South Africa has become well known for its labour issues – strike season, wildcat strike, violent protests and above-inflation demands. Workers and labour unions often do not realise the impact that they have on business although their demands are sometimes justified. Contrary to the warnings and threats from established businesses, they are unlikely to shut down altogether.

Restructuring, retrenchments and cost cutting are more likely outcomes leading to smaller operations that can be profitable. However, it is the workers that will ultimately suffer – not all, but a good portion of the newcomers and unskilled employees who lose their jobs and are largely unemployable in the competitive South African market.

“Labour Brokering” Yourself

It is not all bad news though. Industrious workers can see the gap in the market and use this opportunity to start their own business. The fact of the matter is that any business will be keen to continue their current operations without the hassles associated with labour issues and union demands.

For years now, labour brokers have capitalised on this opportunity. Hiring workers on behalf of their “clients” and managing the labour force that removes liability on part of the business owner. Although labour brokers are largely frowned upon, both by workers and unions, there may still be similar business opportunities for the single worker or groups of workers.

If workers marketed themselves as independent service providers who are prepared to work for clients at a predetermined rate agreed upon by both parties for a set period of time, then it becomes a business-to-business (B2B) relationship – not a worker-employer relationship. The issue of labour laws suddenly changes. The former worker is now the service provider, an independent businessperson. The former employer is now the client.

Independent Service Providers

An independent service provider is essentially a business, a micro-enterprise. In a free trade market, businesses are allowed to operate, sell their products or service at a price of their choosing and transact with clients that they select provided that they are not breaking the law. Similarly, an independent business can utilise the services of a provider of their choice and negotiate the rate freely without third party interference.

It becomes a little more difficult when businesses are transacting with the government due to tender criteria and BEEE issues. However, private businesses and non-governmental workers are not restricted in this manner. Becoming an independent service provider is in keeping with many global trends like the “results only work environment” (ROWE). The 2008 financial crisis, which South Africa is only feeling the pinch of now, forced workers around the world to find alternatives to being a salaried employee. Why not South Africans?

Farm Workers and High Wage Demands

Let’s take a look at the current farm labour issue.

The problem largely revolves around the previous wage of R65 which workers claim were too low and the current R105 per day that the Department of Labour has now enforced. South African farmers are threatening to retrench workers and mechanise. Some 900 farmers have applied for a reprieve of the current wage demands. And now there is talk about farmers looking at hiring cheaper foreign workers.

So if a worker is prepared to take a lower wage with the thinking that “half loaf of bread is better than none”, farmers would be breaking the law by paying a lower rate. However, if individual workers approached their employers and decided that they would rather resign as an employee and instead sell their services at a lower rate, the ball game changes entirely.

Farmers can now hire the independent service provider and legitimately pay a lower rate. Proper business contracts can be drawn up and protect both parties. The now self employed service provider (former worker) can sell his services at a competitive rate that is lower than unionised worker demands and both parties win. Farmers can rest assured of tasks or projects being completed before paying out. The inefficient worker who does little within an 8 hour working day yet demand full wages at the end of the week will quickly become extinct.

Whether unskilled South African workers will be that innovative in the face of rising unemployment remains to be seen. But when money is tight and laws are suffocating, alternative solutions can bring a ray of hope to both parties.

Last updated on March 08, 2013

Tough Labour Laws Can Promote Business Innovation

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