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South Africa – Temporary staffing outpaces permanent employment

10 June 2014

One of the anomalies of the past few years, according to South Africa’s largest staffing firm Adcorp, is that despite legislation that was intended to either reduce the use of temporary workers or raise the cost of hiring them, temporary employment has continued to grow.

Across South Africa’s whole labour market employment data remains disheartening, primarily as a result of the decline in permanent work. While permanent jobs fell by 54,184 in May, non-permanent work increased sharply. Informal employment increased by 8,591 jobs, temporary work grew by 27,250 jobs, and agency work was up 4,555 compared with the previous month. The net loss of jobs, however, was 26,934.

The number of blue-collar temporary workers over the past 17 months from January 2013 has increased by +6.9%, rising from 65,256 temporary workers to 67,732. Between April and May 2014 the number of temporary workers increased by +6.3%. White collar temporary workers, however, decreased by -5.6% since January 2013, and by -7.5% between April and May 2014.  

These figures indicate a structural shift in the labour market whereby mostly blue-collar permanent workers are being outsourced to employment agencies, such as Adcorp. This trend can be attributed to the following factors:

  • South African firms are utilising temporary blue-collar workers in their expansion strategies in the rest of Africa.
  • South African manufacturing firms are continuing to outsource their entry-level positions, which they are still allowed to do under the new labour laws.
  • Entry-level blue-collar workforces do not consist of a mix of permanent and temporary workers, which allows companies to defer or ignore the new ‘equal pay for work of equal value’ provision in the Employment Equity Act, as there are no permanent worker comparisons for equal pay purposes.

Loane Sharp, Labour Economist for Adcorp, commented: “The case for temporary staffing solutions within the modern economy is strong, as it offers companies the option of outsourcing non-core activities and staff flexible office hours.”

“With this in mind, blue-collar temporary staffing, particularly through employment agencies, will continue to grow strongly into the future. Permanent employment is in outright decline, and Adcorp’s modelling suggests that permanent employment will only grow sufficiently to absorb school-leavers when economic growth rises to +4% of more per annum, and will only grow sufficiently to reintegrate informal sector workers into the formal sector when economic growth rises above +8% per annum – neither of which is in prospect for at least several years,” Mr Sharp concluded.   

Adcorp’s Employment Index indicates that there are fewer jobs in South Africa today than in 2006.

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