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Sub-contracting and Collective Bargaining:
An Investigation into Trends Towards Sub-contracting and
Informalisation/Casualisation and the Viability of a Centralised
Bargaining Council for the Western Cape Building Industry.
A Research Report
presented to
The Graduate School of Business
University of Cape Town
In partial fulfilment
of the requirements for the
Masters of Business Administration Degree
By
Dean Jordaan
Greg Slingerland
December 2000
Supervisor: Professor Frank Horwitz
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Acknowledgements
This report is not confidential. It may be freely used by the Graduate School of
Business.
We wish to thank Professor Frank Horwitz of the Graduate School of Business for
his insight and direction in regards to finding data and existing information on
this subject, in particular the work conducted by the Horwitz Commission.
We certify that except as noted above the report is our own work and all
references used are accurately reported in footnotes.
Signed:
Dean Jordaan Greg Slingerland
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Sub-contracting and Collective Bargaining:
An Investigation into Trends Towards Sub-contracting and
Informalisation/Casualisation and the Viability of a Centralised
Bargaining Council for the Western Cape Building Industry
Abstract
This study investigates the trends towards sub-contracting and increasing
casualistion/informalisation within the Western Cape building industry. The
relevance and changing role of an industry bargaining council is considered in
this context.
A survey of the role-players within the industry reveals significant levels of
informal and labour-only sub-contracting. The Building Industry Bargaining
Council (Western Cape) is strongly criticised in terms of its relevance to current
industry conditions as indicated by the high levels of non-compliance with its
Agreement governing terms and conditions of employment.
The findings are discussed and arguments put forward as to the viability of the
BIBC and what changes and reforms would need to take place to ensure its
continued survival.
Keywords: bargaining, bargaining council, building, casualisation, centralised
bargaining, construction, labour-only sub-contracting, informalisation,
outsourcing, sub-contracting, trade union.
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Contents
Acknowledgements .......................................................................... i
Abstract ...................................................................................... ii
1 Introduction ............................................................................ 1
1.1 Background to the Research.................................................... 1
1.2 Purpose of the Research ........................................................ 2
1.3 Statement of the Research Problem .......................................... 3
1.4 Scope and Limitations ........................................................... 4
1.5 Report Layout..................................................................... 5
2 Literature Review ..................................................................... 6
2.1 A Historical Perspective of Labour Relations ................................ 6
2.1.1 North America and Canada................................................ 6
2.1.2 Labour Sub-contracting in Singapore and Japan....................... 8
2.1.3 Implications for Occupational Health and Safety .................... 11
2.1.4 Occupational Health and Safety in Australia.......................... 14
2.2 Casualisation and Outsourcing in South Africa ............................. 15
2.2.1 Casualisation ............................................................... 15
2.2.2 Outsourcing................................................................. 16
2.2.3 Sub-contracting ............................................................ 18
2.3 Centralised Bargaining in the Building Industry ............................ 20
2.4 The South African Building Industry.......................................... 23
2.4.1 The History of Bargaining Councils ..................................... 26
3 Research Methodology ............................................................... 28
4 Findings ................................................................................ 30
4.1 The State of the Building Industry ........................................... 30
4.1.1 Training ..................................................................... 31
4.1.2 Health and safety.......................................................... 32
4.2 The Effects of Non-Compliance............................................... 32
4.3 The State of the Bargaining Council ......................................... 34
4.3.1 Employer Perspective..................................................... 34
4.3.2 Employee Perspective .................................................... 36
4.3.3 Future Options ............................................................. 37
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5 Discussion and Analysis .............................................................. 41
5.1 Understanding Trends .......................................................... 41
5.2 Analysis of Options.............................................................. 42
5.2.1 Increased Regulation...................................................... 42
5.2.2 Maintain Status Quo....................................................... 43
5.2.3 Free Enterprise ............................................................ 44
5.2.4 Reform ...................................................................... 45
6 Summary and Conclusions........................................................... 50
7 References............................................................................. 51
8 Appendices ............................................................................ 53
8.1 Appendix 1 – Interview Questionnaire ....................................... 53
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1 Introduction
1.1 Background to the Research
The characterisation of the construction industry as a ‘casual’ industry stems
from the particular requirements associated with the nature of construction
work. The product is immobile and produced at the point of construction; work
is highly prone to seasonal fluctuations; demand can be erratic; and the
production process continues to rely heavily upon the use of traditional skills
and crafts. Mechanisation and systems building have occurred, but the industry
remains essentially labour-intensive and the production system inherently less
amenable to routinisation than in the case of other industries. (Bresnen,
1985:108-109)
Generally speaking products are produced at a specific location and then
transported to a point of sale. A building is constructed on the ground and
goods are brought to the location where they are put together, finally
culminating in the end product a completed building. Construction companies
therefore face immobility or location specificity of products.
Construction companies are routinely faced with marked fluctuations in their
workload. It is well known that the demand for buildings is sensitive to
movements in the interest rate. The building industry is therefore susceptible
to economic cycles.
The tendering system also fosters fluctuations because contracts are generally
won as single projects and the completion of the project leads to discontinuities
in the construction companies’ workload and output, unless a new contract is
won.
Coupled to the above, construction activity is labour intensive owing to its craft
based nature, the pre-dominance of wet trades (concrete, brickwork, and
plaster) and the variety of materials and components assembled on site. The
traditional techniques, some originating several centuries ago, are in many
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cases still performed today because they are economically viable, but are highly
labour intensive.
The construction industry structure is characterised by ease of entry, a large
number of small and under capitalised firms, competitive bidding and a high
rate of business failure.
All of these factors have given rise to the phenomenon of labour-only sub-
contracting (LOSC). Building sites are now significantly staffed by casual labour
who are loosely organised and paid on a daily basis.
In South Africa, these LOSCs fall outside of the ambit of the regional Building
Industry Bargaining Council (BIBC), a formal body that represents the industry
for the purposes of central bargaining. The fact that they operate (at a lower
cost) outside of the BIBC Agreement (which imposes a higher labour cost) has
increasingly placed the formal participants in the industry at a competitive
disadvantage. In the face of a changing industry, the BIBCs for Natal and
Gauteng have closed their doors. Unable to come to terms with the pressures of
changing times, they could not maintain their relevance to their regions.
1.2 Purpose of the Research
The BIBC for the Western Cape finds itself at a crossroads. The last decade has
seen a steady increase in the trend towards informalisation/casualisation.
The traditional employers within the industry, the large contractors, have
reduced their staff levels to a small core of project managers and specialist
artisans. This in response to economic pressures, as they try to reduce the
labour costs associated with permanent staff during cyclical downturns.
The small contractors find themselves unable to compete with the increasing
number of informal and labour-only sub-contractors on a cost basis.
Union membership is dropping because the informal and labour-only sub-
contractors operate outside of a union context.
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The industry is bound by a BIBC Agreement, which defines conditions of work
and the remuneration system. It is known that there are high levels of non-
compliance with the Agreement, both by the informal sub-contractors, and the
formal sub-contractors. Furthermore, the BIBC is widely criticised throughout
the industry in terms of its relevance to current industry conditions. Finally,
the BIBCs in both Natal and Gauteng have been disbanded in the face of similar
pressures.
This research report seeks to explore the trends both locally and internationally
towards informalisation/casualisation, investigate the perceptions and opinions
of the different players in the Western Cape building industry as to the role of
the BIBC and conclude with observations as to the future of the BIBC for the
Western Cape.
1.3 Statement of the Research Problem
The research report will be guided by the following propositions:
The BIBC has lost its relevance as a central bargaining mechanism within
the Western Cape building industry in the face of increasing trends
towards informalisation/casualisation.
The main contractors are strongly critical of the BIBC and would prefer to
end their involvement in the BIBC
The formal sub-contractors are strongly critical of the BIBC but would be
in favour of the continued existence of the BIBC
The trade unions in the building industry have a clear preference for
continuing and strengthening the BIBC
The informal and labour-only sub-contractors view the BIBC as irrelevant
and would be in favour of disbanding the BIBC.
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1.4 Scope and Limitations
This research project was initiated in parallel with a commission investigating
the effects of sub-contracting on collective bargaining in the building industry in
the Western Cape.
The Commission was formed to investigate and report on:
The effects on the BIBC, its parties and the application of collective
agreements, of the growth of informal sector sub-contractors, especially
labour-only sub-contractors.
The impact of these developments on conditions of employment and
employment standards set by the BIBC.
The development of a bargaining framework and arrangement that
integrates both flexibility and fair and stable employment practices.
The investigation considered the:
The role, effect of and needs of the informal sub-contractor.
The role, effect of and needs of the formal, specialist sub-contractor.
The role, effect of and needs of the trade unions.
The role, effect of and needs of the main contractor.
The feasibility of alternative mechanisms of setting wages and conditions
of employment.
This research project therefore benefited from a body that had credibility
within the building industry and that had broad co-operation from the various
role players in terms of information gathering.
The nature of the informal sub-contractor however, implies that it is in their
best interest to remain anonymous from the Receiver of Revenue and BIBC. The
extent to which they would participate in the Commission would likely be
limited therefore.
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1.5 Report Layout
The report is laid out as follows:
A literature review explores trends in the building industry both
internationally and locally. The building industry in the Western Cape is
examined in greater detail, as is the BIBC for the Western Cape.
The research methodology used to gather the data for this report is
explained.
The findings are analysed with a view to establishing cause-effect
relationships and areas of agreement and difference between the role-
players within the Western Cape building industry.
