Conclusiones

Financial flexibility is the extent to which the levels of payment to employees can be varied in line with changes in profitability. As in the previous two sections, consideration was also given to the different ways in which organisations can achieve this form of flexibility. The data revealed mixed responses in terms of the costs associated with the use of temporary labour through TES providers, and the level of payment to these temporary employees.

Several interesting topics that significantly influenced business decisions in terms of financial flexibility emerged from the data. The most prominent being the Motor Industry Bargaining Councils (MIBCO) main agreement which regulates the minimum wage that can be paid to an employee, the administrative costs associated with the use of TES providers, and the “equal pay for equal work”

clause outlined in the Employment Equity Act (EEA).

The general view that existed amongst the respective businesses was that there was little to no benefit in terms of financial flexibility prior to the amendments. In some instances, businesses were of the view that making use of temporary employees through TES providers came with an added cost because of the associated administration fees.

94 D 1: Transcribed Interview - Company A

“…the labour broking came with a small cost premium as there was administration fees and those types of issues.”

D 2: Transcribed Interview - Company B

“…we pay an additional admin fee which comes as a premium but we retain our flexibility.”

D 3: Transcribed Interview - Company C

“…then you still have to pay the labour broker a fee on top of that. The cost benefits have disappeared…”

D 4: Transcribed Interview - Company D

“…labour brokers are expensive to use because of the associated administration costs.”

However, the rate of pay that businesses payed their permanent and temporary employees respectively also had a major role to play.

D 1: Transcribed Interview - Company A

“We already paid our permanent employees the minimum wage, so as a result we did not see a major financial benefit…”

D 2: Transcribed Interview - Company B

“…couple of companies that I know of pay their permanent employees more than the minimum wage and then they bring the temporary employees in and pay them the minimum wage.”

95 D 4: Transcribed Interview - Company D

“We cannot influence the cost or level of pay of labour. The wage grades and levels are negotiated nationally, so we do not have any influence on that.”

In some instances, businesses were paying their permanent employees a premium rate and then bring in temporary employees at the MIBCO minimum rate.

One can therefore argue that the use of temporary employees does provide a degree of financial flexibility to these businesses as was highlighted by one of the respondents.

D 1: Transcribed Interview - Company A

“I would think for businesses that did not pay the minimum wages per the bargaining council, there would probably have been a bigger benefit because you would probably find that the temporary employees were paid minimum wages as per the bargaining council.”

Considering this view, one of the respondents acknowledged that making use of temporary employees through a TES provider did provide a cost benefit.

D 6: Transcribed Interview - Company F

“…employees employed through labour brokers at the time were earning the MIBCO minimum wage, we were also still paying the administration fee to the labour broking firm, and this still came in less than what we were paying our permanent employees.”

But in most instances the view existed that there was no cost benefit as the associated administration fees would either nullify the perceived benefit, or make the use of temporary employees through TES providers more expensive.

96 D 2: Transcribed Interview - Company B

“…if the work requirements are the same as the permanent employees then the exact same rate should be paid. It makes our temporary employees more expensive than our permanent employees because we have to pay an admin fee to our labour broking company.”

D 3: Transcribed Interview - Company C

“…labour cost pre- and post- the change in legislation has been pretty much the same because you were paying the full rate of a full-time employee to the labour broker, the only difference is that the temporary worker was probably not seeing all of it in the past.”

D 4: Transcribed Interview - Company D

“…before the amendments the temporary employees earned a lower rate than our permanent employees, but when you take into consideration the administration fee that we pay to the labour broker the cost to the organisation was pretty much the same.”

It is therefore evident from the before mentioned findings that if the rate of pay to permanent employees before the amendments was higher than the combined costs of temporary employee wages and the associated administration fees, a cost benefit in terms of financial flexibility could be achieved.

A final point worth considering involves employee benefits associated with permanent employees only. Temporary employees are not always entitled to company specific employee benefits, and therefore by making use of temporary employees through TES providers the business is able to avoid paying these associated benefits to all employees working in their operations.

97 D 5: Transcribed Interview - Company E

“Before the amendment came into effect the only difference has been the legacy cost which I discussed earlier, where we paid employees with longer service a higher rate. Otherwise we pay TES employees and permanent employees the same, council minimum rate.”

The “equal work for equal pay” clause outlined in the EEA prohibits unfair discrimination in terms and conditions of employment between employees performing the same or substantially the same work or work of equal value.

Following the amendments, this clause has nullified all flexibility in terms of labour cost that existed in the past. The bellow responses from the participants is illustrative of the impact of this change in legislation following the amendments.

D 2: Transcribed Interview - Company B

“It is not really a cost benefit as we pay our temporary employees the exact same rate of pay as our permanent employees, because of the equal work for equal pay they all get the same benefits.”

D 3: Transcribed Interview - Company C

“To be quite honest it is only that now because things have changed in terms of equal work for equal pay, and you now have to pay the temporary employee the same wage as the permanent employee…”

D 4: Transcribed Interview - Company D

“…they would be paid the same rate that you would pay your permanent employees because of equal pay for equal work as outlined in the legislation.”

D 6: Transcribed Interview - Company F

“I was going to bring up the equal work for equal pay but I did not want to complicate the matter even further. This is exactly what has happened.”

98

As can be seen from the responses of the respondents in terms of financial flexibility before the amendments, not many organisation were making use of temporary employees through TES provides to influence the level of pay towards the employees. Although in some instances there are ways to obtain a cost benefit, in most instances it seems as if the use of temporary employees through TES providers came at a cost to the business. The impact following the amendments has ended up to be somewhat of a give and take result. Although temporary employees and permanent employees are now being paid the same rate, with the absence of the TES providers the administration fees have been eliminated.

D 4: Transcribed Interview - Company D

“We may however be able to save on some cost as opposed to using labour brokers today. You now have to pay the employees that same rate, and if you were to add the labour broker administration fee on top of that it would become more expensive.”