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Employment Services Bill seeks to prioritise hiring of local unskilled labour

1 Mar 2021

With more than 11 million people currently unemployed in South Africa, the Employment Services Amendment Bill aims to redress high numbers of foreign nationals employed in unskilled occupations by putting more locals to work. Once passed into law, this legislation is likely to cause headaches for executives with regards to updating their recruitment and hiring policies and processes to comply with the Act's requirements. This is not territory that organisations will have to navigate alone. Temporary Employment Service (TES) providers are expertly positioned to help businesses realign to achieve legislative compliance, balancing the requirement to hire locally with the need to have the best skills for the business, even where those skills need to be sourced from outside our borders.

Employment Services Bill seeks to prioritise hiring of local unskilled labour

The numbers speak volumes

According to the International Monetary Fund, South Africa’s unemployment rate is forecast to rise to 36.495% at the end of 2021. Looking ahead, South Africa’s unemployment rate is expected to reach 37.494% by the end of 2025. While approximately 4% of people of working age (15 years to 64 years) across South Africa were born outside our borders, the percentage of foreign nationals is almost twice as high as the percentage of South Africans employed in the informal sector. Just how big is the informal sector? A Quarterly Labour Force Study in 2019 found that roughly 3 million people work in the informal sector, which represents just under 20% of total employment in SA. With this in mind, the Employment Services Amendment Bill is a deliberate attempt by the government to limit the hiring of foreign nationals over South Africans, without justification on the basis of skills.

Proposed changes

Some of the changes proposed in the Bill include stipulations that must be met before a foreign national can be employed in South Africa, as well as the requirement for an employer to prepare a skills transfer plan for such a position. In order to make compliance with the legislation easier, the Bill encourages employers to make use of public employment services or private employment agencies to assist in recruiting suitable South Africans. Regulations will be drafted by the Minister of Labour to facilitate the employment of foreign nationals, and affected sectors and their targets will be published in the Government Gazette to ensure equitable representation in the workforce. Although legislation that prioritises the hiring of domestic nationals is not a new concept globally, these limitations will impact industries such as hospitality, restaurants, security, farming and agriculture, as well as road and freight among others.

Mitigate risk accordingly

From an administration perspective, TES providers will prove invaluable in mitigating risk when it comes to ensuring that businesses are advertising and following a proper recruitment process. Such providers will be instrumental in facilitating skills transfer plans where a foreign national is hired after all other options have been exhausted. Furthermore, employers can benefit from the extensive databases that TES providers have, making it much easier to find suitable South African candidates for placement.

While it has taken more than five years to get to this point in the legislative process and it is still unclear as to exactly when the Bill will be passed into law, it is still necessary for companies that rely heavily on foreign national labourers to prepare themselves accordingly. In light of our rising unemployment numbers, it is an issue that must be taken seriously and organisations should ensure that their risk is properly mitigated. This can be done by having a safety net in place with a TES provider advising on best practices until there is legislative clarity. Ultimately, businesses will have to be mindful of employing foreign residents and should do so only on a needs basis, and not merely for the sake of convenience.