Namibia’s Ban On Labour Hire In Perspective

AS Namibia’s new Labour Bill 2007 is about to become law, one of its clauses led to heated debates and even to threats of court action.

Just before the Bill was passed in the National Assembly, a significant amendment was made to clause 128. The amendment stipulates that labour hire will be prohibited in the Republic of Namibia: “No person may, for reward, employ any person with a view to making that person available to a third party to perform work for the third party” (clause 128[1]).Trade unions enthusiastically welcomed this amendment, which paves the way for the abolition of a labour practice which they regarded as reminiscent of the colonial migrant-labour system.Employers on the other hand, opposed the amendment and argued that the Bill would not only outlaw labour hire but also other practices such as outsourcing and sub-contracting.The Namibia Employers Federation (NEF) announced that it wants the Labour Bill halted and the amendment on labour hire removed.This article aims to put the ban on labour hire in perspective by outlining Namibia’s current labour-hire practices.It draws on past studies carried out by the Labour Resource and Research Institute (LaRRI).What is labour hire? Labour hire as a particular form of outsourcing emerged in Namibia in the late 1990s.This labour-only form of outsourcing forms part of a global trend towards more “flexible” forms of employment, which are implemented by employers in the pursuit of higher profits.Labour-hire companies supply labour to third parties (the client companies) with whom they have a commercial contract.This practice does not only apply to workers that are required for short periods, but increasingly also to those who work on a full-time and ongoing basis for the client company.Global trends Global experiences have shown that employers use labour-hire workers for a variety of reasons.These include coping with peaks in demand, reducing costs, avoiding industrial relations problems, greater flexibility, as well as avoiding retrenchment procedures and trade unions.Labour-hire workers on the other hand are faced with job insecurity, low wages and substandard working conditions, limited training and skills development and low levels of unionisation.In addition, labour-hire workers are sometimes not sure who their actual employer is: the labour-hire company or the client company where they work? Namibia’s labour-hire practices conform with global trends to a large extent.The country’s labour-hire industry is dominated by one large company, which originated in South Africa and now operates across Namibia.In addition, there are several smaller labour-hire companies, most of whom are limited to serving a few clients, mostly in one particular town.Overall, at least 10 labour-hire companies are currently operational in Namibia.They all supply mostly unskilled and semi-skilled workers to client companies in various industries, including mining, fishing, and retail.Their clients include private companies but also state-owned enterprises.Almost all labour-hire companies retain a substantial part (15-55%) of workers’ hourly wage rates as their fee.Impact of labour hire Client companies use labour-hire workers to reduce the impact of strikes by permanent workers, to achieve flexibility, to cut costs, to avoid labour problems and trade unions, to concentrate on their “core business” and to replace “unproductive” workers.Labour-hire workers are paid significantly less than permanent workers and they usually do not enjoy any benefits.Many labour-hire workers suffer from violations of the provisions of the Namibian Labour Act.Although most are registered with social security, many do not receive any paid leave and not even severance pay in case of retrenchment.Even if they worked for the same labour-hire company and the same client company for several years, they have no job security and are employed on the basis of “no work – no pay”.Their employment contract with the labour-hire company is terminated as soon as the commercial contract between the labour broker and its client ends.Although the legal provisions on employment termination apply (in theory) to labour-hire companies as well, the usual practice is to hire and fire workers at will.Client companies can request the removal of any labour-hire worker at any time.The labour-hire company will then have to send a replacement.Labour hire thus contributes to the “commodification” of labour as an easily exchangeable and replaceable commodity.The use of labour hire in Namibia is not limited to peak periods and specific tasks only.Over the past few years, labour hire has become an established practice and in some instances permanent workers were retrenched and replaced by labour-hire workers.Labour hire thus poses a threat to permanent workers, especially in the lower skills categories.It accentuates the division of labour into core (permanent) and peripheral workers.Employment creation? Labour-hire employment is hardly a springboard to permanent jobs.Although a few labour-hire workers were taken over by client companies as permanent staff, such practices are rather exceptional.Some labour-hire companies explicitly prevent their workers from taking up employment at a client company.The employment creation effect of labour hire is limited as almost all jobs are created by the client companies.Overall just over 100 people are employed as administrative and supervisory staff on a permanent basis by labour-hire companies.Most labour-hire companies describe themselves as black economic empowerment companies.While they may create business opportunities and profits for a small group of labour-hire owners and managers, they contribute little to socio-economic development and the creation of decent work.Instead they merely utilise widespread unemployment to their own advantage.Trade unions Although several labour-hire workers have joined trade unions, recognition agreements between unions and client companies usually cover permanent staff only and exclude labour-hire workers.In general, unions experience huge