World Bank report shows sharp rise in temporary work in SA, India

THERE has been a sharp rise in the number of temporary employment services and labour brokers in SA and India, the World Bank says in its latest World Development Report, which focuses on jobs.

In SA, the Congress of South African Trade Unions (Cosatu) is attempting to have the practice of labour broking banned.

“As the world changes, so do jobs. Despite improvements in workers’ education levels, many firms report that they have difficulty finding the skilled workers they seek. Part-time and temporary work appears to be increasing,” the World Bank said in its report on Monday.

Outsourcing, once concentrated in sectors like manufacturing, has increased in services industries as new technology enables the splintering of tasks.

“Meanwhile, new platforms on the internet and mobile phones offer innovations for matching workers and employers, and not only for highly skilled jobs,” the report says.

While more youths between the ages of 15 and 24 are at school or in training, youth unemployment has reached alarming levels. In SA the level has been above 40% since 2008. In Spain, the number is above 50%. Even in countries where it is relatively low, the youth unemployment rate is twice or more the national average.

“In addition, a large share of young people are considered ‘idle’ — not in education, not employed, and not in training or looking for work. In some countries, more than one-third of 15- to 24-year-olds are idle; in most countries, unemployment rates are small compared to idleness rates.

“In many cases, when youth work they do so in unpaid jobs. If paid, they are less likely to have access to social security,” the World Bank notes.

Credit ratings agencies Moody’s, Fitch, and Standard & Poor’s have over the past 10 months changed their outlooks on South African government debt from stable to negative‚ in part from concern that increasing social welfare transfers due to the unemployment rate being above 20% would take SA down a fiscally unsustainable path.

Last week, Moody’s downgraded SA by one notch to Baa1, the first downgrade since SA started to be rated in 1994.

The number of unemployed youth (age 15 to 24 years) jumped by 126,000 or 9.9% in the first quarter from the fourth quarter to 1.393million according to Statistics SA data. The data are not seasonally adjusted, so the large jump in the number could reflect the termination of temporary seasonal jobs in retail and construction.

The sector with the largest job losses among all age groups in the first quarter was construction at 71,000 followed by manufacturing with 67,000. The sector with the least job losses was trade at 3,000.

The Democratic Alliance (DA) in May marched to Cosatu House to highlight the role that Cosatu is playing in worsening unemployment for young South Africans by blocking the proposed youth wage subsidy.

The DA said that the youth wage subsidy would create a first-time job opportunity for 400,000 young South Africans.

After it was mooted as a policy proposal by the DA, the youth wage subsidy was announced by President Jacob Zuma in his state of the nation address in 2009. The National Planning Commission has come out in support of the idea.

Finance Minister Pravin Gordhan’s budget subsequently made R5bn available to fund the first phase of the youth wage subsidy, but it has not yet been implemented.

Moody’s noted that the main driver for the downgrade was its lowered assessment of institutional strength to “moderate” from “high”. The revision reflected Moody’s view of the South African authorities’ reduced capacity to handle the

As temporary staffing grows, so do calls to examine the regulatory framework of the industry. Those calls focus on vulnerability.

current political and economic situation and to implement effective strategies that could place the economy on a path to faster and more inclusive growth.

On India, the World Bank report says temporary work has existed for decades, partly as a way to circumvent rigid labour laws.

“However, the modern industry of temporary staffing is only 15 years old, and is developing rapidly.

“The number of temporary workers recruited by labour brokers grew more than 10% in 2009 and 18% in 2010. According to some media reports, workers are quitting permanent jobs to move into more attractive temporary roles. Some firms claim that as many as 15% of new recruits are permanent employees switching to temporary jobs,” the report reads.

The reports says that competition in the Indian temporary staffing industry is strong, leading to a drop in recruitment fees to gain more market share and to drive growth.

“Large temporary staffing firms are entering niche activities such as business consulting (Manpower) and training (TeamLease),” the development agency notes.

“As temporary staffing grows, so do calls to examine the regulatory framework of the industry. Some of those calls focus on addressing vulnerability. Workers in these jobs typically face lower earnings (because a portion of the pay is diverted to temporary staffing agencies).

“They also face a lack of benefits, coverage by labour laws, and job security. Other efforts focus on professionalising the industry,” the report reads. I-Net Bridge