longer hours without any compensation, they work Monday-to-Monday and 365 days without any compensation for working on Sundays and public holidays.
  • Apart from undermining collective bargaining rights, labour brokers also provide scab labour and therefore serve as strike breakers!
  • Labour brokering, combined with other forms of atypical work, reflects the current trends of the intensification of the rate of exploitation of workers.
  • Significant emphasis is placed on the commercial rationale of using labour brokers to lower costs for clients, which is commonly achieved by reducing wages and excluding employment benefits.
  • Labour brokering allows employers to evade their obligations as stipulated in the LRA. This is tantamount to outsourcing labour relations to a third party.
  • Workers under labour brokers are unable to enforce their rights against any party that may be identified legally as the employer. In cases where this may be imposed against the labour broker agency, its precarious financial standing, especially in cases on insolvency, renders workers’ rights of enforcement as merely notional.
  • Increased regulation of the industry will not work because capacity constraints within the Department of Labour to enforce existing legislation and a ban against labour brokers may be administratively simpler than detailed regulation, thereby simplifying enforcement.
  • Most of the workers employed by the labour brokers do not enjoy pension fund/provident funds, medical aid benefits, etc. The employers dump these workers into the government social security system thereby increasing the state burden to provide for them in their pension life. This means the taxpayers are subsidising the employers to make super profits.
  • Labour broker are also anti-trade unions because ‘their’ workers are constantly being moved around from one workplace to another within short periods, often with no access to union officials or the possibility of stop-order deductions for union subscriptions, they find it very hard to join a union or to remain members.
  • Labour brokers contribute to the progressive de-skilling of workers, especially as a result of the short-term and irregular nature of the contracts associated with labour brokering and other forms of atypical labour.

COSATU and NACTU also reject the following exclusions, proposed by government and supported by business, from protections for employees in fixed term contracts:

  • Businesses that employ less than 10 employees and businesses which employ less than 50 and have been in operation for less than two years;
  • Employees who are engaged on official public works schemes or similar public job creation schemes.

Labour also disagrees with the proposal by government and business proposal to exclude part-time employees from labour law protections during the first six months of their employment.

Signed on behalf of Government:


Signed on behalf of Labour:


Signed on behalf of business:


Patrick Craven (National Spokesperson)
Congress of South African Trade Unions
1-5 Leyds Cnr Biccard Streets

P.O.Box 1019
South Africa

Tel: +27 11 339-4911/24
Fax: +27 11 339-5080 / 6940
Mobile: +27 82 821 7456
E-Mail: patrick@cosatu.org.za