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2 Literature Review
2.1 A Historical Perspective of Labour Relations
2.1.1 North America and Canada
During the 1960’s the American and Canadian construction industry’s labour
relations were characterised as unstable and even chaotic. It was a period in
which economic expansion and decentralised bargaining structures produced a
sharp increase in strike activity. During this time there was an imbalance of
bargaining power, in favour of the building trades. This was as a result of highly
fragmented bargaining structures, (trade, sector and geographical area) the
absence of employer solidarity, and the lack of cohesion within and co-
ordination among employer associations. Unions were able to brow beat weak
employer associations and leap frog wage settlements within and among labour
markets. The outcome of these negotiations was higher prices that were
ultimately passed on to the consumer.
There were several reasons why employers lacked solidarity. Firstly, employer
associations had little or no effective direction and control over members. This
was further exacerbated by the building unions exploiting such weaknesses,
often by reaching interim settlements with individual contractors and applying
pressure tactics on other contractors, by selective strikes. Secondly, employer
association membership was voluntary and individual business did not have to
belong to an employer association to survive. The proliferation of employer
associations contributed to the problem – they did not provide a united front.
The rise in strike activity and wage inflation in the 1960’s focussed public
attention on the construction industry. In response to this the 1970’s became a
decade of legislative change. The legislators recognised that many of the
general principles in collective bargaining legislation were ill suited to the
unique features of the American and Canadian construction industries. Most
labour codes were amended to promote stronger employer associations, broader
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based bargaining and ultimately stable labour-management relations. These
changes had a profound effect on employer and union organisations. By the end
of the decade, local bargaining ceased to be the dominant bargaining structure
and was replaced by provincial wide negotiations, co-ordinated by provincial
employer and union bargaining agents. This significantly improved the
collective bargaining process.
By providing legal underpinnings for multi-employer bargaining, accreditation
has enabled employers to establish more effective associations and reduce their
vulnerability to union divide-and-conquer tactics. The consolidation of
bargaining structures also reduced the frequency of strikes and an important
source of wage inflation, namely the ability of construction unions to leapfrog
wages within and among labour markets. (Rose 1986: 17)
Despite these improvements, broader based bargaining did not produce stable
bargaining outcomes. As a result of strong demand and inflationary pressures,
wages rose faster in the 1970’s than in the 1960’s. Concerns about bargaining
outcomes and the competitive position of unionised construction intensified in
the 1980’s.
In many countries, the 1980’s were a decade of economic upheaval and
uncertainty. It began with a surge in demand, rising interest rates and
inflationary pressures, and the global economy was plunged into the worst
recession since the 1930’s. The western economy experienced high interests
rates of both inflation and unemployment.
The 1981-82 recession altered the competitive structure of construction in
Canada. The rise of non-union construction is evident throughout Canada, with
Western Canada experiencing the strongest competitive shocks. Non-union
construction nearly doubled in the 1980,s. Non-union competition was
influenced by political and legal factors, combined with a severe economic
downturn. The emergence of non-union competition can also be linked to
employer dissatisfaction with collective bargaining outcomes.
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2.1.2 Labour Sub-contracting in Singapore and Japan
The Singapore construction industry is faced a number of problems; one of them
a severe labour shortage, which Singapore has experienced since the early
1970’s. The labour shortage is due to the unfavourable image that the
Singapore construction industry has been burdened with. Construction work is
largely viewed by local workers, as dirty, dangerous and demanding, coupled
with an average working week of more than 50 hours. Therefore the
construction industry relies heavily on foreign workers and a system of labour
sub-contracting. (Debrah and Ofori 1997: 692)
Most construction companies in Singapore do not employ full time site labour,
skilled or unskilled. Instead, they rely on a labour sub-contracting arrangement
known as the Kepala system. This same approach prevails in the construction
industries of many of the countries in the East Asia region, including Hong Kong,
Japan and Malasia.
Labour sub-contracting has been a feature of Singapore’s construction industry
for more than a century. A recruiter would arrange the travel, lodging and work
placement for the would-be immigrant. The immigrant worker acquired skills
through an apprenticeship with a master tradesman. Upon completing his trade
the skilled apprentice would work for his master or for other masters. Close-
knit groups of skilled artisans were formed around a leader who was usually
multi-skilled, and were paid on a daily basis, as and when the leader found work
for the group.
The colonial authorities and clients found the system a convenient way of
obtaining labour. By contacting one person, they could have a complete group
of skilled and cohesive workers. The term Kepala, a Malay word, which means
head or leader, evolved.
The typical Kepala (leader) was a skilled tradesman until fairly recently. At
present many Kepala’s have no construction experience and are strictly
suppliers of labour. The relationship between the Kepala and the workers is
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now a straightforward employer – employee relationship. Kepala’s now range in
size from a few workers up to fifty workers. Kepala’s are today often a single
man with a mobile phone.
The Kepala system epitomizes labour ‘casualism’ in construction. Construction
companies in Singapore rely on a labour-only sub-contractor (LOSC) to provide
them with a floating pool of skilled and unskilled site labour, from which the
required number of tradesman and labourers are engaged from project to
project and some times on a weekly basis. This use of casual labour relieves the
main contractor of contractual obligations to the labour force and makes it
possible for the main contractor to respond effectively to fluctuations in
demand. (Brensen 1995: 109)
The Kepala system has a number of negative effects on the construction
industry in Singapore, namely, low productivity, poor site safety. Flexibility and
other benefits of subcontracting are achieved at the expense of managerial
control of the construction work force.
‘The peculiar nature of construction makes it difficult, if not impossible, for the
industry to draw on the range of management control and recruitment devices
available to ‘static’ companies in a ‘conventional labour market.’ (Drucker and
White 1995: 77)
The Kepala system reinforces the hire and fire approach. Staff can be dismissed
on a variety of grounds at a day’s notice or with a day’s pay in lieu of notice.
This contributes to the industry’s poor image. As the casual worker has no
attachment to the main contractor, the workers under the Kepala system are
seldom sponsored for training and as the Kepala system is a self-employment
system, the Kepala does not sponsor training programmes. The Kepala system
has been linked to the low productivity and poor workmanship. The
construction industry has the lowest productivity levels of all the economic
sectors in Singapore. Quality of workmanship is also affected by the Kepala
system, this arises from poor discipline that in turn results in poor housekeeping
on site - there is no overall direct control of workers in the various Kepala’s on
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site. The Kepala concentrates on achieving the highest volume of output at the
lowest possible cost of labour, rather than focussing on quality of workmanship.
This attitude also leads to the wastage of materials, as the Kepala adopts the
quickest and not necessarily most efficient methods. As the main contractor
relies on casual workers and sub-contractors, they tend to increase productivity
by intensifying work rates rather than organising work better and providing
better equipment with which to do the work.
Attempts have been made to reform the Kepala system within the Singapore
construction industry, but are highly entrenched and no viable alternative has
been proposed. Despite efforts by the government to reform the construction
industry, they have not been able to replace its labour requirements as the
construction industry relies on labour intensive techniques. There has been an
upsurge in construction demand and an increasing proportion of the industry’s
work comprises of maintenance and alterations, which is more labour intensive.
In Japan, as in Singapore, sub-contractors undertake all direct construction.
The sub-contractor employs labour and provides training for their personnel.
Most sub-contractors work for one main contractor and a long-term relationship
is built up between the main contractor and the sub-contractor. The main
contractor is obliged to foster the interests of the sub-contractor and will
ensure that the sub-contractor has continuity of work. In Singapore the sub-
contract is awarded solely on price, establishing close links between the main
and sub-contractor is not a priority. The Japanese sub-contractor has sufficient
technical expertise to offer advice to the main contractor on design issues.
(Debrah and Ofori 1997: 704)
By relying on the Kepala’s for the training, site safety and human resource
issues, contractors will continue to invest little in the training of casual and sub-
contractor labour. Poor quality, low productivity, high inefficiencies, wastage
of material, lack of human resource management and the persistence of the
poor image in the Singapore construction industry are the result.
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2.1.3 Implications for Occupational Health and Safety
Over the last 20 years labour markets in most industrialized countries have
undergone a number of significant changes. There has been a shift in
employment structures and work arrangements, with a growth in self-
employment, casual, temporary and part time work. There has been a
corresponding decline in the proportion of the workforce with permanent
employment. (Quinlan 1999: 428)
There has been little research into the OHS effects of labour market
restructuring. Many of the effects have been masked, under reported or are
completely missing from OHS statistics. The reason for this is that self employed
and casual labour are excluded from workers compensation cover and often the
injured do not report the incident due to ignorance, financial pressure to keep
working or fear of losing their jobs.
The US Bureau of labour statistics annual census of fatal occupational injuries
has consistently shown that self-employed workers account for +- 20 percent of
fatal injuries but represent only around 8 percent of the employed workforce.
(Quinlan 1999: 432)
A Finnish study of 99 serious accidents, found that the risk of injury was
significantly higher for sub-contractors. Sub-contracting increased the accident
risk one and a half times. The accident risk of workers employed by sub-
contractors was higher than that of workers for main contractors. (Salminen
1993: 356)
The causal factors that have been identified as the major causes for the
increase in injuries to workers who carry out work on a sub-contract basis are as
follows.
Fierce competition for work among sub-contractors and payment by results
systems encourage a range of hazardous practices including evading legal
requirements to save time and money. The use of sub-contractors often creates
a more fractured and complex work process and management structure, which
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leads to disorganisation. Regulations that focus on permanent employees in
large workplaces fail to address sub-contracting effectively. Sub-contractors
typically do not have the resources to comply with the OHS. Adverse OHS
effects are most pronounced in the case of self-employed workers who operate
in a less regulated context.
Labour shedding by large organisations, combined with outsourcing and
franchising, has contributed to a growth in small businesses. This affects OHS in
a number of ways.
Increased work loads/deadline pressure, longer hours
Loss of corporate memory, technical expertise and experienced
personnel, which is exacerbated by older workers taking redundancy
packages
Rising levels of stress related illnesses
Insecure workers view health promotion as a burden and avoid health
services for fear the information would be used in
redeployment/redundancy decisions
Measuring OHS performance in small business is difficult. The concentration of
casuals, self-employed and family members in these small businesses affect the
levels of workers compensation claims. The reasons for this are as follows.
