Companies need to fundamentally re-think the way they employ and remunerate people in order to resolve labour unrest and ensure their sustainability, says human resources consultant Dr Lukas de Swardt.
A former Absa Bank human resources general manager, Dr de Swardt was recently appointed by Dolphin Bay to review its company structure and streamline the business.
Setting out his views in an interview with Dolphin Bay Brief, he says current conflict between employers and workers, such as the prolonged impasse in the platinum mining industry, indicates the country is approaching the type of transition experienced by developed countries some time ago. These countries tend to place a high value on most types of work, even manual labour. They have developed a flat remuneration structure in which the difference between payment to executives and workers is much lower than in developing countries.
Work and remuneration in developing countries such as South Africa have continued to be based on supply and demand, resulting in companies perpetuating low-wage structures while unions increasingly demand that greater value should be placed on work, with consequently higher wages.
In the agricultural industry, for example, a minimum wage of R105 a day has been set. “Farmers say they cannot afford to pay more and can barely afford the R105, and workers say they simply cannot live on R105 a day,” points out Dr de Swardt. “I can understand both arguments but the reality is that we simply cannot perpetuate the conflict arising from a system like this.”
It is not only unions that demand greater value for work. The issue of corporate sustainability has come to the fore, explains Dr de Swardt. Institutions such as the King Code on Governance Principles and investors in companies, such as pension funds, are insisting that companies must actively involve themselves in resolving social and environmental challenges. Among these issues is the need to develop equitable employment practices. “Investors will simply not put their money in companies that maintain practices which will make them unsustainable,” says Dr de Swardt. “The people who control the payroll purse strings are as influential in terms of managing conflict as the police.”
Applying his thinking to the agriculture and forestry sectors, he suggests too many farmers still regard themselves as the so-called baas van die plaas, believing they are the only people who can have control over their operations.
Farmers and timber growers should rather reassess their businesses and focus only on their core operations. This could exclude such functions as clearing land, planting, pruning and harvesting, enabling them to reduce their workforce. Groups of famers should then form cooperatives and outsource non-core functions to former workers who, in turn, form themselves into small businesses. These would initially provide services to former employers but could in time expand their client base and develop into businesses in their own right, creating further jobs.
On another level, farmers’ cooperatives could also create situations in which former workers are supported to add value to crops through, for example, establishing food or timber processing operations, with former employers and employees possibly becoming joint shareholders.
Developments such as these are nothing new in South Africa, points out Dr de Swardt. Numerous companies have outsourced non-core functions, such as cleaning, catering, transportation and security.
Dr de Swardt acknowledges fears that by changing the operating model of companies, jobs will be lost, creating labour and social unrest, but he counters: “This is a transition we have to go through. With careful planning much can be achieved, especially if we develop secondary industries. We will have to grind it out over time and come up with solutions through trial and error if necessary. But this is a transition which will happen. If we try to resist it, our companies and our country will simply become uncompetitive and wither.”