Herbert Jauch, Labour Resource and Research Institute (LaRRI)

In recent years a new phenomenon appeared in the Namibian labour market: labour hire companies. They are now featuring prominently in Walvis Bay but also in other towns like Windhoek, Swakopmund and Tsumeb. A study carried out by the Labour Resource and Research Institute (LaRRI) examined the effects these companies have in terms of job-creation, training and conditions of service. LaRRI also looked at the responses of trade unions and at the proposed regulations for the labour hire industry. This article summarises some of the findings of LaRRI’s study.

What are labour hire companies?

The ILO categorises 2 forms of subcontracting, namely job contracting (where a subcontractor supplies goods or services) and labour-only contracting where the sub-contractor supplies merely labour only. Namibia’s labour hire companies fall into the second category as they merely supply labour to their clients. Referring to international experiences, South African researchers Kenny and Bezuidenhout described such practices as ‘the most exploitative form of labour broking’. It is therefore hardly surprising, that the emergence of labour hire companies has resulted in heated debates and angry responses from the Namibian labour movement.

Labour hire companies have sprung up over the past three years in several towns. They hire out workers (mostly unskilled or semi-skilled) to companies for a certain period of time. This period ranges from a few hours to several months or even a year. They are not offering permanent employment to their staff, but merely offer them contracts that are only as long as the contract between the labour hire company and its clients. Labour hire companies do not offer specialised services to a number of firms but merely provide them with casual labour in accordance with the wishes of the client company. Such client companies include private businesses as well as parastatals.

Africa Labour Hire (ALH), based in Walvis Bay, is the dominant labour hire company in Namibia, employing about 1 500 workers countrywide on an ongoing (but contract-bound) basis. In addition, some workers are hired on a daily basis depending on the requests from client companies. ALH supplies three categories of workers, ranging from unskilled workers, to semi-skilled and skilled ones. The other labour hire companies are much smaller and are limited in their operations to specific towns or companies.

The client companies

A wide variety of companies, both private and parastatals, recruit casual workers through labour hire companies. They include mining companies like Rossing Uranium, private companies like Namib Mills, PCI, ABB, Namibia Breweries, Hansa Breweries, Wesbank transport, Brandberg Construction, Namibia Press and Tools (EPZ company in Walvis Bay), parastatals like Transnamib, Nampost, Telecom Namibia and others. Most of the companies interviewed indicated that they use labour hire workers mainly during peak periods, e.g. loading and off-loading trucks, plant cleaning etc. One manager explained:

‘The main reason why we use labour hire companies is because the work is irregular. There are quiet periods and very busy periods when we need a lot of workers. On busy days we use about 10 –12 labour hire workers, normally just unskilled workers. They are hired on an hourly basis and paid according to the fixed rate of the labour hire company. When they work on Saturdays they are paid the overtime rate as set out in the Labour Act. We usually use the same group of workers because they already know how to do the job… The work that labour hire workers do does not take place all the time and it is not feasible to employ permanent staff for it. Sometimes there is no work and we can’t afford to employ many people that might then have to be retrenched again. That is why we employ only a few people permanently and then get additional workers from labour hire companies when needed.’

Clients of labour hire companies also found the use of labour hire workers to be cheaper than hiring workers on a permanent basis. Companies save on administrative costs (like calculating wages) and also on the costs for protective clothing. In the words of one manager:

‘Protective clothing was a problem for us because workers often lost or damaged the clothing and the company had to replace it. Now it is the task of the labour hire company and we just request a number of workers whenever we need them’.

Another manager added that his company spent large amounts on boots and protective equipment which was sometimes stolen by casual workers. Now the responsibility for protective equipment has been placed on the labour hire company.

Overall, the ability to obtain and dismiss workers at will, in line with their company’s requirement, seems to be the main reason why client companies use labour hire workers. It allows client companies to turn labour into a commodity that can be ordered and disposed of without any social responsibility towards the workers concerned. Although the overall costs of recruiting casual workers through labour hire companies might not be significantly less than recruiting casual workers directly, the convenience for clients is greatly enhanced. In the words of company managers:

‘We are very happy with the services rendered by the labour hire company. We can get workers very quickly, within half an hour’.

‘They are fast to deliver and even during the period when TCL was closed they never gave up trying to find clients to whom they could supply workers. Labour hire workers are not our workers, they belong to the labour hire company. We agree on a rate with the labour hire company and it is not our concern what they pay their workers’.

Another advantage of labour hire workers is that they are not unionised and can thus be used as ‘scab labour’ (strike breakers) during industrial action. As such practices are allowed under the Namibian Labour Act, client companies may use labour hire workers during strikes of their permanent staff. One labour hire company stated:

‘I think it is right that companies should hire casuals during a strike. If you are my client and you phone me to say that your workers are striking, I will send workers because the country's economy suffers if the man cannot produce. That is part of why we have many clients - if he has problems with his workers then I am there to send people to him. And my people will go and work there ... If my people are in safe circumstances, then they will go and work there. My people won't have problems with that, it is work for them’.

