Temp employment is booming – despite legislation to curb it

One of the anomalies of the past few years is that temporary employment continues to grow – and in fact is one of the ONLY areas in which employment is growing (other than the public sector) – despite legislation specifically designed to curtail this practice. In fact, by some accounts, temporary employment is growing at an annualised 73%.

According to Adcorp, one of the reasons for this anomaly is that South African firms are taking on temporary blue-collar workers in their expansion strategies in the rest of Africa. This now accounts for close to 10% of the head count for the SA labour market, according to Stats SA, and the figure has grown 126% over the last three years. There are now reckoned to be nearly 1 million temporary workers in SA. Companies are also able to side-step the new labour laws by employing entry-level blue collar workers.

Temporary staffing is clearly the preferred method of handling staffing in an environment where sales are unpredictable or seasonal. Companies do not want to take on further monthly fixed costs. This also explains the tendency among private sector companies to outsource their labour requirements. The outsourcing of highly skilled professionals is not being driven by companies alone – professionals themselves are looking for more flexible working arrangements, and shorter-term project work.

The elephant in the room here, of course, is a rigid labour law environment that seeks to impose heavier labour costs on employers. The trend towards outsourcing will therefore continue and flourish.

Companies do this in various ways: they employ temps directly, through agencies or insert structures between themselves and the employees (called “Managed Service Providers”). This perhaps also explains why South African companies are seeking to diversify their operations elsewhere in the world, particularly in Africa, where labour laws are far more accommodating to investors.