A low level of OHS awareness and a tendency to place responsibility with
workers
A lower level of worker training
Little or no knowledge of OHS regulations and little contact with OHS
agencies
The generic nature of OHS material, which is not appropriate for small
business, who prefer a more focused approach
A low level of OHS compliance due to ignorance
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There are a number of problems associated with temporary and part-time work.
Part time workers or casuals are less likely to receive training of any kind let
alone training in OHS. Casual employees lack job specific knowledge and
experience, coupled to this is high labour turnover, which weakens the link
between age and job specific knowledge. Casual employees lack the bargaining
power to safeguard their own safety.
It also appears that OHS initiatives have been overwhelmed by the promotion of
competitive tendering/outsourcing. Competitive tendering has undermined the
levels of compliance with OHS. There has been even less recognition for the
need for new compliance strategies for part-time or casual employees.
Labour market changes pose particular problems to worker and union input into
OHS regulations. In most industrialised countries unions make an important
contribution to maintaining OHS standards. Collective labour regimes and union
presence have established a baseline of minimum wages, maximum working
hours and other employment conditions protecting workers as well as creating a
framework for negotiations over OHS. The decline of union density in most
industrialised countries and the growth in casual employment has weakened
worker input in OHS regulation. As the locus shifts to more decentralised
bargaining or individual employment contracts, industrial regimes have
facilitated work intensification and an erosion of OHS standards, particularly
among casual workers with little bargaining power.
In many countries self-employed workers are largely excluded from workers
compensation and few take out adequate private insurance cover, and those
with cover are reluctant to make claims because of economic pressures to keep
working. A significant number will not make claims due to job insecurity,
involvement in illegal practices or ignorance. A significant level of hidden costs
already exists in relation to occupational injury and disease. Costs not met by
employers are passed on to the public health service and the families of the
injured workers.
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Sub-contracting and casual jobs contribute to other regulatory problems
including a substantial loss in taxation revenue, this due to tax evasion via cash
in hand payments to casual workers. The long-term effect of this is that
workers are not financing their own retirement, which will ultimately be an
additional burden to the state.
In conclusion, the growth of casual employees has an adverse affect on OHS by
adding to disorganisation in the workplace and subjecting workers to unfettered
market forces. There is an increased level of risk especially for the already
vulnerable groups, especially women and the young. Labour market changes are
undermining the effectiveness of OHS laws by weakening participatory
mechanisms and stretching inspectoral resources. Outsourcing is eroding the
effectiveness of workers compensation systems and so doing weakening the data
available to drive prevention policies.
2.1.4 Occupational Health and Safety in Australia
As with trends globally, Australia has over the last 10 to 20 years undergone
significant changes wrt the use of various forms of temporary or marginal
workers such as casual and part-time employees. The growth in ‘non standard’
forms of work such as sub-contracting, has been driven by a mixture of
economic priorities, technological and regulatory shifts, and increased product
market uncertainty. This has led to the use of a more flexible and inexpensive
workforce. While outsourcing can deliver short term cost savings and
improvements in competitiveness. There are a number of negative
consequences, such as the under-development of human resources, over
dependence on a large number of suppliers and the difficulty and costs of
associated with co-ordinating a large number of sub-contractors. (Ferris,
Quinlan and Mayhew 1997: 165)
With few exceptions, the overwhelming majority of sub-contractors and self-
employed workers are not covered by workers compensation legislation. The
effect of this is that there is little or no official recording of work related
injuries, to the extent that workers compensation information cannot be used to
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drive prevention. Workers who are denied access to workers compensation are
under financial pressure to carry on working, and often develop chronic
conditions when not treated promptly. Overall though, data is suggestive of a
connection between self-employment, sub-contracting and additional OHS risk.
Economic pressures lie at the heart of the injury and illness patterns identified
for self-employed and employee workers. With few barriers to entry, labour
that is displaced from other sectors of the economy moves in relatively easily.
Working conditions inevitably deteriorate, with rates of pay decreasing and
hours worked increasing as competition for work increases. As more and more
economic rationalisation takes place, the necessity of under-cutting prices to
win tenders and an increasing need for a more flexible labour force has resulted
in more and more jobs being outsourced. Sub-contracting/outsourcing enables
employers to obtain labour to cover peak demand periods, without carrying
additional labour, and overheads during periods of low demand. Most
importantly, both financial and OHS risks can be outsourced. At no point in the
study was OHS perceived as a good economic investment. (Ferris, Quinlan and
Mayhew 1997: 175)
Sub-contracting/outsourcing is a significant and growing phenomenon in
Australia, and this growth constitutes a major reshaping of employment
relationships, the implications of which are yet to receive much consideration.
The re-shaping of the labour force has been primarily driven by economics and
has led to the fragmentation of the labour force, where both financial and OHS
risks have been outsourced. This study reveals that economic survival is
prioritised over OHS concerns and where outsourcing becomes common, OHS
standards are likely to deteriorate for both sub-contract and employee labour.
2.2 Casualisation and Outsourcing in South Africa
2.2.1 Casualisation
South Africa has followed international trends, where casual or temporary jobs
are replacing permanent jobs. A SA Labour Bulletin article captures the
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changing employment practices. ‘Aspirant workers’ would wait at a company’s
gate. A bell would ring. This was the signal that the company would now be
employing casual workers. The workers would storm the gate, wrestling to get
there first. The stronger men usually made it and were employed for the day.
The weaker ones had to wait for the next shift to wrestle their way to
employment. (Vlok 1999: 47)
A casual can be described as an individual who works up to three days per week
for a company. Generally casuals do not enjoy benefits that a permanently
employed person would. This includes medical aid, work-mans compensation
and pension fund benefits.
Casuals are employed because companies do not have enough work to employ
the individual on a full time basis or they have a temporary vacancy. However,
companies often employ casuals for extended periods to cut costs. Because
casuals do not enjoy the benefits that a full time employee does, they are
cheaper to employ and can be dismissed without a retrenchment package,
usually with 24 hours notice. Often casuals are employed for extended periods
of time, without enjoying permanent employment status. Companies avoid this
by appointing different casuals every day. They thereby avoid changing the
casual’s status from casual to permanent. (Vlok 1999: 47)
2.2.2 Outsourcing
Andrew Levy and Associates conducted a survey on outsourcing covering the
period 1994 to 1998. 101 companies completed the questionnaire. The
companies employed 120 746 workers. 80.1% of the companies were unionised.
The following is a summary of the findings: (Kelly 1999: 37)
68.3% of the companies surveyed had outsourced between 1994 and 1998
79% of the companies had outsourced more than once
The majority of workers (90.6%) who were affected were blue collar
workers
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Companies gave the following reasons for outsourcing:
Economic (41.4%)
Restructuring (17.1%)
Control (37.4%)
New technology (4%)
40.5% of the companies reported that retrenched employees had been
absorbed by the outsourcing company
44% of the companies stated that the hiring of retrenched employees was
a condition of the contract with outsourcing company
In only 25% of the cases were workers employed on the same terms and
conditions of employment as before
56% of the companies experienced problems
A common complaint was that the outsourced employees were not as
committed to the company as the existing staff. They were not well
informed on the company culture and procedures and were often
inexperienced and needed intensive training.
Companies considered the following when selecting a service or company:
Service, expertise (36%)
Cost, administration, control (30%)
Track record, reliability (16.5%)
Employment practices, policies (15.9%)
94% of companies reported that they would recommend outsourcing
65% of companies were thinking about outsourcing in the next two years
As the debate around the flexibility, or rigidity, of the South African market
rages on, companies continue to outsource and avoid the difficulties associated
with human resource management. (Kelly 1999:39)
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2.2.3 Sub-contracting
Other terms used for sub-contracting are contracting, outsourcing and
partnering. While there are different kinds of sub-contracting, they all have
one thing in common. Sub-contracting replaces an employment contract with a
commercial contract. In an employment contract a worker agrees to do certain
work for an employer. The employer provides the material, tools, premises etc
to carry out the work and pays the employer for the work. The employer has to
implement the relevant legislation governing the treatment of the worker. In a
commercial contract the company does not employ permanent (or even casual
workers) directly. Instead a company pays a third party to perform a certain
task. The company obtains goods or services from the third party through a
commercial contract. The assumption with commercial contracts is that these
two firms are independent and each firm operates on an equal footing. (Kelly
1999: 39)
Sub-contracting is categorised into two forms. Namely, job contracting and
labour-only contracting.
With job contracting, a user company contracts out the supply of goods and or
services to a sub-contractor. The sub-contractor undertakes the work at their
own risk and with their own financial, material and human resources. The sub-
contractor hires, supervises and pays the wages of their workers. The sub-
contractor is paid by the user company for completing the service and not on
the number of people employed or hours worked. For example a plumber who
is responsible for the design and supply of plumbing contract on a building site.
The LRA excludes independent sub-contractors from the definition of an
employee. However, the LRA never clearly defines independent contractors.
The courts have drawn the distinction between people who assist in carrying out
or conducting the business and those who perform the work or services. The
latter are independent contractors. (Kelly 1999: 41) However the sub-
contracted worker is not a independent contractor if the sub-contracted worker:
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Is supervised by the user-company
Does not act independently
Does not own his or her own tools and equipment
Works regular and set hours
Is paid a fixed wage
The courts use the above criteria, but give high priority to supervision and
control of the workers, to determine if a sub-contracted worker is a
independent contractor or not.
Labour-only contracting is co-ordinated by an employment service or labour
broker. The workers are placed on the users premises. They are not employed
by the user company but are generally supervised and controlled by the sub-
contractor. The labour-only sub-contractor (LOSC) pays the workers directly
and has the power to hire and fire.