However, several client companies also indicated that they have to pay higher fees for casual workers if they employ them through labour hire companies. This is due to the fees charged by the labour brokers. Client companies thus have to weigh up the higher wage costs against savings regarding administrative costs as well as protective equipment.

One manager also cast doubt over the viability of recruiting workers through labour hire companies on a medium to long-term basis. The manager explained that it is in the company’s own interest to nurture some loyalty between the workers and the company which is not possible under the labour hire arrangement. The manger added that by employing workers permanently, the company would achieve better labour relations, increased loyalty and improved productivity which could be further enhanced through the company’s own training programmes.

The Effects on Conditions of Employment

The employment of casual workers and the increasing flexibility of production globally have resulted in more and more workers loosing permanent employment and job security. As companies try to reduce their permanent staff to those who perform ‘core activities’, permanent full-time posts are converted into casual jobs. At Rossing Uranium, for example, the workers that were not engaged in ‘core mining activities’ are being phased out. They may either be replaced by labour hire workers, or the complete provision of a specific service is outsourced to a sub-contractor.

The emergence of labour hire companies has meant that several companies do no longer recruit casual workers themselves. They merely request a certain number of workers for a certain period from the labour hire company. They then pay the labour hire company a certain hourly fee per worker but are no longer responsible for the conditions of employment. In other words, the employment contact between employers and employees is replaced by a commercial contract between the labour hire company and its client company.

This system holds direct benefits for the client companies, especially in terms of cutting costs associated with permanent employment like benefits and leave pay. Client companies can utilise subcontracted labour whenever the need arises without being responsible for the employment conditions. They merely negotiate a fee with the labour hire company. Client companies are also free to request specific workers that they utilised before – and they may exclude labour hire workers that did not perform (or behave) to their satisfaction.

Labour hire companies pay their workers a certain hourly rate, provide them with safety equipment and usually register them with social security. Namib Labour Hire still provides transport for its employees but offers no other benefits. In turn, the labour hire companies keep 25 – 50% of workers hourly wages.

In Walvis Bay competition emerged between labour hire companies for contracts from clients. Former ALH employees started their own labour hire companies and tried to win contracts by offering the same services at lower rates. Some of these companies deducted as much as 75% for their workers’ earnings and paid workers as little as N$ 2 per hour. The same amount was paid to labour hire workers in Tsumeb while other labour hire companies pay their workers (labourers) between N$ 3,50 and N$ 5,20 per hour. Most labour hire workers earn less than N$ 4,- per hour.

The dramatic loss of income for casual workers that are employed by labour hire companies was indicated by one of the client companies which indicated that casual workers that were directly hired used to receive a minimum wage of N$ 6,20 per hour. This amount was reduced to about half once the workers were employed through a labour hire company.

Training and skills

The vast majority of labour hire workers seem to be relatively young, unskilled or semi-skilled, with more than half of them having completed grade 9 or more. Only one worker had tertiary education.

Some of the labour hire companies stressed the positive effect of employment on the development of workers’ skills and indicated that they offered training. However, only 3 of the 38 workers we interviewed had received any training. On the other hand, 14 workers stated that the skills they had obtained during their work would be useful when applying for another job. ALH emphasised that the company places great importance on training. The company indicated that they offer training in adult basic education, literacy skills, language skills, security procedures and specialised training like forklift operations. During our interviews with workers of ALH, however, 28 out of 29 randomly selected workers indicated that they never received any training at all.

Living conditions

The labour hire workers are migrants, mainly from the northern parts of Namibia. Only four of the 38 were permanent residents in the town where they worked. Nearly all of them (31 workers) stated that they left their hometown to find work. They tried to go home as often as possible, but half of them could afford the journey only once or twice a year. Only one was involved in income-generating activity at home (trade).

The housing conditions of labour hire workers are similar to those of other migrant workers, most of them rent a room in a private house. Their expenses on housing form a considerable part of their wage. The low standard of living becomes even more visible when the workers’ expenses on food are analysed. Considering the fact that most labour hire workers carry out strenuous physical labour, it is worrying that they have little money to buy food. Sixty-six per cent of the workers spent less than N$ 200 on food per month.

Most labour hire workers have family members dependent upon their wage in their hometown, and 32 of the 38 workers send money home, 24 of them regularly. The amounts vary between N$ 50 and N$ 400. Thirteen of the workers have dependants both in their hometown and in the town where they work, either parents or spouses and children.

An indicator that the wages labour hire workers are below the subsistence level is the fact that some workers received food and clothes from their hometown. During periods without work, help from the family in the hometown was their most important means of survival.

