How staff outsourcing can help avoid wage strikes

Strike action is so destructive to a business’ operations, it comes as no surprise that organisations are willing to go to extremes to avoid such devastation.

It was recently announced that government and labour and business agreed to a package of labour market reform which will see R20/hour as the minimum wage. This arguably provides more benefits to the labour movement than it does to business. However, this is the price business is willing to pay to reduce labour market tension.

The South African government, business, community sector and the labour federations represented at Nedlac signed the agreement earlier this year in Cape Town. The agreement came in the wake of years of destructive labour unrest, particularly in the mining industry, which wreaked untold damage on the economy and on job creation.

Faced with the option of paying a wage that many businesses really cannot afford, or alternatively risking their entire business destroyed by prolonged strike activity, Nedlac opted for the former. Nonetheless, individual companies may feel they cannot afford that leap in their wage bill. However, strikes at a local level could be avoided in other ways.

Strike action typically doesn’t happen from any principled stance by either labour or business, but because the situation is not anticipated or managed and simply drifts out of control. A viable solution to eliminating the strike factor is by outsourcing your staff. We employ more than 6,000 staff whom we contract out to various clients, and in our experience, if you take care of your staff they will take care of you.

It also makes the commitment that should there ever be a strike, alternative staff are put on site at the client to ensure its operations are not affected. South Africa’s economy has become an extremely competitive one, and losing business through a strike is a serious blow. While some companies are strong enough to survive the damage, they may still lose market share. Weaker businesses could go under as a result of industrial action.

It is not just its client companies that benefit, but also the workers who often in the past found themselves embroiled in strike action against their will due to union pressure. This takes as great a financial toll on the lives of staff as it does on the company, as employees are not paid for the days they are on strike. In fact, a prolonged strike may also mean striking workers never truly recover financially.

The labour agreement also introduces secret strike balloting, advisory arbitration and agreed standards of conduct during industrial action (including by the police and private security companies) and this is a step in the right direction which should reduce the propensity for violence and the length of strikes.

This is going to become the higher priority, if the Nedlac deal achieves its aim of reducing strike activity. The price tag for securing labour’s co-operation was steep: it is estimated that R20/hour (R3,500/month for a 40-hour week) national minimum wage will raise wages across nearly half of South Africa’s businesses.

Many small businesses are panicking that it will put them out of business. Staff outsourcing is an option they should consider as it can save a business up to 60% in operational costs instead of letting things drift until they inevitably are forced to close their doors.

Arnoux Maré is the Managing Director of Innovative Staffing Solutions.

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