challenges to organise labour-hire workers and to represent them through collective bargaining.The insecurity of their jobs coupled with potential shifts between workplaces makes union organising difficult.Some unions are even reluctant to organise labour-hire workers, as they do not want to recognise labour-hire companies as their employers.Instead they want labour hire to be abolished.Workers’ problems Most labour-hire workers earn N$3 to N$6 an hour but in some cases wages can be as low as N$2 an hour.Better wages are the exception, such as skilled artisans who can earn around N$40 an hour, particularly if they work at mining companies.Labour-hire workers enjoy very few benefits and most work 37 to 46 hours a week.In many case overtime is not performed on a voluntary basis as workers are forced to do so by managers and supervisors.There is a clear sexual division of labour, with men being employed as drivers, artisans, loss controllers and truck assistants while most women are employed as shop assistants and operators.Even the wages reflect a gender bias, as most women are concentrated in the lowest income categories.The biggest problems experienced by labour-hire workers are the lack of benefits, low wages and job insecurity.The current labour law (Labour Act of 1992) and regulations have little impact on their working conditions and failed to grant them protection against abuses.Even the initially proposed provisions of the Labour Bill (2007) would have been insufficient to deal with the problems experienced by labour-hire workers.Solution? The perceived similarities between the colonial migrant labour and post-colonial labour hire, coupled with the hardships experienced by labour-hire workers today, prompted Namibia’s parliamentarians to outlaw labour hire.One of the challenges to overcome in this regard is that labour hire constitutes only one form of outsourcing that co-exists with other forms such as cleaning and security sub-contractors.Outlawing labour hire while allowing other forms of outsourcing to continue would probably result in labour-hire companies re-constituting themselves as service providers with little change in the employment conditions of their workers.Thus the new amendment to the Bill restricts outsourcing in all its forms.Employers are expected to rather employ their staff directly and to shoulder some social responsibility for their workers.Employers will still be able to employ staff on a temporary basis (if they cannot be employed permanently) as the new Labour Bill 2007 contains no restrictions in this regard.Some labour-hire companies have claimed that the abolition of labour hire would lead to thousands of job losses, but this argument is based on the assumption that client companies will reduce their operations and staff levels if they cannot use labour-hire workers any longer.This is debatable.What is certain is that labour-hire companies themselves are not job creators and therefore contribute very little to Namibia’s development and the creation of decent work.They are merely facilitators of exploitative labour practices.* Herbert Jauch works as senior researcher for the Labour Resource and Research Institute (LaRRI).The amendment stipulates that labour hire will be prohibited in the Republic of Namibia: “No person may, for reward, employ any person with a view to making that person available to a third party to perform work for the third party” (clause 128[1]).Trade unions enthusiastically welcomed this amendment, which paves the way for the abolition of a labour practice which they regarded as reminiscent of the colonial migrant-labour system.Employers on the other hand, opposed the amendment and argued that the Bill would not only outlaw labour hire but also other practices such as outsourcing and sub-contracting.The Namibia Employers Federation (NEF) announced that it wants the Labour Bill halted and the amendment on labour hire removed.This article aims to put the ban on labour hire in perspective by outlining Namibia’s current labour-hire practices.It draws on past studies carried out by the Labour Resource and Research Institute (LaRRI).What is labour hire? Labour hire as a particular form of outsourcing emerged in Namibia in the late 1990s.This labour-only form of outsourcing forms part of a global trend towards more “flexible” forms of employment, which are implemented by employers in the pursuit of higher profits.Labour-hire companies supply labour to third parties (the client companies) with whom they have a commercial contract.This practice does not only apply to workers that are required for short periods, but increasingly also to those who work on a full-time and ongoing basis for the client company.Global trends Global experiences have shown that employers use labour-hire workers for a variety of reasons.These include coping with peaks in demand, reducing costs, avoiding industrial relations problems, greater flexibility, as well as avoiding retrenchment procedures and trade unions.Labour-hire workers on the other hand are faced with job insecurity, low wages and substandard working conditions, limited training and skills development and low levels of unionisation.In addition, labour-hire workers are sometimes not sure who their actual employer is: the labour-hire company or the client company where they work? Namibia’s labour-hire practices conform with global trends to a large extent.The country’s labour-hire industry is dominated by one large company, which originated in South Africa and now operates across Namibia.In addition, there are several smaller labour-hire companies, most of whom are limited to serving a few clients, mostly in one particular town.Overall, at least 10 labour-hire companies are currently operational in Namibia.They all supply mostly unskilled and semi-skilled workers to client companies in various industries, including mining, fishing, and retail.Their clients include private companies but also state-owned enterprises.Almost all labour-hire companies retain a substantial part (15-55%) of workers’ hourly wage rates as their fee.Impact of labour hire