Don’t throw baby out with bathwater!
IN seeking to protect workers from the unsavoury practices of some employers who are favouring contract workers (contract for service) over permanent full-time employees (contract of service), Government may be heading in the direction of using legislation to kill the practice of independent contractors entirely. This would be a grave mistake and could harm the economy, disincentivise investors from setting up shop on the island, and ultimately reduce employment prospects for job seekers.
In the case brought by the National Housing Trust (NHT) against Marksman Limited to recover the company’s three per cent statutory contribution, Justice David Batts ruled that the workers, who are at the centre of the imbroglio, are direct employees of Marksman and not contract workers as stated in their contracts. The September 23, 2022 ruling, although sound from a legal and ethical perspective, lets the proverbial cat in among the pigeons. It ostensibly gives political parties who become Government licence to introduce draconian legislation to curtail, if not eliminate, the offending practice and thereby breathe new life into their affiliates, the labour unions.
It is not surprising that the Government, through the Minister of Finance Dr Nigel Clarke, was quick to issue its edict in the wake of the Supreme Court ruling that, effective April 1, 2023, security guards working with companies that have contracts with government agencies will be recognised as employees and not contractors.
Interestingly, the financially strapped Government, which has a poor track record living up to its collective bargaining obligations, was able to find the resources to increase the value of existing contracts to cover the additional costs to security companies acting as employers. Failure by security companies to comply will lead to termination of their contracts. That is the first shoe to drop towards legislating independent contractors or third-party contractors across all categories, not just security guards, out of existence. The writing was on the wall as far back as 2018.
Speaking in the 20182019 Sectoral Debate, then Opposition spokesman on labour Horace Dalley made a seemingly innocuous but threatening call on Government to work with the Opposition to end the practice of contract work. He said, inter alia, “Government must join with the Opposition in promulgating legislation as a matter of urgency to protect the vulnerable workers of Jamaica from the oppressive, pernicious, and unfair system of contract work, which has wiggled its way into our industrial relations landscape. It is wrong, it is exploitative, and it is union busting.”
No one could rationally deny that workers’ rights need to be protected through comprehensive overhaul of our archaic labour relations code, which dates back to 1975. But in an age of globalisation, a central goal of such legislation should be to increase labour productivity, which is the basis for competitive advantage between not just companies but countries. Juxtaposing union representation with modern workplace practices will take us down the wrong path by limiting the options open to employers in how they hire personnel. Jamaican employers need more and not less options.
The Planning Institute of Jamaica (PIOJ), the Economic Growth Council (EGC), and Jamaica Promotions Corporation (Jampro) are missing the mark in their announced strategies to turn around Jamaica’s perennial low economic growth rate. There is no gainsaying the importance of the various initiatives being pursued to increase growth in gross domestic product (GDP) by attracting investors. Often missing are strategies to increase the country’s dismally low worker productivity, which places Jamaica at a disadvantage compared to its main trading partners.
Let’s remove the blinkers. Which rational investor would put capital at risk in a country where many people in the labour pool are functionally illiterate; unable to learn and master the new technologies; who have virtually no critical thinking, communication, and interpersonal skills demanded by the modern workplace? In the highly competitive global environment, companies are seeking ways to convert fixed labour overhead to a variable cost to increase labour efficiency and labour productivity. One method is to outsource personnel services, including contracting fix-term independent contractors through a process of asset deintensification. This is demystified when seen as another form of business process outsourcing, which successive governments have relied on to boost employment.
Employers must resist the temptation to adopt a shortterm approach to cutting cost through measures such as denying workers benefits and statutory entitlement by switching, overnight, existing employees to independent contractors who they continue to directly employ. That old zero-sum game does not play anymore. Instead, they should seek the services of a professional organisation specialising in human resource management that can do more than provide bodies. The focus should be on a partnership toward building a modern, cost-effective, and highly competitive workforce.
It’s a prerogative of management to determine how to best man its operation to achieve higher levels of productivity and profitability in the interest of all parties: shareholders; those who sell their labour; and government, which collect taxes. Any attempt by legislators to encroach on or limit the rights of employers in this regard should be stoutly resisted.
A warning to those who legislate and make policies: Tread carefully in how you try to right the wrongs in labour practices associated with contract work, lest in throwing out the bathwater you also throw out the baby.
Dr Henley Morgan is founder and executive chairman of the Trench Town-based Social Enterprise, Agency for Inner-city Renewal and author of My Trench Town Journey - Lessons in Social Entrepreneurship and Community Transformation for Policy Makers, Development Leaders, and Practitioners. Send comments to the Jamaica Observer or hmorgan@cwjamaica.com.
It is not surprising that the Government, through the Minister of Finance Dr Nigel Clarke, was quick to issue its edict in the wake of the Supreme Court ruling that, effective April 1, 2023, security guards working with companies that have contracts with government agencies will be recognised as employees and not contractors