The LRA (1995 section 198) on temporary employment services protects
temporary workers in the following way. The temporary employment service
and client are jointly and severally liable, if the temporary employment service,
in respect of its employees, contravenes the following:
A collective agreement concluded in a bargaining council that regulates
terms and conditions of employment.
A binding arbitration award that regulates terms and conditions of
employment.
The Basic Conditions of Employment Act.
A determination made in terms of the Wage Act.
Some labour broking companies specialise in supplying user companies with
skilled or specialised workers such as in the IT industry. This form of labour
broking is called specialisation labour broking. Using specialised labour brokers,
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user companies alleviate the administration burden associated with human
resource management, and utilise focussed skills.
Some labour brokers are small businesses whose only function is to supply user
companies with workers. These workers are generally unskilled and are
typically picked up at certain collection points. This form of labour broking and
is called general labour broking.
User companies sometimes sub-contract to informal teams. They take on
contracts as gangs and is known as gang sub-contracting. This type of sub-
contracting takes place in the construction industry. The main contractor sub-
contracts to a bricklayer, consisting of a leader who employs bricklayers and
helpers. The main contractor pays the leader who in turn pays the bricklayers
and helpers. This means that the main contractor does not employ the
bricklayers, instead they are sub-contracted according to a commercial
contract, which in a number of instances is never formally concluded.
Employers also use multiple levels of sub-contracting, known as cascading sub-
contracting. A sub-contractor, sub-contracts to another sub-contractor and so
on. This further complicates the lines of responsibility.
2.3 Centralised Bargaining in the Building Industry
The advantages of centralised bargaining are summarised below.
Centralised bargaining sets basic minimums and basic labour standards.
By setting the basic minimums it prevents undercutting, worker
exploitation and labour practices generally considered unacceptable in
democratic society.
It provides a more efficient way of conducting bargaining, there is a
consolidation of necessary bargaining resources and it allows unions to
allocate skilled negotiators to negotiate on the workers’ behalf. This can
be contrasted with decentralised bargaining, which often works out to be
a mishmash of poor quality agreements, negotiated in haste and without
sufficient care.
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Centralised bargaining is important for trade unions. It allows unions to
promote equality and egalitarian objectives. Without centralised
bargaining it is difficult to try and promote issues in a broad based
manner.
With centralised bargaining, there are many economies of scale that
emerge for both unions and employers. In decentralised negotiations,
workers often negotiate for private medical aids and provident funds,
which are extremely costly and inefficient. With centralised bargaining
one can develop benefit funds that can be more cost effective.
Centralised bargaining increases the powers of both parties. This is
important if there are to be stable industrial relations in a country like
South Africa.
Without centralised bargaining, unions are pushed into a defensive mode.
They deal with issues such as retrenchment in a narrow-minded way,
typically in a reactive mode. With centralised bargaining they are able to
take a much broader of what is going on in terms of industry
restructuring.
A criticism of centralised bargaining is that it can be inflexible.
The global trend is towards to decentralised bargaining, with organisations
restructuring using casual/sub-contract workers and moving away from
employing permanent staff.
South African labour law creates the vehicle for centralised bargaining through
industry specific, regional bargaining councils. The focus of this report is the
Building Industry Bargaining Council (BIBC) for the Western Cape.
The Main Agreement is the council’s primary vehicle for regulating the Building
industry and to a large extent underpins the existence of the council. The Main
Agreement is one of the key regulations that LOSCs evade. An answer as to why
LOSCs avoid compliance needs to be found. What aspects of the Agreement are
particularly onerous for employers and what benefits there are when compared
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to the Basic Conditions of Employment Act (which would apply if the Main
Agreement did not exist)?
The key features of the Main Agreement are:
The Agreement has a 2 year duration
All employer’s and employee’s to whom the Agreement applies must
register with the Council
Casual employee’s, as defined by the Basic Conditions of Employment are
excluded from the Agreement
The maximum weekly hours, of work for general workers is 42.5 hours,
for drivers 44 hours, for watchman 60 hours and for all other employee’s
it is 40 hours.
No weekly limit is placed on overtime. While the daily limit is 4 hours
during the week and 8 hours on Saturdays and Sundays
The minimum notice period is 5 days
There is a provision for temporary lay-offs on one day’s notice of up to 20
days due to inclement weather, shortage of materials, or temporary
shortage of work. Such a temporary lay-off can be extended for a further
20 days. The employer is not liable to pay employees during such lay-
offs.
Severance pay shall be equal to one week’s basic wage for each
completed year of service with the employer.
In addition to wages, contributions to benefit funds must be made by the
employers on behalf of the employee’s.
Deductions from employee’s wages are also made for payment into
council administered benefit funds as well as to cover the cost of running
the councils.
Credits to benefit funds are recorded by means of benefit stamps. Every
employee who works for an employer for at least 33 hours in any week
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shall be entitled to receive benefit stamps in terms of the Agreement.
Employers must buy the benefit stamps from the council.
A dispute resolution procedure is set out for disputes in respect of the
interpretation or application of the Agreement. This provides for
mediation followed by arbitration.
The Basic Conditions of Employment Act is a useful benchmark with which to
evaluate the main provisions of the Main Agreement. Such a comparison reveals
a number of provisions that are similar to those in the Basic Conditions of
Employment Act. Notably, certain provisions in the Basic Conditions of
Employment Act (like minimum wages) are more onerous that those in the Main
Agreement.
This report explores the problems and challenges facing the Western Cape BIBC.
We unfortunately don’t have the benefit of turnkey solutions from either the 1st
or 3rd world to draw from. We need to take into account the specific conditions
in South Africa in any attempts to restructure our central bargaining
mechanisms.
2.4 The South African Building Industry
The South African building industry has undergone significant changes during the
past decade. The building industry has been faced with high interest rates. It is
well known that the demand for buildings is sensitive to movements in interest
rates. The decline in investment in the residential sector of market was 42%
between 1984 and 1999. The commercial sector experienced a 25% decline
between 1982 and 1999. The overall decline in the building sector between
1994 and 1999 was 29%. The effects of this structural adjustment included
many building contractors leaving the industry, the retrenchment of labour and
a drop in profitability. (Snyman 2000: 3)
The building sector has historically been well regulated by regional bargaining
councils, although the itinerant nature of building work has always made
monitoring of compliance and enforcement difficult. The nature of the sector
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has also made union organisation difficult and is generally poorly organised.
“The formal part of the sector in the Western Cape is an exception in this
regard. It has a union density of 78%. By comparison, the unions on the
Gauteng Building Bargaining council represent only 27% of the employees in the
sector.” (Godfrey and Theron 2000: 2).
The product produced has meant that there has always been sub-contracting in
the South African building industry. Few contractors’ posses all the skills and
equipment to complete a building project on their own. Certain building
operations have always been traditionally sub-contracted out to the so-called
specialist sub-contractor. Of these specialist sub-contractors, some are large
and well-established companies, but often sub-contractors are small businesses
that suffer from poor management, infrastructure and administrative capacity,
and cash flow problems. Historically most of the small sub-contractors and
small builders have not registered with bargaining councils. These sub-
contractors/builders tended to exist at the margins of the formal industry and
their non-compliance did not threaten the formal industry or bargaining
councils.
In recent years an entirely new form of sub-contracting has emerged, namely
labour-only sub-contracting (LOSC). LOSC differs completely in a qualitative
and quantitative way from the traditional and specialist sub-contractors. The
specialist sub-contractor is highly skilled, supply all the labour and materials
necessary to complete the work and in certain instances will undertake design
and supply contracts. LOSCs perform only narrowly defined tasks, usually not
requiring a great deal of skill and the main contractor supplies materials. LOSCs
are generally not registered with a bargaining council and usually do not comply
with any other labour regulations. LOSCs are employed in various ways.
Working on a fixed term contract, working as independent contractors, and
often employed as so-called joint venture partners. LOSC has grown to rapidly
over the last decade that it now equals the formal industry in size and is
undermining the bargaining councils. (Godfrey and Theron 2000: 3).
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The 1994 Census of Construction (Statistics South Africa 1994) reveals a decline
in employment from 353 835 in 1991 to 291 522 in 1994. Figures in the Survey
of Total Employment and Earnings indicated the employment numbers have
declined to 225 339 in December 1999. The decline in total employment in the
construction industry has been paralleled by a massive restructuring of working
and employment arrangements, mainly in the form of LOSC.
There are a number of reasons for this upsurge of LOSCs. The starting point has
been the steady decline in building activity over the last two decades. This has
resulted in increased competition, narrower profit margins and cut backs in
government spending on large civil engineering and construction projects.
Running parallel with the decline in construction activity was the emergence of
trade unions for black workers in the construction industry and the participation
of these unions on the bargaining councils. This has placed increased pressure
on labour costs. Combined with the above is the government’s drive to
promote small businesses and most of these small businesses/contractors do not
register with the councils and generally ignore labour regulations.
With the steady decline in building activity, competition has forced employees
to focus on cost, especially labour cost, at a time when unions are exerting
upward pressure on costs through the bargaining councils. Coupled to this was
the emergence of the small contractor who did not register with a bargaining
council. The rapid growth of the informal sub-contractor has undermined the
competitive ability of the formal sector. This resulted in the formal sector
restructuring working and employment arrangements in such a way that a large
portion of their work is being carried out by LOSCs. They see this as the only
way they can lower labour costs and remain competitive. With competitive
tendering, the only way a main contractor can remain competitive is to use
LOSC prices in their tender build up.
The emergence of the LOSC has placed severe pressure on the bargaining
councils. The large number of contractors operating outside the bargaining
council regulatory net has resulted in the growing dissatisfaction of the
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contractors within the net. The Gauteng Master Builders Association (MBA) was
involved in debate, discussion and negotiation with local unions, for more that 2
years. This is in an attempt to level the playing fields between formal and
informal sub-contractors. The consequence of the above is that as of 11 June
2000 the Gauteng MBA terminated their membership as a party with the
Gauteng Building Bargaining Council.