Client companies use labour-hire workers to reduce the impact of strikes by permanent workers, to achieve flexibility, to cut costs, to avoid labour problems and trade unions, to concentrate on their “core business” and to replace “unproductive” workers.Labour-hire workers are paid significantly less than permanent workers and they usually do not enjoy any benefits.Many labour-hire workers suffer from violations of the provisions of the Namibian Labour Act.Although most are registered with social security, many do not receive any paid leave and not even severance pay in case of retrenchment.Even if they worked for the same labour-hire company and the same client company for several years, they have no job security and are employed on the basis of “no work – no pay”.Their employment contract with the labour-hire company is terminated as soon as the commercial contract between the labour broker and its client ends. Although the legal provisions on employment termination apply (in theory) to labour-hire companies as well, the usual practice is to hire and fire workers at will.Client companies can request the removal of any labour-hire worker at any time.The labour-hire company will then have to send a replacement.Labour hire thus contributes to the “commodification” of labour as an easily exchangeable and replaceable commodity.The use of labour hire in Namibia is not limited to peak periods and specific tasks only.Over the past few years, labour hire has become an established practice and in some instances permanent workers were retrenched and replaced by labour-hire workers.Labour hire thus poses a threat to permanent workers, especially in the lower skills categories.It accentuates the division of labour into core (permanent) and peripheral workers.Employment creation? Labour-hire employment is hardly a springboard to permanent jobs.Although a few labour-hire workers were taken over by client companies as permanent staff, such practices are rather exceptional.Some labour-hire companies explicitly prevent their workers from taking up employment at a client company.The employment creation effect of labour hire is limited as almost all jobs are created by the client companies.Overall just over 100 people are employed as administrative and supervisory staff on a permanent basis by labour-hire companies. Most labour-hire companies describe themselves as black economic empowerment companies.While they may create business opportunities and profits for a small group of labour-hire owners and managers, they contribute little to socio-economic development and the creation of decent work.Instead they merely utilise widespread unemployment to their own advantage.Trade unions Although several labour-hire workers have joined trade unions, recognition agreements between unions and client companies usually cover permanent staff only and exclude labour-hire workers.In general, unions experience huge challenges to organise labour-hire workers and to represent them through collective bargaining.The insecurity of their jobs coupled with potential shifts between workplaces makes union organising difficult.Some unions are even reluctant to organise labour-hire workers, as they do not want to recognise labour-hire companies as their employers.Instead they want labour hire to be abolished. Workers’ problems Most labour-hire workers earn N$3 to N$6 an hour but in some cases wages can be as low as N$2 an hour.Better wages are the exception, such as skilled artisans who can earn around N$40 an hour, particularly if they work at mining companies.Labour-hire workers enjoy very few benefits and most work 37 to 46 hours a week.In many case overtime is not performed on a voluntary basis as workers are forced to do so by managers and supervisors.There is a clear sexual division of labour, with men being employed as drivers, artisans, loss controllers and truck assistants while most women are employed as shop assistants and operators.Even the wages reflect a gender bias, as most women are concentrated in the lowest income categories. The biggest problems experienced by labour-hire workers are the lack of benefits, low wages and job insecurity.The current labour law (Labour Act of 1992) and regulations have little impact on their working conditions and failed to grant them protection against abuses.Even the initially proposed provisions of the Labour Bill (2007) would have been insufficient to deal with the problems experienced by labour-hire workers.Solution? The perceived similarities between the colonial migrant labour and post-colonial labour hire, coupled with the hardships experienced by labour-hire workers today, prompted Namibia’s parliamentarians to outlaw labour hire.One of the challenges to overcome in this regard is that labour hire constitutes only one form of outsourcing that co-exists with other forms such as cleaning and security sub-contractors.Outlawing labour hire while allowing other forms of outsourcing to continue would probably result in labour-hire companies re-constituting themselves as service providers with little change in the employment conditions of their workers.Thus the new amendment to the Bill restricts outsourcing in all its forms.Employers are expected to rather employ their staff directly and to shoulder some social responsibility for their workers.Employers will still be able to employ staff on a temporary basis (if they cannot be employed permanently) as the new Labour Bill 2007 contains no restrictions in this regard. Some labour-hire companies have claimed that the abolition of labour hire would lead to thousands of job losses, but this argument is based on the assumption that client companies will reduce their operations and staff levels if they cannot use labour-hire workers any longer.This is debatable.What is certain is that labour-hire companies themselves are not job creators and therefore contribute very little to Namibia’s development and the creation of decent work.They are merely facilitators of exploitative labour practices.* Herbert Jauch works as senior researcher for the Labour Resource and Research Institute (LaRRI).