The primary research question of the study involved exploring the impact that the amendments to section 198 of the LRA have on labour flexibility in the Nelson Mandela Bay automotive component manufacturing industry. To establish whether the study was successful in addressing this primary research question, consideration needs to be given to how successful it was in addressing the secondary research questions. The findings pertaining to the research questions are summarised below.
The results revealed two main categorical approaches in response to the LRA amendments. The interpretation and decisions pertaining to the amendments to section 198 of the LRA, by the respective respondents, is the defining factor from
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which these two distinct categories emerged. The first category involves businesses that opted to comply with the legislative change, whilst the second category involves businesses that opted to wait and see how the change in legislation would unfold once tested in the courts. Although these businesses believe that the labour court ruling could result in a change in their approach, they have indicated that this stance will remain until proven otherwise. As this section aims to summarise the research finding pertaining to the research questions, this section will focus on the findings related to the businesses that opted to comply with the associated legislative change.
5.2.1 How have the amendments to sections 198 of the LRA influenced numerical flexibility?
The empirical results revealed that before the LRA amendments came into effect all the respondents indicated that numerical flexibility was the primary means to achieve labour flexibility within their respective organisations. Whether there was a need for an increase or a decrease in the number of employees required, the highly unregulated use of temporary employees employed through TES providers offered the ultimate means of flex in terms of labour.
In response to this research question, one can conclude that following the amendments the opportunity to flex in terms of numerical flexibility has been abolished, as in all instances businesses resorted to temporal flexibility to remain flexible in terms of labour. A summary of the impact that this shift had on the businesses that were targeted for this study will be discussed in the research question that follows, as the second research question seeks to ascertain the effects that the amendments to the LRA had on temporal flexibility.
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5.2.3 How have the amendments to sections 198 of the LRA influenced temporal flexibility?
In contrast to numerical flexibility, the empirical results revealed that prior to the LRA amendments coming into effect temporal flexibility had an insignificant role to play in achieving labour flexibility. Any need to be flexible in term of hours worked was compensated for by means of an increase or a decrease in the number of employees. This is indicative of the fact that before the change in legislation, businesses changed the number of employees to effectively influence the number of hours’ work required.
Following the legislative change, temporal flexibility became the ultimate flex in terms of labour as opposed to numerical flexibility in the past. This shift from numerical flexibility to temporal flexibility predominantly came in the form of short-time or retrenchments, depending on whether an increase or decrease in labour demand or working hours was required. Considering these two alternatives in response to the research question, conclusions can be made that the impact following the amendment was significant. This statement is supported by associated factors that emerged from the research, as well as common knowledge and experience that the researcher possesses in terms of the influences or effects that over-time and retrenchments could have on businesses.
As per legislation the cost of overtime is one and a half times the normal rate of pay, and whilst overtime still provides businesses the ability to remain flexible, it comes at a premium rate that significantly influences the associated manufacturing costs. The question in response to this finding is to what extent businesses can absorb this increase in costs and still remain profitable. Consideration also needs to be given to employee performance levels when working excessive overtime.
While many employees are generally happy to work as much overtime as available, excessive overtime can result in decreased levels of productivity, increased absenteeism, increased staff turnover rates, and safety risks because of
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fatigue. The latter may not be emergent findings within the study, but it would be naïve to ignore these potential consequences considering the impact that it could have on employee morale and business performance.
As in the case of overtime, the influence or effect of retrenchments (as the only alternative for businesses to retain flexibility in terms of reduced labour requirements), could also have substantial drawbacks on business profitability and feasibility. The ever-looming possibility of future retrenchments poses serious questions related to employee job security, morale and motivation, in addition retrenchments open many doors for legal disputes in terms of fairness, and result in excessive costs associated with compensation requirements as per the relevant legislation.
5.2.4 How have the amendments to sections 198 of the LRA influenced financial flexibility?
The empirical results revealed that in both instances, before and after the LRA amendments, employers had limited scope to influence the rate of pay towards temporary employees. However, if one were to assess the cost of labour in terms of total cost, some flexibility existed between the rate of payment towards temporary employees and permanent employees. The argument therefore exists that businesses that paid their permanent employees at a higher rate than the MIBCO minimum wage, did in fact obtain a benefit in terms of financial flexibility. In the absence of temporary employees following the amendments, and the equal work for equal pay outlined in the EEA, this financial benefit will disappear as all employees will be permanent and payed at the same rate. These businesses will now have more permanent employees; all being paid the same premium rate.
Although the respondents indicated that temporary employees were not being utilised with the intent to obtain a cost benefit in terms of financial flexibility, the way financial flexibility could have been obtained has certainly been removed.
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5.2.5 What are the significant decisions businesses have made in response to dealing with the amendments to section 198 of the LRA?
The decisions taken by businesses largely depended on their interpretation of the amendments to section 198 of the LRA. As mentioned in the introduction to this section, two primary approaches exist among the respondents of the study.
Businesses either waited to see how the new legislation would play out in the courts, or opted to become compliant with the new legislation. In the first instance, businesses continued to operate as normal, keeping the status quo in terms of labour and continued with the traditional use of TES. Only time will tell how these businesses will be affected by, and respond to the legislative change.
In the second instance, businesses that opted to become compliant were the ones that implemented the most drastic measures in response to the legislation. The most significant secondary responses to the amended legislation is summarised below:
a) Businesses opted to terminate all contracts with TES providers and exited the use of temporary employees through TES.
b) Businesses decided to make use of fixed-term contractors within the boundaries of the amended legislation.
c) Businesses took upon themselves the burden of managing and administering any future temporary labour with internal resources.
d) Businesses opted to either appoint existing temporary labour employees permanently, or terminated the contracts of temporary employees in line with operational requirements.
e) Businesses accepted the associated cost implications in terms of overtime and retrenchments as a condition to become compliant.
The above decisions all fall under the umbrella of the broader definition of labour flexibility which includes numerical, temporal, and financial flexibility. In summary,
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the decisions outlined above are indicative of the extent to which these businesses are prepared to sacrifice their ability to be flexible in terms of labour, and the value they place on becoming complaint with the new legislation.