City Press reports that an astonishing 80% of labour broker workers were on contracts with a duration of more than three months when the contentious “deeming” provision in the Labour Relations Act came into force in 2015.  

Those with contracts longer than a year made up 26% of all broker workers.  With a watershed Constitutional Court ruling last month confirming that the provision concerned makes the client the “sole” employer, the future of labour brokering is once again in question.  A paper presented at the annual African Review of Economics and Finance conference, held at Wits Business School last week, used an SA Revenue Service (SARS) database to investigate the controversial sector’s “wage penalty”.  The 474,161 workers who showed up in income tax records as working for labour brokers earned, on average, 30% less than workers who were employed directly, according to the paper’s authors.  This wage penalty consisted almost entirely of the lack of benefits – such as medical aid or provident funds – for labour broker workers.  If benefits were excluded, the difference in pay fell to 6%.  There have been many conflicting estimates of the size of the labour broker sector, with industry sources giving numbers as divergent as 1 million and 600,000.  The SARS data, which excluded anyone earning less than R2,000 a month, showed about 475,000 brokered workers in 2014.  The data apparently also showed that there had been a sharp reaction to the deeming provision, despite its legal interpretation having been fought in the courts up until July this year.  The 2016 SARS data will soon be available and it will likely reflect more contraction in labour brokering.

• Read this report by Dewald Van Rensburg in full at Fin24

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