How large is the wage penalty in the labour broker sector? Evidence for South Africa using administrative data

Abstract

This study has been prepared within the UNU-WIDER project on 'Southern Africa-towards inclusive economic development (SA-TIED)'.

The impact of employment protection on the temporary employment services sector: Evidence from South Africa using data from tax records

“…It should be noted, however, that the data do not allow us to tell whether those that moved into the non-TES sector were absorbed by client firms directly or moved into other firms in the non-TES sector. This means the results may also be picking up that the non-TES sector has better-paying jobs than the TES sector (Cassim and Casale 2018). This suggests that TES firms may be a stepping stone into better employment, and perhaps TES employment serves as a screening tool for employers in the client/non-TES sector, as has been found internationally (Booth et al 2002;Graaf-Zijl et al 2011;Ichino et al 2008).…”

“…Labour brokers are identified through an IRP30A form that they are expected to submit to SARS, which absolves the client firms from having to deduct tax from any payments made to a labour broker, as the labour broker is responsible for paying tax on behalf of its employees. This eliminates the problem of misreporting of sector or type of employment, which is common in household or employee surveys, as discussed in Cassim and Casale (2018). It is important to point out that in the data, it is only possible to see whether an individual is employed by a TES firm (or a non-TES firm).…”

Precarious Workers and the Labour Process: Problematising the Core/Non-core

“…Today, it is estimated that four out of ten workers in the formal sector are precarious workers (Webster and Francis, 2018). Such workers, as elsewhere in the world, are especially vulnerable to higher rates of exploitation and earn, on average, half of what a permanent worker earns (Cassim and Casale, 2018).…”

“…The strength of the core/non-core model is that it provides a descriptive lens through which to analyse important trends in the labour market. This is particularly welcome considering the limited data that is available to classify and analyse trends in precarious labour (Budlender, 2013;Cassim and Casale, 2018). However, by collapsing the previous distinctions made within the noncore between forces of casualisation and externalisation, Webster and Francis (2019) break down important distinctions that are vital for analysing the restructuring of the labour force, principally the differences between the employment relationships between casualised and externalised workers and the prospects for organising.…”

Earnings in the South African Revenue Service IRP5 data

“…However, there are two sources in the IRP5 certificate from which job duration can be obtained. The first is the start and end dates of employment, which have been used to construct monthly labour income by a number of researchers, including Bassier (2019), Bhorat et al (2017), Cassim and Casale (2018), and Kerr (2018) (and the earlier working paper version, Kerr (2016)). Kerr (2018) showed that the start and end date data implied trends in employment within each tax year that did not seem plausible, and suggested that this might be due to HR administrators having little incentive to fill out this part of the certificate correctly.…”