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Critically evaluate, using examples, how the trend towards flexible labour and outsourcing has affected the re-organisation of work in South Africa.
The emergency of the new economy, based on information technologies which aim at decentralizing management, individualizing work and customizing markets have resulted in labour flexibility as metaphor of industrialized economies. The era of globalisation requires organisations to adopt flexible workforce that is multi-skilled, knowledgeable, interchangeable and adaptable, these elements have affected the re-organisation of work in South Africa. Flexible labour and outsourcing have resulted in detrimental effects on labour force while ensuring that Post Fordist organisations enhance efficiency and effectiveness which have resulted in better managerial and productive methods. This essay will critically evaluate, using examples, how the trend towards flexible labour and outsourcing has affected the re-organisation of work in South Africa.
Most industrialised countries such as Britain, Japan, America and China have resorted to flexible labour and outsourcing and South Africa is no exception. The production techniques in Japanisation such as TQM (Total Quality Management), JIT (Just in Time) are all embedded by flexible and outsourcing elements which have been adopted by South African firms. Labour market flexibility “refers to the extent to which an enterprise can alter various aspects of its work and workforce to meet the demands of the business, for example the size of the workforce, the content of jobs, and working time” (Barker, 2007:127). Production systems have changed the organisational structures according to Rogers (2007;4) the growth of global production systems is probably the most significant factor here, introducing flexibility and adaptation through new sourcing arrangements which by-pass national policies. According to Thomas and Hugh (2009; 203) flexible labour processes in Post-Fordist organisations emanated from work rules that were embodied in contractual relations, rights and grievance procedures which gave unions high bargaining power, as well employment protection that states provided through legislation which limited the employers the power to adapt to the mechanisms of supply and demand. To enhance flexibility Post Fordist organisations according to Horwitz and Eskine (1995;290) have promoted multi-skilling, job rotation and different forms of team work to structure the work place to all the employee participation, work time flexibility also been the patterns of working time through continuous shifts systems.
Two types of labour market processes are practiced by South African capital oriented flexibility and negotiated flexibility. Thomas and Hugh (2009; 204) retaliates that capital oriented flexibility as a labour process flexibility geared towards the needs of employers and compel labour to adopt largely involuntary ways. Employment for part time and other categories is insecure, non standard work such as self employment increases and the role of the state is minimal or confined largely to providing legislation conducive to the powers of employers to hire and fire as the sole want. In South Africa capital flexibility and outsourcing have become the rampant in the manufacturing, mining, retail and agricultural industry. While the state advocate for negotiated flexibility its effects on labour have been the same, the negotiated flexibility according Thomas and Hugh (2009:204) is characterised as a process that is “subject to co-odinated or central bargaining between the major economic actors while non standard forms of employment can increase flexibility has defined limits and allows for better working life”. Non permanent contracts, agency work, self employment non standardized work has been are the major characteristics of flexible labour processes these have resulted in major criticism by creating spheres of unemployment, exploitation and a decrease in the labour absorption rates.
South African companies through capital flexibility have managed attain more profits and enhance human labour management according to Webster, E & von Holdt, K (2005) companies such as SEA Harvest in South Africa introduced extensive participatory process as a way to improve performance inline with the TQM management technique that gives autonomy to the worker. The SEA Harvest Company was able to compress structures and reduce hierarchy as workers took increased responsibility; this was beneficial to the company as it able to reduce production costs in employing supervisors to control workers as well in enhancing motivation on the worker force. According to Webster, E & von Holdt, K (2005) the introduction of Invocoms at SEA Harvest which allowed names to be introduce to capture concepts of involvement, communication, and commitment were also major trends in develop a flexible work force, the invention of a network society also made it possible in the company’s bid to cut costs and worker related expenses. The Inovocoms according Webster, E & von Holdt, K (2005) are able to give individual autonomy to evaluate their work, take remedial action and identify obstacles and formulate action to solve the obstacles.
These new forms of flexible manufacturing systems adopted in SEA Harvest such as TQM (Total Quality Management) by increasing worker participation through Invocoms resulted in functional flexibility, according to Thomas and Hugh (2009; 219) functional flexibility is assumed to lead to higher levels of skilled labour by removing barriers between grades and categories. Thomas and Hugh (2009; 219) propounds that the capacity to rotate workers across different tasks is normally predicated on their prior fragmentation, rather than combining them into something holistic. The other detrimental effects of flexibility means fewer rules and less bureaucracy as well according to Thomas and Hugh (2009; 220) the multi-skilling at the heart of functional flexibility represents a modest enlargement of the range of tasks required rather than and more fundamental change in the direction of skill enhancement. From participation at SEA Harvest the workers never benefited with remuneration low, hard working conditions, casual work, temporary work, subcontracting and outsourcing. Clarke (2001:23) argues that without a clear employment contract, better working conditions and legal protection, casual workers have faced intense exploitation and are going through difficult times.
Also Pick n Pay has also adopted labour market flexibility and outsourcing as a way to reduce its production cost and enhance managerial control. Pick n Pay has promoted casual work, temporary work, subcontracting and outsourcing. According to Mathega (2009;63) competitiveness, growth and reduction of costs have put pressure on companies to restructure their workforce relations. While Pick n pay is among the most labour intensive retail stores in South Africa, with pressure of deregulation and liberalization of the South African economy the company was forced to adopt a flexible labour force and outsourcing. According to Mathega (2009;62) the restructuring process in Pick n Pay started by introducing and making use of flexible forms of employment such as casualisation, part‐time or temporary work and externalisation. The Pick n Pay retail stores have managed to survive in the retail industry competing with Shoprite and Checkers, flexible labour and outsourcing has helped the Pick n pay to profit maximise according to Mathega (2009;64) Pick and pay now enjoys market hegemony implies a new workplace order whereby the forces of market growth, competition and cost reduction have restructured workplace relations and have changed the way in which workers and managers view the workforce.
