South African business is increasingly looking at alternatives to direct employment as employing workers was becoming too onerous, Production Management Institute (PMI) director John Botha said on Wednesday.

He said companies were opting for alternatives, such as outsourcing, sub-contracting, automation, off-shoring and new technology.

“There is no motivation for employers to employ more staff than absolutely needed because of statutory inflexibility, over-regulation and sanctions, as well as the absence of incentives. As a result, we are seeing and will continue to see companies increasingly focus on alternatives to direct employment relationships,” he said.

Botha also predicted that companies might increase independent contracting relationships at the expense of direct employment. “This will be evidenced in outsourcing practices, sub-contracting, off-shoring, the use of temporary employment services and the like.”

He believed that the net effect of the amended broad-base black economic empowerment (BBBEE) codes was to drive outsourcing rather than direct employment, given the significant weighting on procurement and enterprise development.

“These new labour bills would have a profound impact on human capital practices and BBBEE credentials. Human resources functions and departments are shrinking as employers strive to fulfil those functions without employing more people.

“Corporate human resources was already heavily regulated by the BBBEE Act. Coupled with the revised labour bills, employers are simply avoiding liability completely and, instead, optimising business processes through strategic procurement, minimalistic employment, technology and mechanisation,” he said.

Botha also said inconsistencies between some of the provisions of the labour bills – particularly the Employment Equity and Labour Relations Bill Amendments – were “astonishing”.

“The most significant example of such contradictions lies in the Labour Relations Bill, which limits equal pay for work of equal value to vulnerable persons. At the same time, the Employment Equity Bill proposes equal pay for all employees – from general workers to managing directors,” he noted.

Botha pointed out that many of the amendments effectively undermined some of the strategic national goals articulated in the National Development Plan, the New Growth Path and the National Skills Accord, all of which promoted job creation.

The changes to South Africa’s labour laws, proposed as far back as 2010, are currently before Parliament.