2.4.1 The History of Bargaining Councils
At the turn of the 19th century a number of Builders (employers) Associations
were established in South Africa with the object of dealing with craft based
Trade Unions collectively. After the unification of South Africa in 1910 the
Colonial Federations were dissolved and became the National Federation of
Building Trade Employers (NFTBE), which in turn became the Building
Federation of South Africa (BIFSA). The first Industrial Conciliation act was
promulgated in 1924, after which the Industrial Council for the Building Industry
was established. The Act at the time provided for one registered employer’s
organisation per Industrial Council. The National Federation of Building Trade
Employers became the sole registered employer’s organisation represented on
the National Building Industrial Council. In 1933 the National Industrial Council
was dissolved and members of the various Master Builders Association (MBA)
bodies clearly felt that local autonomy in respect to collective bargaining was
necessary. The Industrial Conciliation Act was amended to allow more than one
registered employer’s organisation per industry.
In 1948 the National Party won the general election. The new government in
addition to its apartheid policies was strongly in favour of large-scale
nationalisation of many sectors to the economy and had a strong
worker/socialist orientation – albeit white. The National Party promoted
voluntary collective bargaining in the form of Industrial Councils. Employers
opted for a number of regional industrial councils, which still operate today in
one form or another.
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In theory the employer and employee parties fund industrial councils equally.
The introduction of holiday pay (stamp schemes) in the BIBCs upset this
equilibrium. With the rise in interest rates in the 1980’s, the various BIBCs who
held these funds in trust started earning significant returns on these
investments. The advent of the LOSC, who generally does not comply with the
Building Industrial Council requirements, has shrunk the revenue base. Today,
the only financially sound bargaining council is the Western Cape Regional
Bargaining Council. This is largely due to good investment decisions taken by
the Council.
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3 Research Methodology
From the literature review outlined in Section 2, it is evident that understanding
the problems facing collective bargaining in the building industry in the Western
Cape needs to be approached from the perspectives of the different role-
players.
To achieve this balanced view, information for this research project was
gathered via interviews and written submissions to the Commission. The
interviews were based on a semi-structured format (Appendix 1 – Interview
Questionnaire), incorporating both open-ended and closed questions.
Invitations to participate in the Commission were extended through
advertisement in the media, MBA, and BIBC.
The research paradigm was therefore, primarily qualitative in nature. It was,
however, combined with a quantitative approach where appropriate to achieve
a measure of methodological triangulation. The chosen paradigm is partly due
to the nature of the research problem, and partly due to certain assumptions.
Creswell (1994) explains that the answers to a set of assumptions guide a
research project in either a quantitative or qualitative direction.
Before adopting any method of data collection, the objectives for the research
need to be clearly decided. Interviewing is a time consuming process, and if
answers to a fairly simple set of questions are needed then a questionnaire may
be more appropriate. This was not the case in this research, more in depth and
open-ended answers were required and therefore a face-to-face approach was
needed. It was therefore not possible or appropriate for the interviews to be
highly structured. The aim here went beyond simply trying to obtain a
quantitative result from an interview.
While this research project endeavoured to establish clear cause-effect
relationships, the nature of the problem is a socio-economic one, and is only
accurately understood by examining the perceptions of the people involved.
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The nature of the data gathered was an interpretation of the current problems
in the building industry by the role-players, each with their own perspectives
and interests. In semi-structured interviews it is important to understand the
constructs that the interviewees use as a basis for their opinions. For this
reason, one of the first questions in the interview was aimed at categorising the
interviewee as a main contractor, formal sub-contractor, informal sub-
contractor or trade union representative.
A content analysis was made of both the interview and written submissions to
identify areas common concern, the main areas where perspectives differed
between the affected parties and the cause-effect relationships. Content
analysis involves looking for recurrent themes in the data that is gathered.
Relevant themes were assessed prior to the interviews, and are laid out as the
propositions that guide this research project.
The study was limited in its ability to randomly sample the role players in the
building industry, particularly the informal sector. The informal sub-contractors
have an interest in remaining anonymous, in terms of compliance both with the
Receiver of Revenue and the BIBC. This was borne out in the profile of
company/individual who participated in the Commission. Formal sub-
contractors made over half (55%) of the submissions, with representation by
informal sub-contractors being in the minority.
Nonetheless, the focus and structure of both the interview questionnaire and
written submission made it possible to categorise opinions and explanations as
to the cause-effect dynamics within the building industry in general and the
BIBC in particular.
56 written submissions were received. These were characterised by group
submissions such as that made by the general contractors on behalf of 22 listed
employers, MBA (Boland), Small Builders Association, Buildsmart and a co-
ordinating committee of five trade unions. 37 semi-structured interviews were
held over a 2-month period from 31 August 2000 – 31 October 2000.
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4 Findings
4.1 The State of the Building Industry
There was general consensus among the respondents that the nature of the
building industry has changed significantly over the last decade. This change
was characterised by the increase in informal and labour-only sub-contracting.
It was widely accepted that the informal and labour only sub-contractor were
very much a part of the industry in the Western Cape, no-one objected to the
existence of this form of business. The rising phenomenon of the informal sub-
contractor was explained in terms of difficult economic conditions, high
unemployment and the realities of participating in a 3rd world economy. The
rise of informal sub-contracting is not in itself the cause of the industry’s
current labour market problems, rather the result of challenging times in a
cyclical industry.
Implicit in all of the submissions, with the exception of those from the trade
unions, was the picture of an industry where there where too many players
competing for too little work. The main contractors point out that they have
had to dramatically reduce permanent staff, in order to keep costs down when
building contracts are scarce. They also feel compelled to submit tenders based
on labour-only sub-contracting rates, which they explain are 20-30% lower than
the BIBC rates. Sub-contractors feel squeezed by the main contractors on one
side who tender at labour only rates, and the informal sub-contractor on the
other who is willing to provide services at these rates. The informal sub-
contractor’s main economic advantage is flexibility in terms of conditions and
pay. Many of their operations are ‘fly-by-night’ and take advantage of
favourable conditions, such as large but temporary construction projects.
Many of the formal sub-contractors explained that as the economic conditions
worsened, they are under increased pressure to move into the informal sector.
They see this as a potential survival strategy. This is consistent with the picture
of a highly competitive, crowded industry.
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Sub-contracting and outsourcing have become a significant feature of the
industry over the past 15 years. Few LOSCs existed in the 1970’s and early
1980’s. The increase has been attributed to an influx of workers from
economically depressed regions, such as the Eastern Cape. As the respondents
indicated, formal specialist sub-contractors employing their own labour have
struggled to compete with LOSCs. The response to this competitive threat has
taken the form of closure of businesses, movement into the informal sector, but
mainly a reduction in direct employees and the use of LOSCs.
A survey conducted in July 1999 by the Boland MBA indicated that 53.6% of
members had used LOSCs, and 75% of the respondents stated that they compete
on a regular basis against informal sub-contractors. 73% stated that they
regularly lose business when competing against unregistered, informal
contractors. 35.2% of the members responded to the survey.
4.1.1 Training
The building industry has for many years relied on an apprenticeship system to
ensure the training of skilled artisans. The submission by Murray and Roberts on
behalf of 22 main contractors claimed that in 1975 there were 991 bricklayer
apprentices. By 1985 this had reduced to 43, and by 1995 there were none.
The main contractors, formal sub-contractors and trade unions lamented the
declining levels of workmanship and quality within the industry. They believe
the rising levels of informal and labour-only sub-contractors are directly
responsible for this.
The decline in training and standards coincides with the trend by the main
contractors to severely reduce staff levels. It seems the apprentice system was
best supported by the long-term nature of employment that the main
contractors used to offer. The transient employment nature of labour-only sub-
contracting is clearly not conducive to the apprenticeship system.
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In addition to the decline of the apprentice system, the Belhar Training College
is running at less than half of its 144-person capacity. It was clear from the
submissions that most employers felt there was no incentive to send their
employees there.
4.1.2 Health and safety
The trade unions pointed to an increase in hazardous building working
conditions and a general lack of adherence to health and safety standards.
Injuries tend to go unreported and the person involved is simply not employed
again.
The respondents explain that this is consistent with increased pressure to
decrease costs and an increase in informal sub-contracting, where the lack of
training and infrastructure leaves workers vulnerable to industry hazards.
4.2 The Effects of Non-Compliance
Approaching the labour market problems in the Western Cape building industry
from the BIBC perspective, the main problem associated with an increase in
informalisation and casualisation is that of non-compliance. In terms of the
Labour Relations Act, the BIBC agreement extends to non-parties. This means
that informal and labour-only sub-contractors should pay the same wages and
benefits as the formal, registered businesses.
The response by existing players to the growth of the informal sector is
generalised by various forms of non-compliance. There is wide agreement
between main contractors, formal sub-contractors and trade unions, that non-
compliance with the BIBC Agreement and stamp system is as high as 60%. The
interpretation of the submissions, points to a growing culture of non-
compliance.
The informal and labour-only sub-contractors are by definition non-compliant.
They remunerate their workers in cash, do not include benefits, and do so
primarily on a piece work basis. They seldom register as a business at all,
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evading tax and legally required deductions from the pay of employees, e.g. UIF
and PAYE. People are employed primarily on a casual, short-term basis. The
majority are very small, with fewer than 6 employees at any one time. The
submission from the Secretary of the BIBC points out that the regulation of this
group is particularly difficult. They remain largely outside of the scope of union
organisation.
