Analysis: Labour brokers an essential part of the South African labour market

Labour broking is the fastest-growing sector of the South African labour market. Labour brokers constitute a R44 billion industry employing around 19 500 internal staff and just over one million agency workers ("temps").

In other countries, where labour brokers are called private employment agencies, the industry employs 741 000 internal staff and assign nearly 20 million agency workers in an industry worth R2.3 trillion globally. Agency work now constitutes 7.5% of total employment in South Africa, and it is likely to grow further: in countries with similar levels of economic development, temporary work represents between 12% and 19% of total employment.

The use of labour brokers is overwhelmingly connected to peaks in demand (cited by 61% of clients) and filling-in for absent employees (cited by 48% of clients). Temporary workers are not substitutes for permanent workers: they play different roles, connected to one or other cycle in the production process, that leads to variable demand for labour.

In this context, 3.9 million workers (or 29% of total employment) are temporary in nature - the overwhelming majority (74%) is employed by companies directly, and a minority (26%, mostly in medium and large business enterprises) are employed through agencies.

Agency workers spend less time looking for work - 90 days, compared to a staggering 806 days (two years and three months) for the average South African job seeker. In addition, agency workers have better access to on-the-job learning: last year labour brokers contributed R490 million to the National Skills Fund and conducted 32% (17,900) of all learnerships conducted in the country. Since 2000, labour brokers introduced 5.9 million people to the world of work.

Adcorp has a profound impact on South African society. In a country where the unemployment rate is one of the highest in the developing world (officially 25% or, in terms of the broader definition which includes people who have given up hope of finding work, as high as 37%), in 52% of cases, Adcorp job seekers have never worked before; 81% are youth; and 94% are from disadvantaged backgrounds. This is an important stepping stone for inexperienced African youth into formal, permanent jobs: 28% go on to permanent employment within one year, and 37% do so within three years.

The industry's contribution to the South African economy is shown in the accompanying chart.

This an extract from the Adcorp Employment Index for May 2013. The full report can be accessed here - PDF.

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