OUTSOURCING
THE OUTSOURCING OF FACILITIES MANAGEMENT SERVICES IN THE PUBLIC SECTOR A sustainable pathway to inclusive stakeholder value through partnership
O
ver the past few years, there has been much debate and discourse around the topic of job creation. Against a backdrop of an unemployment rate that continues to increase year-on-year and more than 63 % of the country’s youth (ages 1524) that are currently unemployed, it is clear that South Africa is in desperate need of a new trajectory that will curtail job losses, boost the economy and create a desperately needed environment that is geared towards growth and job-creation. The role of organized labour in society The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social and economic justice through setting international labour standards. One of its core objectives is the achievement of decent and productive work in conditions of freedom, equity, security and human dignity. Similarly, the South African government has also pledged its commitment to the attainment of decent work and sustainable livelihoods for all workers and has undertaken to mainstream decent work imperatives into national development strategies. At the core of decent work is job security, a living wage and the right to join a trade union. The job market in South Africa can be classified into economies: The Real Economy and the Parasite Economy. In the Real Economy, employers
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Municipal Focus
pay their workers a living wage. These jobs provide the income, benefits, and security necessary to participate robustly in the economy as a consumer and taxpayer. It also drives production and demand and creates tax revenues that support the Government’s developmental agenda in service to its citizens. On the other side of the spectrum, however, lies the In the Parasite Economy where employers fail to pay their workers a living wage and where companies (both large and small) cling to a business model where they pay less than the minimum. Nonstandard hiring practices, such as casualisation and labour broking, fall under this classification and these practices are prevalent in both the private and public sectors. Separating the wheat from the chaff: outsourcing is not labour broking Somewhere along the way, and because of noises made largely by unions and labour interest groups, outsourcing has been lumped together with labour broking. Consequently, these two terms are today being used interchangeably. This is an unfortunate, inaccurate and unfavourable characterization of outsourcing. Labour broking couldn’t be any further from outsourcing. • Labour broking is more inclined towards temporary or casual employment arrangement and is, by its very nature, transactional. It is a means to an end and
Jamie Louw, Financial Director at FM Solutions and Director of Afroteq Advisory
leaves no lasting benefit after such an arrangement is done. No cognizance is given to the longevity of employment or the quality of work from an ongoing employment perspective. As a consequence, it has in some instances been exploitative and has a checkered record in respect of its core intention, which is rooted in a “cheap” labour deployment approach. • Outsourcing differs dramatically from any form of labour broking in that it creates fixed-term and permanent employment. Employees are entitled to the full benefits of employment and are afforded protection under the Labour Relations Act. Outsourcing is a legal form of contracting in the public sector, and in fact, serves as an essential cog underpinning the government’s ability to render services to all stakeholders in South African society.