The retail industry has used labour flexibility to circumvent South African Labour Laws such as ERA (employment Relations acts) EEA (Employment Equity Act) and BECA (Basic Employment Conditions Act), most industries in South African economy have termed these labour laws as “draconian laws” that hampers business operations. According to Voladia (1991:48–50) flexible labour is used to work extended hours, these workers are more productive than permanent workers, flexible labour is used to protect retail companies against existing trade unions, most of the casual workers do not have medical and other benefits a normal workers is supposed to have. Casual worker force in Pick and Pay work from 17:00 to 19:00 hours a day and on weekends according to Mathega (2009;64) the management of Pick n Pay prefers casual workforce cause it is cheaper and reliable than permanent workforce that refuse to work extra hours hence used as a substitution for permanent workforce. According to Voladia (1991:48‐50) some managers admit that the use of flexible labour is an effective way of protecting their companies against strikes and stay aways by permanent workers.
The use of casual, temporary and subcontracted workers the retailers have eroded worker protection and have rendered unionism power in retail business useless. Retail shops such as Pick n Pay through numerical flexibility has made it easily retrench and dismiss the work without any state or union involvement as most of the jobs are non permanent. Mantashe (2005;4) points out that permanent jobs have been replaced by flexible jobs that lack a standard employment relationship. Thomas and Hugh (2009; 205) retaliates that high contestation of labour flexibility causes uncertainty in the job market, job security has been eroded, the impact of flexibility were populated by negative accounts of re-hiring redundant workers under subcontractors with significant loss to pay, benefits and health and safety protection. Most South African retail industries such as Shoprite, Pick n Pay and Checkers willingly practice deliberate measures to erode employment security and increase the number of workers on non-standard contracts in order to adapt to the mechanisms of supply and demand that consistently change to consumer preferences hence are paramount in determination of profits.
Most casual workers in Pick and Pay are paid low remuneration according to Mathega (2009:59) flexible employment such as casual and subcontracted work goes hand in hand with lower levels of income, making it more difficult for workers to satisfy their basic needs. While the labour laws of South Africa do not protect the workers that are drawn into labour market flexibility, worker exploitation has increased relatively in all sectors of the economy.Wage flexibility in this era of free market economies has also been enhanced Horwitz and Eskine (1995: 290) elaborates that wages have shifted from uniform pay systems to performance based pay either or an individual team. The most detrimental labour market flexibility that has been the sole result for unemployment and social degradation is numerical flexibility which allows the owners of capital to reduce the size of the labour force to the laws of supply and demand this has resulted in subcontracting of labour, outsourcing, the use of casual or seasonal labour and homework. According to Benjanim (2005:12) in the South unemployment has been described as the handmaiden of flexibility. Home working and Teleworking has become a major characteristic of the SA retail industries with an increasing amount of part time work driven by female preferences according to Thomas and Hugh (2009; 2010) flexibility analyses tend to set aside the issue of gender and ethnicity by recasting dual labour markets as benign, progressive of invertible.
Massive franchising, outsourcing, casualisation and flexible labour is the main critical issues among Trade union representatives the recent issue on Wal-Mart 51% acquisition of Mass-Mart has received hostility from both government and trade unions as they fear intense exploitation of workers. Due extreme labour market flexibility globally the SA Trade Unions have argued that the merger will bring detrimental effects to the labour force in the retail industry according to Mail and Guardian (2011) Wal-Mart is being criticised of having a history around the world of suppressing union and worker rights. The major contradiction is the that labour flexibility itself create employment according to Rodgers (2007;3) employment protection does not clearly lead to higher unemployment, although it was found to be associated with lower employment rates hence enhancing labour flexibility will result in high employment rates even though the employment is not secure or permanent protection reduces inflows to employment of labour market entrants. According to Benjamin (2005;21) though externalisation flexibility which includes subcontracting, putting out work, use of self employed, buying instead of making components, on-site use of independent contractors or of employees “on loan” from other firms job creation is actually created for different sectors of the economy however this contradiction can justify that flexible labour markets help to keep wages close to the equilibrium and therefore avoid creating unemployment.
Despite the negative consequences of labour market flexibility South Africa firms attain benefits as the investment portfolio increases as well as reduction of production costs. While on part of the workforce increases labour participation rates is enhanced because it gives them more options of, when and where to work according to Thomas and Hugh (2009:with occupational changes characterised by portfolio workers and knowledge removes autonomy of the organisation on the employees hence numerical flexibility outsourcing and home working is less than a management strategy but more of individual cashing their knowledge and the dependency of the organisation upon it (2009; 2011). However, although flexible labour markets have created work in the part-time, service sector, there has been less success in creating permanent, full time jobs
The employer in this discourse of implementation labour flexibility process will benefit more from this setting while the employees suffer intensively due to lack of uncertainty and job insecurity in the Post Fordist Organisation. However due to the changing global markets labour flexibility has been adopted by most organisations to have a comparative advantage in profit making. Although ILO (International Labour Organisation) advocates for protective flexibility, the result have been detrimental as most of the employers resort to exploitative methods of labour flexibility hence the implication of creating labour flexibility in post Ford Organisations has created spheres of worker exploitation, unemployment and job insecurity.
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Mail and Guardian: Former Walmart boss grilled on 'hostility' to unions LLOYD GEDYE - May 10 2011 15:33 http://mg.co.za/article/2011-05-10-former-walmart-boss-grilled-on-hostility-to-unions