The small, formal sub-contractor is undoubtedly under the greatest pressure
from the LOSC. With the main contractors’ tendering for contracts on labour-
only rates of pay and the BIBC Agreement on the other, the small sub-
contractors find themselves in a position where they cannot tender for
outsourcing from the main contractor without breaking the BIBC Agreement,
reducing pay and benefits to level competitive with the informal sub-contractor.
Many of the respondents in this category openly admitted non-compliance with
the BIBC Agreement, even though they have representation on the BIBC. Others
do not even participate in the BIBC.
The main contractors have systematically reduced their permanent work force
over the last decade to a level that includes project managers and a few skilled
artisans. At the same time, they have outsourced the work they would
previously have performed themselves, to both formal and informal/labour-only
sub-contractors. The main contractors are adamant that they comply fully with
the BIBC Agreement.
The government has a policy whereby a certain percentage of any government
contracts must be allocated to ‘emergent’ contractors. These informal sub-
contractors are typically not registered with BIBC and fail to comply with the
BIBC Agreement. The government through its approach to awarding tenders
does not support the statutory powers of the BIBC, a mechanism created
through its labour legislation.
Non-compliance within the industry has an adverse effect on the trade unions.
Trade union income is based on the purchase of benefit stamps, so when
businesses operate outside of the BIBC or fail to comply with its Agreement,
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their income is effected. Because the trade unions are weakened financially,
the stability of the industry is threatened.
It is interesting to note dividing line within the MBA around the issue of who is
responsible for the level of non-compliance within the building industry. The
main contractors are unequivocal that they are compliant with all aspects of the
Agreement, pointing out that it is within the ranks of the sub-contractors, both
formal and informal, that non-compliance exists. In terms of the staff they
directly employ this is true.
The sub-contractors on the other hand hold the main contractors ultimately
responsible for their non-compliance. They explain that the main contractors
tender for contacts based on labour-only rates then outsource to those sub-
contractors who meet those conditions. The formal sub-contractor is left
unable to compete and comply with the BIBC Agreement at the same time. The
main contractors claim it is not their responsibility to police the business they
outsource, and that employers should take responsibility for their own
compliance. The main contractors readily outsource work to LOSCs, when it is
well known that the informal sub-contractors operate outside of the ambit of
the BIBC Agreement. Given the current nature of the BIBC Agreement, the
formal sub-contractors are clearly in a difficult position.
4.3 The State of the Bargaining Council
4.3.1 Employer Perspective
The BIBC delivers a number of advantages and disadvantages from an employer
perspective. The majority of the respondents pointed this out.
The bulk of MBA members are smaller companies that do not have the necessary
resources and are not necessarily skilled at bargaining. Given that they have to
work with unionised employees, centralised bargaining is preferable.
Centralised bargaining also avoids direct negotiation at a site level. Separate
negotiations were seen as costly and inefficient alternatives. Because industrial
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action is regulated by an industry agreement, regional, industry level bargaining
provides longer-term stability.
The resolution of disputes is more advantageous to employers and employees
than having to involve the CCMA or Department of Labour. This is because
labour relations agents with specific knowledge of the building industry are used
rather than CCMA commissioners or labour inspectors.
They recognise the role that the BIBC plays in setting training and competency
standards for the industry, and by so doing better secure the future of the
industry. They point out that in the informal unregulated industry work and
safety standards have already fallen and this position needs to be reversed. At
the same time, almost all respondents pointed out that the BIBC should be doing
more in this area, possibly in partnership with the Sectoral Training Authority
(SETA) in fostering training and development.
Long-term employers who wish to provide benefits for their staff are able to
make use of the supplied benefits system that is far less costly than outside
alternatives. This is true for the pension system. At the same time, the pension
system is criticised as not suitable to all types of employers in the building
industry, particularly those who employ on a short-term basis.
The current holiday pay system is perceived as advantageous to employers and
employees in that payment is based on weeks worked and not on duration of
service as in the Basic Conditions of Employment Act. In the absence of a BIBC
Agreement, employers would have to comply with existing labour legislation.
The same applies to the BIBC negotiated overtime rate, which at 1.33 is less
onerous than the Basic Conditions of Employment Act at 1.5. This is an
important point due to the fact that overtime work is often required in the
building industry due to weather and program constraints.
The fact that regulated standards are not consistently enforced wrt labour-only
and other informal sub-contractors puts certain employers, particularly the
smaller, specialist sub-contractors, at a disadvantage.
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A pay system based on compulsory minimum wages and benefits does not
accurately reflect the nature of the building industry, nor does it encourage
increased productivity. Minimum wages are a disadvantage in times of low
economic activity and high unemployment. The consequence of these market
unrelated wages is avoidance of these wage rates and stamp purchases, through
retrenchments and sub-contracting of work to LOSCs. This is a recurring
criticism of the BIBC Agreement.
All employer submissions expressed a perceived lack of flexibility in the BIBC
system in general and Agreement in particular. The respondents pointed to
inflexibility in purchasing benefit stamps. Employers are required to purchase
the full complement of holiday, pension and sick fund stamps.
There was a minority of respondents, mainly small sub-contractors, who felt
that the BIBC did not offer any material advantage to their business, and in fact
hindered their operations through criminalizing their operations when they did
not comply.
4.3.2 Employee Perspective
The BIBC Agreement provides minimum wage and benefit standards to thousands
of employees across the building industry. Even if the Agreement does not
practically extend its coverage to non-parties, the benefit it provides is wide
spread.
Employee rights are more easily protected in centralised bargaining where the
efforts of union representatives take affect in all businesses party to the
agreement. Small businesses are otherwise often overlooked as unions are
forced to concentrate on large employer.
In theory the extension of the BIBC Agreement to non-parties should afford non-
unionised employees protection from exploitation. In reality, informal and
labour-only sub-contractors operate outside the ambit of the BIBC, and the
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people they employ are not protected from exploitation in any meaningful
sense.
The Sick Leave Pay Fund is advantageous to employees because credits are
transferred when moving between employers.
The advantages of the dispute resolution system extend to both employers and
employees, as do a number of previously mentioned advantages.
Some employees would, however, prefer to receive the portion of their wage
used to purchase benefit stamps paid out as cash.
Finally, the existence of informal and labour-only sub-contractors and the
nature of their non-compliance, paying low wages and no benefits, does provide
much needed employment.
4.3.3 Future Options
The various role players all expressed opinions as to the future of the BIBC.
These are explored through the following sub-sections.
4.3.3.1 Status Quo
None of the participants were satisfied with the current functioning of the BIBC,
and while most were not in favour of disbanding the BIBC, they strongly
suggested that the BIBC be scrutinised in terms of its services and functions.
The submissions from the trade unions centred more around the problem of non-
compliance than restructuring the BIBC. Of all the stakeholders, they seemed
the most satisfied with the current structure of the BIBC, if not the levels of
compliance. They feel strongly that the informal sector should become a part
of the BIBC and comply with the Agreement. They feel that this could be
accomplished if the main contractors assume responsibility for the work that
they outsource to informal and labour-only sub-contractors.
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4.3.3.2 Shutting Down
A minority of the small sub-contractors suggested the BIBC be closed down. This
was consistent with their view that the BIBC did not extend sufficient
advantages to their profile of business, and was in fact a hindrance to their
operations.
Although there were only a small number of respondents representing the
informal and labour-only sub-contractor, it can realistically be assumed that
many informal sub-contractors would at the very least be ambivalent to the
closure of the BIBC. Interestingly, a submission from a member of an
organisation that seeks to organise and represent the informal sub-contractor,
was relatively favourable about joining the BIBC and benefiting from training
and education.
4.3.3.3 Restructuring
By far the majority of respondents (80%) argued strongly for the restructuring of
the BIBC. There were both common elements and differences in the opinions of
the different players in the building industry.
Clearly one of main issues that must be addressed in any restructuring of the
BIBC is that the informal sector currently remains outside of the BIBC and fails
to support its agreements. Any actions taken must look to effectively attract
support and participation from the informal and labour-only sub-contractor.
The main contractors suggested 2 options for the restructuring of the BIBC, both
of which hinged around making participation voluntary. The first suggestion was
that the BIBC retain its current form, but that the collective Agreement would
only be binding to those parties that participate in the Agreement. The council
would continue to administer the pension fund, medical aid, holiday pay, sick
pay fund and act as the dispute resolution agency. It would not, however,
perform an inspectorate function because participation would be voluntary.
The collective agreement would be re-negotiated around either an entrance
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level rate, or no more than three categories (general worker, semi-skilled,
artisan), or piece work rates. The stamp system would be revised and offered
as a ‘cafeteria system’, where an employer and employee have flexibility to
select benefits according to their preference. This would allow the cash
component of current remuneration to be increased.
This is based around their assertion that ‘sub-contracting is here to stay’, and
their view that the BIBC should undergo a shift in mindset where is ceases to be
the ‘policeman’ of the industry, rather a ‘user-friendly, market-related’
facilitator benefiting the whole industry’. The BIBC would offer training courses
and head various initiatives to assist ‘emergent’ builders in improving their
administrative and business knowledge. This view is supported by about half of
the formal sub-contractors and small builders.
The alternate suggestion was that the BIBC shut down, and be replaced by a
voluntary bargaining group in the Natal model. This group would be similar to
the BIBC in many respects, but any agreement would only extend to those
parties who participate.
They correctly point out that the majority of MBA members would not support
such a proposal, although the main contractors would support such a move. The
smaller sub-contractors in the MBA point out that the Natal Voluntary Bargaining
Group serves the purposes of only a few main contractors, and doesn’t address
the problems that are placing the BIBC in its difficult position.
In contrast to the main contractors’ preference for a voluntary unregulated
model, nearly half of the formal sub-contractors favoured increased regulation
of the Agreement. The main contractors would assume responsibility for the
compliance of all sub-contractors and additional resources to police the
agreement would be employed. This group also believes that the LOSC must
register with the BIBC and comply with the Agreement. This group suggests that
education and training be provided to the informal sub-contractors, as part of a
carrot that would induce them to join the formal sector. They also propose
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creating a list of approved sub-contractors and LOSCs, as well as a public list of
those firms who do not comply.
