6. Rand spend on employee training
Several years ago, a large JSE-listed mining company battled with consistently poor safety performance. Not only were employees regularly getting injured, but lives were lost at such an alarming rate that the company had to do something. They had to place the blame on an appropriate set of shoulders. Unfortunately for the Group Health & Safety Manager, those shoulders were his, which should have meant that his access card would soon be recalled. Somehow though, his career was miraculously saved by a request to attend a company-sponsored PhD programme in the United States. Rather than pay him severance, the company chose to pay relocation costs for him and his family, to pay his salary for no fewer than four years, and to pay the substantial tuition fees demanded by an American university.
What was the benefit to the company? They were able to report all associated costs as ‘skills development spend’.
This is surely not what the government intended as skills development for South Africa as set out in the Mining Charter, the Skills Development Act and the Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice set out by the Department of Trade and Industry (dti). Rather, this is an abuse of otherwise extremely useful legislation. The above example is relatively rare, but it nevertheless represents one such case of abuse.
Nonetheless, the rand value of training spend can be an extremely useful benchmark for determining which companies are ‘more responsible’ than others, as well as which ones have sufficiently adequate financial controls in place to publicly report how much money they spend on training.
Comparing Metals & Mining with Retail
Of the 45 Metals & Mining companies, 30 companies provide training spend data. Unfortunately though, the data reported for many of the 30 companies is either incomplete or incorrect, such that the data for only 17 companies can be used to calculate a ‘rands per person trained’ value. The suggested value for 7 of the 17 exceeds R60 000 per person trained. Only 10 companies reported within a reasonable range of R1 700 to R15 000 per person trained.
Once again, the data for the Retail sector is less than impressive. Of the 23 companies in the sector, only 12 provide training spend data. Of this, only 8 provided enough data to calculate a ‘rands per person trained’ value, with two companies reporting obviously incorrect information.
7. Percentage of employees who are permanently employed
In recent years, much has been made of the fight for and against the use of labour brokers. On the one hand, companies argue that local legislation makes the hiring of permanent employees an unbearable risk, with employees controlling a disproportionate advantage in the balance of power needed to hire and fire people who ought, or ought not, to be given access to employment. At the same time, our workforce is regarded as one of the least efficient in the world, severely hindering our rankings in the World Economic Forum’s Global Competitiveness Index, where South Africa’s labour market efficiency is ranked 113th out of 144 countries in the latest report2.
On the other hand, unions and other stakeholders argue that the corporate sector is shirking its responsibility to society by opting to recruit people on a temporary, rather than permanent, basis. Restricting the length of contract, or in many cases, limiting the number of hours someone can work in a week (which classifies them as ‘part-time’ rather than ‘full-time’ employees), permits companies to limit employee access to much-needed benefits. Labour brokers – or companies that act as an intermediary to recruit temporary workers on behalf of a company fearing the risks associated with hiring people on a permanent, full-time basis – have therefore become a blessing for larger corporates, and the bane of everyone else’s existence, including the government.
Comparing Metals & Mining with Retail
As per the data reviewed for IRAS’s 2014 research report, 29 of the 45 Metals & Mining companies (64.4%), and 17 of the 23 Retail companies (73.9%), recognised the significance of disclosing data about the percentage of employees who are deemed ‘permanent’, while six Metals & Mining companies and one Retail company didn’t even report how many people they employed (let alone ‘% permanent’).
Once again, the data suggests that while most companies understand the importance of providing data, the quality of what they place in the public domain remains questionable. For example, it’s highly improbable that one mining company is able to operate with only 8.87% permanent staff, unless contract employees are somehow considered ‘employees’ rather than reported separately. At the same time, it’s highly improbable that four retailers can report a labour force based exclusively on 100% permanent staff.
The issue is one of managing the ‘social licence to operate’: particularly when unions have made it clear to all concerned that they will not tolerate any practice that even suggests a two-tiered employment system. Whether it’s the string of endless strikes delaying Eskom’s Medupi and Kusile power station projects, or the five-month-long platinum strike that devastated platinum belt communities in 2014, unions have put on record an unwillingness to allow companies to underestimate the need for workers’ rights (be those rights real or perceived). Companies need to be much clearer about what constitutes a ‘permanent employee’, and be clear when presenting labour statistics to the public. If there’s a genuine need for temporary labour, inclusive of labour-broking services, then they must be clear in their description of where benefits accrued to permanent employees do not substantially differ from those of temporary workers.