Analysis: Labor brokers are an essential part of the South African labor market
Labor broking is the fastest growing sector of the South African labor market. Labor brokers constitute a R44 billion industry employing approximately 19,500 internal workers and over one million agency workers (“temps”).
In other countries, where labor brokers are called private employment agencies, the industry employs 741 000 internal workers and about 20 million agency workers in an industry worth R2.3 trillion globally. Agency work in South Africa now accounts for 7.5% of total employment, and is likely to increase further: in countries with similar levels of economic development, temporary work represents between 12% and 19% of total employment.
The use of labor brokers is highly associated with an increase in demand (cited by 61% of customers) and recruitment for absent employees (cited by 48% of customers). Temporary workers are not substitutes for permanent workers: they play different roles linked to one or another cycle in the production process, leading 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%) are employed directly by companies, and the minority (26%) are employed through agencies (mostly in medium and large business enterprises).
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. Furthermore, agency workers have better access to on-the-job learning: last year labor brokers contributed R490 million to the National Skills Fund and hosted 32% (17,900) of all learnerships held in the country. Since 2000, labor brokers introduced 5.9 million people to the world of work.
Adcorp has a deep impact on South African society. In a country where the unemployment rate is among the highest in the developing world (officially 25% or, in the context of the broader definition, which includes people who have given up hope of finding work, up to 37%), in 52% of cases, Adcorp job seekers have never worked before; 81% are young; And 94% are from disadvantaged backgrounds. This is an important step into formal, permanent jobs for inexperienced African youth: 28% move on to permanent employment within a year, and 37% do so within three years.
The industry's contribution to the South African economy is shown in the accompanying chart.
This is an extract from the May 2013 AdCorp Employment Index. The full report can be viewed Here – PDF.
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