It would seem therefore, that opinion was split among the respondents as to
whether the BIBC should be restructured to become more effective at forcing
compliance with its Agreement, or whether participation should become
voluntary and the BIBC more service orientated. The majority of respondents
sided with the latter point of view.
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5 Discussion and Analysis
5.1 Understanding Trends
The South African building industry has lagged behind global trends in terms of
casualisation/informalisation and sub-contracting but is fast catching up. For
the United States of America and Canada, the 1960’s were a period of
decentralised bargaining. There was a subsequent shift to centralised
bargaining in an attempt by the employer organisations to better negotiate with
the trade unions. With the shift to centralised bargaining and a decline in
construction activity in the mid 80’s, there was a sharp increase in non-union
building activity, which began to undermine the union strength. This lead to a
situation in Canada where many companies did not comply with central
bargaining agreements. The South African building industry is now also
characterised by informalisation and non-compliance.
As in Singapore, were the building industry is completely reliant on labour-only
sub-contractors (LOSC). They have/are experiencing the same problems as the
South African building industry, in that the LOSC/Kepala does not take
responsibility to train or skill their employee’s with the resultant decline in
levels of workmanship and quality. This culture of non-responsibility is carried
over into health and safety on site. This increases the hazardous building
working conditions and a general lack of adherence to health and safety
standards. This problem is further exacerbated, by cascading sub-contracting in
that work is sub-contracted by a sub-contractor to another sub-contractor,
thereby further distorting the lines of responsibility.
The increase in informalisation and casualisation in the Western Cape has the
effect of a shrinking revenue base for the trade unions. This is leading to a
weaker union representation, which in future will not be able to negotiate on
behalf of workers from a position of strength. With the resultant decline in
health and safety standards on sites, poorly negotiated agreements and
ultimately a fragmented industry with the various players trying to negotiate
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deals for their benefit. This is borne out by the Natal and Gauteng MBAs
withdrawing from their regional bargaining councils. The above is consistent
with trends in OHS worldwide, as union strength weakens so does the role of
unions acting as watch dogs diminish, with the resultant non-compliance of OHS
standards.
5.2 Analysis of Options
The options available to the building industry range across a spectrum of
choices; from increased regulation on the one side, to free enterprise with no
centralised bargaining on the other. We will attempt to explore the arguments
for and against each of these options, based on local and international trends as
identified in the Literature Review, and on the opinions expressed by the
industry respondents as identified in the Findings section.
5.2.1 Increased Regulation
As discussed under Findings, a group of the small, formal sub-contractors
favoured increased effort in enforcing the BIBIC Agreement. This would imply
greater manpower being employed to perform site inspections, and greater
powers granted to site inspectors to shut down building sites where sub-
contractors were not compliant.
We would argue against this approach on number of points.
Increased regulation and policing is ill suited to a 3rd world and developing
economy like South Africa’s. In a developed and stable economy, such an
approach could be supported by the legal system. Our courts are unable to deal
with the workload they face. With crime levels as high as they are and
receiving the publicity that they do, there is a natural prioritisation in favour of
criminal cases.
The phenomenon of the LOSC and the growth in informal sub-contractors is
partially due to the advantage of flexibility they carry. A developing economy is
well served by small and micro-businesses precisely because of their
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adaptability and resourcefulness. The success of the LOSC is partially due to
their flexibility in terms of working conditions.
Not only does this flexibility suit a developing economy, it also suits the nature
of the building industry. We have seen that internationally, the fundamental
characteristics of the building industry are the same. The place and object of
work is transient, the industry is cyclical in nature, and so on. LOSCs and
informal sub-contractors are well suited to survive and take advantage of such
an environment.
We argue, therefore, that is it not feasible to change the nature of the industry
to suit the context of the BIBC Agreement. Rather, the BIBC Agreement should
reflect the reality of the industry it serves.
Furthermore, we believe that increased policing efforts would not result in a
significant change in behaviour. The LOSC would still manage to operate
outside of the system in one way or another; survival is one of their key
competitive advantages.
Any system of centralised bargaining in the building industry must be consistent
with the fundamental character of the industry; increased regulation is not.
5.2.2 Maintain Status Quo
This research report is guided by the proposition that the BIBC has lost its
relevance as a central bargaining mechanism in the face of increasing
informalisation/casualisation.
We believe this proposition is borne out by the report’s findings both in terms of
national and international trends towards centralised bargaining and in the
viewpoints of the participants in the Western Cape building industry.
Internationally, where central bargaining still exists, it exists in a far more
flexible context than currently defined by the BIBC Agreement. For the BIBC to
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come in line with international experience therefore, it cannot maintain the
status quo.
We support the majority viewpoint among respondents that to maintain the
status quo is not an option for the BIBC. To be relevant going forward, the BIBC
must adapt itself to the levels of informalisation/casualisation.
5.2.3 Free Enterprise
A possible alternative is one of no centralised bargaining. In countries like
Australia, bargaining is performed at an enterprise level, with each individual
employer negotiating the conditions of employment with workers and trade
unions.
It is clear from the Findings that the advantages of centralised bargaining are
well understood by the majority of participants in the Western Cape building
industry. Most do not want a situation where they negotiate on an individual
basis.
The system of free enterprise that exists in many parts of the world is partially
explained by the weakening power of trade unions, particularly in developed
countries. With weaker trade unions, the case for centralised bargaining is not
as compelling.
This is not the case in the Western Cape however. The trade unions still
represent a significant proportion of the workers in the building trade. In
addition, the ANC government is part of an alliance with the umbrella trade
union movement in South Africa. There is therefore sympathy towards trade
unions from a government level. Although much has been written about the
tensions that exist between the government with its macro-economic policies
and the trade unions, the current labour law still favours the union movement
and strong worker protection. The fact that labour law supports the concept of
industry bargaining councils indicates the government’s support of an approach
that formalises bargaining relationships between business and labour.
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A system of free enterprise, and the absence of a bargaining council, overlooks
the benefits of a council. In developing countries in particular, workers rights
tend to be overlooked and abused. This report has shown the trends towards
decreasing occupational health and safety standards that accompany increased
informalisation/casualisation. A body that can look beyond sectional interests
and profit, best addresses the issues of training and general industry work
standards.
We would therefore argue that the context of the Western Cape building
industry is suited to the existence of an industry bargaining council. The
industry participants appreciate the advantage of having such a body. The
minority opposed to the BIBC hold their opinion based to a degree on the
frustration that they experience with the rigid and inappropriate nature of the
BIBC Agreement and its extension to non-parties. We believe that they too
would participate in, or at least be ambivalent to, a reformed bargaining council
that genuinely serves their needs.
The concept of reform is explored in the next section.
5.2.4 Reform
The majority of respondents argued for the reform of the BIBC. We believe that
this is the approach will allow the BIBC to maintain its relevance to the industry
it serves, and deliver the type of benefits it could.
The issue of informal and labour-only sub-contracting needs to be considered
and addressed in any reform of the BIBC. It should be understood that the
informal business has an important role to play in the South African economy by
providing people, who would not otherwise have work, with employment. The
issue therefore, is not whether they have a role to play, but the nature of the
role. Currently it is estimated that the informal sector provides up to 60% of
labour on building sites. There will always be a place for casual labour, but it is
unlikely that the informal sub-contractor will provide a sustainable service to
the formal sector, particularly on larger projects.
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The approach to informal sub-contracting should therefore follow an 80:20 rule.
The BIBC needs to draw in the informal sector to a significant, if not absolute,
degree. This will of course, depend on the nature of the reform of the BIBC and
how meaningfully it addresses the needs of the informal and LOSC.
Central to the reform of the BIBC is the need to make participation voluntary,
where any agreement applies only to those who choose to be a part of the
Council. This approach is consistent with the view that increased regulation is
not appropriate to the building industry. It will also go a long way to changing
the perception of the Council as a policing body to one that genuinely serves the
interests of its members. It must be clear that participation in the BIBC should
be voluntary, and that while any Agreement will not extend to non-parties,
compliance for registered members of the BIBC should be compulsory.
The BIBC needs to re-negotiate its agreement on a fundamentally different
basis. The purchase of benefit stamps should be optional, thus adopting a
‘cafeteria’ approach. This would mean that employers and employees could
decide together the split between benefits and cash. This would address the
criticism that has been levelled against compulsory participation in the pensions
scheme for example. One problematic area in this approach would be the
revenue stream for the trade unions. Currently they draw their subscription
income from the stamp system. While on the one hand they face a problem
with increased numbers of workers operating outside of the stamp system, a
new system that offers flexibility in stamp purchases may see their revenue
drop off even further. Unless a suitable alternative was found, it is unlikely that
the unions would support such a change in the BIBC Agreement.
Furthermore, a different approach to setting wage levels should be adopted.
The concept of piece work rates should be included in the Agreement, possibly
in conjunction with a 3-level minimum wage system (unskilled, semi-skilled and
artisan). Piece work rates are a more accurate reflection of the current
remuneration system employed by LOSCs. Therefore any serious attempt to
include the LOSC in the BIBC Agreement would need to cater for this. This
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output based remuneration approach would also address the current
productivity concerns expressed by employers.
Exceptions to the Agreement should be ended. The current Agreement allows
for exemptions, but the low number of companies that know about, applied for,
or were granted exemption from the current Agreement, indicates that it has
not been very effective. Furthermore, a flexible Agreement and voluntary
participation in the BIBC makes exceptions unnecessary and confusing.
