A number of institutions will experience increases in costs as a result of increases in administrative tasks or case-load.
If Section 198 is repealed, as discussed earlier, the client/employer will be responsible for registering the employee for UIF, as well as COIDA if applicable. Currently, for example, specialised agencies provide the nursing personnel who offer home-based care to ill or elderly people. These nurses provide care for as long as required, but the agencies pay their UIF and COIDA contributions, as well as any other contributions to medical-aid or other schemes as per the employment contract. The nursing personnel are therefore employed by the agency and are placed by the agency on successive assignments. If Section 198 is repealed, these nurses will have to be employed directly by each person they care for or that person’s family. The family will also be responsible for the nurse’s UIF and COIDA contributions. This will increase the administrative costs of the UIF and COIDA as each employer will now have to register the nurse separately, whereas the agency currently only has to register the employee once (Benjamin & SBP, 2010). As noted above then, the unit costs associated with registering an employee (through a TES) on the UIF or COIDA systems would no long hold if the amendments were vetted. Specifically then, the administrative costs incurred by these institutions in registering employees and then incurring additional costs associated with employees' changing employment status must be a key consideration of the proposed amendments.
The repeal of Section 198 does not mean that triangular employment arrangements will become unlawful and it has been suggested that parties in the labour market would continue to make use of triangular employment relationships, and that they would attempt to shape these in a manner that minimises their obligations (Benjamin & SBP, 2010). It is further expected that in these relationships the identity of the employer might sometimes be unclear. This will lead to an increase in litigation and specifically in the number of cases referred to the CCMA, Labour Court and civil courts. While relevant data from the Labour Court and the civil courts is not available, the impact of an increase in the case- load of the CCMA can be illustrated.
For example, if we assume a ten percent increase in the number of referrals to the CCMA, the impact on the operating budget of the Commission can be illustrated, using data from the 2009/2010 financial year. In 2009/2010 153,657 cases were referred to the CCMA – a ten percent increase thus implies that more than 15 000 additional cases would have been referred to the CCMA. The CCMA estimates that in the 2008/2009 financial year the average cost per case referred was R2 334. Using this cost as a proxy for the 2009/2010 financial year, it means that if 15 000 additional cases were referred to the CCMA, the Commission's total expenditure on cases referred would have increased by more than R35 million. As discussed previously, the average cost per case increases by approximately R3 400 when a case proceeds beyond the referral stage. If we assume that approximately 20 percent of the referred cases would have been outside the jurisdiction of the CCMA (based on the 2009/2010 estimates), the CCMA would have had to hear 12 000 additional cases, which implies a further increase of R40.8 million in the CCMA’s expenditure. Overall then, as a result of this amendment, the
CCMA would have required an additional budget allocation of approximately R75 million, which corresponds to 26 percent of the Commission's 2009/2010 budget allocation
III)
Benefit
The aim of the proposed repeal of Section 198 is the protection of vulnerable workers who are currently being exploited under temporary employment arrangements. Some of the workers employed under these arrangements have no security of employment and often earn less than their permanently employed co-workers. In addition, they often have very limited or no protection under the labour law.
Again, it is very difficult to identify exploited or vulnerable workers in the TES sector using data from the official labour force surveys. As discussed above, the majority of these workers are recorded within the “Not Elsewhere Classified” category within the Financial and Business Services Sector. In an attempt to estimate the share and number of workers who may be considered vulnerable to exploitation, we utilise wage levels as a proxy for vulnerability. In other words, we estimate the number of workers who could be considered vulnerable, given a pre-determined wage threshold. Figure 4 below again presents the wage distribution of all employees classified in the “Not Elsewhere Classified” category within Financial and Business Services according to the September 2007 Labour Force Survey. In order to identify the share and number of workers who could potentially be considered vulnerable to exploitation, we estimate the number of workers earning below selected points on the wage distribution. Here we consider three points, namely the 5th, 10th and the 15th percentile of the wage distribution. Put differently, we propose that the bottom five, ten or 15 percent of wage earners might be considered vulnerable to exploitation.
The reference lines in the figure illustrate the mean wages of the workers at the three points of the wage distribution, at R700, R1 044 and R1 200 a month respectively. Put differently, the bottom five percent of workers in the sub-sector which includes TES earned R700 a month or less, the bottom ten percent of workers earned R1 044 or less, while the bottom 15 percent of workers earned R1 200 a month or less. In terms of the corresponding number of workers, if the wage level at the fifth percentile is used as the reference line, approximately 28 775 workers can be considered vulnerable to exploitation. If the reference line is set at the tenth percentile, almost 64 000 workers can be considered vulnerable, while approximately 107 662 workers earned R1 050 a month or less.
Figure 3: Kernel Density Distribution with Reference Lines, 2007 0 .0 0 0 2 .0 0 0 4 .0 0 0 6 D e n si ty 0 2000 4000 6000 8000 10000 nomwage