Trade Union Responses

The Namibian labour movement has responded angrily to the emergence of labour hire companies. Following workers demonstrations and a petition to the Government, the secretary general of the National Union of Namibian Workers (NUNW), Ranga Haikali, presented the union’s position to the Labour Advisory Council (LAC). He pointed out that labour hire companies pose a particular problem for workers and their trade unions. Their workers are not covered by collective agreements and are extremely vulnerable as they depend on renewed contracts for their survival. Haikali added that labour hire companies remind the labour movement of the contract labour system under which Namibian workers suffered before independence:

‘Our memories are still fresh about the role SWANLA played in upholding an unjust and exploitative system and we seem to allow a revival in the form of Labour Hire Companies. We need to take stock of the goals we set ourselves during the liberation struggle and of the rights and freedoms brought about by our independence. Are these goals and achievements cherished or are we beginning to undermine and destroy them? Are we moving forward as a free people in a free country or are we moving backwards? We need to realise our historical responsibility for the destiny of our country, the destiny of our people and the destiny of future generations.’

The emergence of labour hire companies coupled with a broader emphasis on ‘ labour flexibility’ poses a major challenge to the achievements of the Namibian labour movement. The use of labour hire workers reflects (in part) an attempt by employers to regain greater control over workers (and their trade unions). Calls for greater ‘flexibility’ in the deployment and use of labour therefore amount to an attack on the joint regulation of work practices.

The Proposed New Regulations

The government has identified Namibia’s high unemployment rate and employers’ attempts to avoid high social costs as key factors that contributed to the emergence of labour hire companies. However, the government is not prepared to outlaw their operations. On the other hand, the labour movement is concerned that labour hire companies do not provide permanent employment to their employees but merely turn the casualisation of work into a business venture. Labour hire companies tend to undermine collective bargaining because labour hire workers are deployed at different workplaces in highly insecure circumstances. There is also a concern that labour hire companies will promote the erosion of labour standards achieved by the trade union movement in Namibia. At present, only Namib Labour Hire has a recognition agreement with a trade union, the Mineworkers Union of Namibia (MUN).

The Namibian government’s ‘proposed guidelines for labour hire employment and operating standards’ that were circulated for discussion among unions and employers in 1999, are an attempt to regulate the labour hire industry. These guidelines provide for the registration of labour hire companies, the obligation to set up training programmes, the adherence to grievance and disciplinary procedures, records of employees etc.

After some debate between trade unions, employers and the Government within the framework of the Labour Advisory Council, an amended set of ‘Proposed Guidelines for Labour Hire and Employment Agencies’ was presented by the Ministry of Labour in August 2000. These guidelines set out a duty for employment agencies to register with the Labour Commissioner and to adhere to the Namibian constitution, the Labour Act, the Company Act and any other Namibian law. Employment agencies will also have to declare if they render their services free of charge or if they levy a fee on the user-enterprise or their workers.

The Labour Commissioner may cancel the registration of any employment agency if they contravene any law or the guidelines. However, the Minister of Labour may grant exemption form the guidelines as long as the laws are adhered to. The guidelines set out minimum wages as follows:

N$ 4,70 per hour for labourers;

N$ 5,30 per hour for semi-skilled workers; and

N$ 6,00 per hour for skilled workers.

Employment agencies have to register their workers with the Social Security Commission. However, the agencies are not compelled to provide any additional benefits as the guidelines merely appeal to such agencies to register their workers with a recognised pension fund ‘where possible’.

Employment agencies will have to design a training programme to ‘uplift industry training skills’. All workers employed on a ‘regular basis’ by the employment agency have to be included in the training plan. However, the guidelines do not spell out what constitutes a ‘regular basis’. Unless this is clearly defined, employment agencies will have the prerogative to decide who will be trained, for what period and in which field.

The proposed regulations hold employment agencies responsible to provide training for their workers when they are required to carry out any work ‘which could threaten their health, safety or welfare’. Furthermore, employment agencies will have to keep records of their workers; develop fair and just grievance and disciplinary procedures in line with the Labour Act; and promote good labour relations. Employment agencies are also not allowed to participate in any scheme aimed at retrenching workers at client companies and replacing them with workers from employment agencies.

Solution?

Although these regulations might help to set some minimum standards and to prevent the operation of illegal labour brokers that violate the Labour Act, the fundamental problems with labour hire companies as expressed by the labour movement are unlikely to be resolved through the proposed regulations. One of the likely problems will be how to monitor and enforce the provision that aims to prevent the replacement of permanent workers with labour hire workers. Companies might find convincing arguments for retrenchments just to re-employ workers some time later through labour hire companies. Companies might also resort to a strategy of not filling permanent vacancies and instead employ labour hire workers. Other problems that are likely to emerge are the permissible fees that the agencies are allowed to charge. The proposed regulations are silent on this issue and there are also no proposed limitations on the period for which an employee can be treated as a casual worker. This will allow client companies to make use of casual and labour hire workers indefinitely without imposing any duty on them to create permanent employment. It thus seems that the proposed regulations will have to be improved further to ensure that Namibian workers are protected against the abuses they currently have to endure. A dual strategy of strict regulations and good labour laws coupled with effective unionisation strategies seem to be the only immediate solution to the burning issues of abuse and exploitation that casual workers at labour hire companies are facing.