The role of the trade unions is a difficult one. The existence of a reasonably
strong trade union movement is one of the main justifications for the BIBC – a
forum where central bargaining occurs. If the trade unions were weak or
represented a minority of workers, the need for a central bargaining mechanism
would not be as strong. This is put forward as part of the reason why the Natal
BIBC dissolved. If the BIBC system inherently weakens the unions, for example
through a flexible stamp system, then in a sense it may work towards its own
demise. So on the one hand a new Agreement must maintain a balance in
strength, while on the other it indicates the BIBC should justify itself to its
industry in ways beyond centralised bargaining, i.e. through training etc. What
is clear, however, is that like the BIBC, the trade unions will need to adapt in
order to maintain their relevance to the industry they serve.
The BIBC needs to transform itself in terms of its service mentality. Whereas it
currently operates as the ‘policeman’ of the industry, it should instead redefine
itself in terms of the services it offers to members. This will be a crucial aspect
in terms of bringing the informal sector into the fold. It needs to maintain its
offerings in terms of a central bargaining forum, dispute resolution centre and
industry benefit administration, but should extend its offering in terms of
training, possibly in conjunction with the Sectoral Training Authority (SETA).
This could include a focus on both building skills, but importantly also business
training and advice for the informal sub-contractor.
Part of the transformation of the BIBC must include giving increased
representation to small builders. The large main contractors have significantly
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reduced the number of people they employ, and the representation they have in
labour related matters should be proportional to this.
Given that we have argued for reform in a number of areas, what are the
factors we believe are critical to the success of such reform?
We have discussed certain services the BIBC could provide to informal and
labour-only sub-contractors that would act as a ‘carrot’ to draw them into the
BIBC. Once drawn in, a mechanism must exist that acts as an incentive for them
to continue their participation. Maintaining a list of preferred LOSCs could
achieve this. The main contractors would commit to first considering bids from
approved LOSCs. If the number of approved LOSCs is high enough, it will ensure
that the bids remain competitive, addressing a potential concern that being part
of a list will allow LOSCs to charge a premium. The outcome of this mechanism
could realistically be a situation where the LOSCs used on medium and large
contracts would be a part of the BIBC and its Agreement. This would achieve
the initial goal of drawing a certain threshold of the informal sector into the
fold.
An area that needs to be addressed is the nature of government contracts.
Quite often government contracts account for significant work within the
industry. The government supports use of informal, or emergent contractors,
where in an effort to bring economic upliftment to an area, a certain
percentage of workers must be drawn from the local community. This means
that the government approach to awarding tenders encourages the use of the
LOSC, i.e. supports a system where the work is done by businesses outside of
the BIBC Agreement. Clearly for a reformed Council and Agreement to be
successful, business processes must support it.
There is an ambiguity in the responsibility for compliance that the main
contractors currently assume. On the one hand they are fully compliant in
terms of the staff they employ, while on the other they take no responsibility
for the compliance of businesses to whom they outsource the majority of the
contract work. This places the formal sub-contractors in their difficult position.
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The main contractors begin the cycle of non-compliance by tendering for work
at labour rates that compliant companies cannot match. The result is that
either non-compliant LOSCs are awarded the tender, or formal sub-contractors
are forced into non-compliance to win the tender.
We believe that the support that the main contractors give to a reformed BIBC
Agreement will be critical to its success. It is not enough for the main
contractors’ responsibility to end with their own employees. They need to take
a position of leadership within the industry in this regard.
The argument distils to that of economic rationality vs. equity. We maintain
that the unchecked capitalist motive is not morally tenable. In no way are we
advocating anything other than a profit-centred approach, but it needs to be
tempered with a degree of social responsibility. The BIBC provides this through
the benefits and protection its extends to the industry’s workers. The main
contractors, however, are in a critical position to support or undermine the
system. The main contractors need to be guided by strong leadership and
exhibit real commitment to ensure the success of a reformed BIBC.
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6 Summary and Conclusions
The trend towards casualisation/informalisation in the Western Cape building
industry is not unique to the area, nor is it unique to South Africa. We have
seen similar trends as far a field as North America and Eastern Asia. It has been
explained how the building industry, by virtue of its itinerant nature, has
allowed a special form of informalisation, labour-only sub-contracting, to
develop.
The implications for any system of central bargaining are great. On the one
hand many countries do not have central bargaining systems at all, while on the
other those who do have had to reform themselves fundamentally in terms of
their relevance and pragmatism. In South Africa we have seen the Bargaining
Councils in both Natal and Gauteng dissolve in the face of these increasing
pressures.
It is also clear that the Western Cape Building Industry Bargaining Council is at a
crossroads. While economically sound, it is facing increasing criticism from
those who participate in it, and is being undermined by those who operate from
without.
We have argued that the BIBC (Western Cape) can play an important role within
the building industry, provided that it can undergo structural reform. This
would include a paradigm shift towards a service mentality, a system based on
voluntary participation, and most importantly a collective agreement that
reflects the reality of the industry it serves.
To achieve this will require leadership and courage, and a long-term outlook on
the industry by all who participate in it.
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7 References
Building Industry Bargaining Council (Cape of Good Hope), (1996) Constitution,
South Africa: Building Industry Bargaining Council.
Building Industry Bargaining Council (Cape of Good Hope), (1996) Agreement for
the Peninsula, South Africa: Building Industry Bargaining Council.
Creswell, John W. (1994) Research Design: Qualitative and Quantitative
Approaches, Thousand Oaks: Sage.
Debrah, Y.A. and Ofori, G. (1997) ‘Flexibility, labour sub-contracting and HRM in
the construction industry in Singapore: can the system be refined’ The
International Journal of Human Resource Management, 8(5): 690-709
Ferris, R. Quinlan, M. and Mayhew, C. (1997) ‘The Effects of Sub-
Contracting/Outsourcing on Occupational Health and Safety’: Survey Evidence
from Four Australian Industries, Safety Science 25:1-3 163-178.
Godfrey, S. and Theron, J. (2000) ‘An Investigation of Deregulation, Small
Business and Labour Standards’, Unpublished industry report.
Hussey, J. and Hussey, R. (1997) Business Research, London: Macmillan Press.
Kelly, J. (1999) ‘Casualisation and Outsourcing: Outsourcing Statistics’, South
African Labour Bulletin, 23:3 37-46.
Labour Department. (1995) Labour Relations Act, 66/1995: 3rd edition,
Butterworth Publishers.
Labour Department and CCMA. (1999) ‘Bargaining Councils – Meeting the Labour
Market Challenges of the 21st century’, Discussion Document, South Africa:
Ministry of Labour and the Council for Conciliation, Mediation and Arbitration.
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Quinlan, M. (1999) ‘The Implications of Labour Market Restructuring in
Industrialized Societies for Occupational Health and Safety’, Economic and
Industrial Democracy, 20 427-460
Rees, R. (1997) ‘Flexible Labour: Meeting the Challenge’, South African Labour
Bulletin, 21(5) 31-36.
Rose, J. (1986) Legislative Support for Multi-Employer Bargaining: The Canadian
Experience, Industrial and Labour Relations Review, 40:1, 3-17.
Snyman, Dr G.J.J. (2000) ‘Building Industry: Past, Present and Future’. An
analysis of trends in the South African building industry with special reference
to the Western Cape, Unpublished industry report, Medium-Term Forecasting
Associates, Stellenbosch.
Theron, J. (1993) ‘Small Business and Collective Bargaining’, South African
Labour Bulletin, 17(6)58-67.
Vlok, E. (1999) ‘Casualisation and Outsourcing: Being Casual’, South African
Labour Bulletin, 23:3 47-52.
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8 Appendices
8.1 Appendix 1 – Interview Questionnaire
INTERVIEW SCHEDULE: EFFECTS OF SUB-CONTRACTING ON THE
COLLECTIVE BARGAINING SYSTEM IN THE BUILDING INDUSTRY
(WESTERN CAPE)
[A] Name of organization
[B] Name of interviewee(s)
[C] Type of organization:
1. What in your opinion are the effects of the BIBC on the role and growth of
the informal sector sub-contractor, and vice-versa?
2. What are the implications of the BIBC agreement for the role and needs of
the formal sub-contractor, and vice-versa?
3. What are the implications of the BIBC agreement for the role and needs of
the formal main contractor, and vice-versa?
4. What are the implications of the BIBC agreement for the role and needs of
the trade unions?
5. What role should the BIBC play in determining wages and conditionals of
employment in the Western Cape?
6. What changes (if any) should be make to the BIBC to address your needs.
Formal main contractor
Formal sub-contractor
Informal sub-contractor
Trade Union
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7. To what extent is the BIBC agreement not complied with, by whom and why?
8. What are the effects/consequences of non-compliance?
9. (How) Should non-compliance with the BIBC agreement be addressed?
10. Has your business/organization applied for exemption from the BIBC
agreement? YES/NO
11. If, ‘YES’, why did you apply for an exemption?
12. If ‘NO’ to the above question, do you apply the BIBC agreement at your
workplace? YES/NO
13. Should a small business of a particular size be automatically exempt from
the agreement? YES/NO
14. If ‘YES’, what is the appropriate size in terms of employee numbers?
15. If ‘YES’ to question No.13, why should an automatic exemption be granted?
16. What is your opinion on partial exemption from some, but not all terms of
the BIBC agreement?
17. How many BIBC exemptions have been applied for, granted and rejected?
18. What are the current criteria for granting exemptions?
19. Should the informal sector sub-contractors be required to comply with the
terms and conditions of the BIBC? YES/NO
20. What are the reasons for your answer above?
21. What are the implications of one or more of the main parties withdrawing
from the BIBC?
Applied for
Granted
Rejected
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22. In your opinion the BIBC should be:
23. Briefly explain why you hold the above opinion?
24. What would the effects be of such an outcome?
Thank you for your assistance and co-operation.
Restructured
Maintained in its present form
Wound up/dissolved
