Nedbank Group is in talks with about 1 500 employees over potential job cuts at the South African lender’s retail and business-banking division to cope with a struggling economy and increased competition.

The company forecasts that “between 50 and 100 employees are at risk of not being placed in a role,” Johannesburg-based Nedbank said in an emailed response to questions on Friday. “Unplaced employees will then be assisted by the bank to either secure available alternative positions within the bank, which is our first prize, or be equipped for opportunities outside the bank.”

South African lenders are battling to grow revenue faster than costs as they contend with an economy that has shrunk for three of the past five quarters. Consumers have been battered by rampant unemployment, rising taxes, fuel prices and utility bills, pushing them to explore cheaper banking alternatives or digital services. Companies aren’t investing amid uncertainty over electricity supply and surging government debt levels.

“Nedbank is being forced to reshape our operating models and businesses,” the company said. “In doing this, Nedbank actively makes use of natural attrition and a redeployment and reskilling pool. Non-voluntary retrenchments are always the last option.”

The company, which employs 30 577 people, has also been reducing the floor space used by its branches and increasing the use of automation to lower costs. Nedbank expects the process to be concluded after the final meeting with the labor union Sasbo at the end of this month, it said.

 

 

- Bloomberg

Matshela Energy, which is fronted by South Africa’s power utility Eskom’s former chief executive officer, Engineer Matshela Koko, will invest US$250 million into a solar power plant in Gwanda, with project works set to begin next month.

The company was awarded the licence to set up the power plant by the Zimbabwe Energy Regulatory Authority (Zera) on July 17.

It is envisaged that the project, which will produce 100 megawatts, will become the single largest solar venture in the country and will create up to 1000 jobs.

The solar plant dovetails with the country’s renewed push to promote clean energy sources that are meant to protect the environment and reduce attendant consequences such as climate change.

Engineer Koko told The Sunday Mail that the project can be expected to feed into the national grid within the next 12 months.

“The board of Zera approved the issuance of the electricity generation licence to Matshela Energy for Phase 1. Total approximate investment for licensed generation facility: US$250 million.

“The project will create approximately 1 000 direct and indirect jobs during the construction and operation phases,” he said in e-mailed responses.

Eng Koko said he had assembled a “competent team” of energy experts and investors from different parts of the world to embark on the project.

He said the team will be in Harare next month to begin works.

“Our partners will be on site in August to complete the detailed design for the power plant. We believe our team is competent and second to none and will deliver the project without fail.”

“We anticipate first power 12 months from September 2019. Matshela Energy is fully funding the project through a robust financial structure and is expecting no upfront payment from the people of Zimbabwe.

The only expectation is for the Government of Zimbabwe to honour the power purchase agreement that has been signed.”

Engineer Koko said the company will not receive advance payment from the Government, but will use its own resources instead.

He insisted that despite being linked to corruption allegations at the South African power utility, he had a traceable track record of integrity.

“I have had a very successful career at Eskom spanning over 25 years. I have not been charged or found guilty of any corrupt activities and have no pending criminal charges against him. Mr (Wicknell) Chivayo was paid by the Government of Zimbabwe to build a 100 MW solar PV plant. The Government of Zimbabwe, through Zesa, took the risk for the project (and) Chivayo was paid to execute. However, Matshela Energy carries all the financial construction risk for its project and the Government of Zimbabwe takes no risk in this regard.”

New technology

The solar project, Eng Koko said, will also consist of an advanced battery energy storage system.

He said because renewable energy does not always coincide with electricity demand, surplus power will be directed towards research and imparting skills to university students.

“Matshela Energy has resolved to ringfence US$100 000 per annum for 20 years to put towards research and innovation in the field of advanced energy storage and renewable energy generation. This will be done in partnership with a local university. The university will be selected in partnership with the Ministry of Energy and Power Development.”

In a notice published last week, Zera said Matshela Energy’s licence would be valid for 25 years.

“The generation licence is hereby granted to Matshela Energy Private Limited in terms of Section 42 of the Electricity Act to own, operate and maintain the 100 MW solar plant called the Matshela Energy-Gwanda Timber Farm Solar Plant at Gwanda Timber Farm, Gwanda, Matabelaland North province for the purpose of generation and supply of electricity.

“Subject to the Electricity Act and the terms and conditions of the licence, the licensee may supply electricity to any transmission, distribution or supply licensee who purchases electricity for resale and with the approval of the authority to any one or more consumers,” Zera said.

 

Source: Sunday Mail Zimbabwe

South African President Cyril Ramaphosa on Sunday said he will seek an urgent judicial review of what he described as an irretrievably flawed report in which the country’s graft watchdog said he misled parliament over a campaign donation.

Public Protector Busisiwe Mkhwebane’s report followed an investigation by the watchdog into a 500,000 rand ($35,878.56) donation to Ramaphosa’s 2017 campaign for the leadership of the ruling African National Congress (ANC) from the CEO of services company Bosasa.

Ramaphosa said the report’s findings were not rational, based in fact or arrived at through a fair and impartial process - assertions Mkhwebane refutes - and that he would seek a judicial review of the report, its conclusions and the remedial action it recommended.

“After careful study, I have concluded that the report is fundamentally and irretrievably flawed,” Ramaphosa told a media briefing, adding that it was therefore appropriate the courts make a final and impartial judgment on the matter.

A statement issued on Mkhwebane’s behalf said she welcomes the president’s decision but stands by the report and will seek to assist the courts in arriving at the “correct conclusion”.

“She has no doubt that she exercised her powers and performed her functions without fear, favor or prejudice, as is required by the constitution,” the statement said.

Mkhwebane, who began the investigation after a complaint from South Africa’s opposition, on Friday said that she found the president had “deliberately misled” parliament and violated the executive ethics code in regards to the donation.

The saga has proven a headache for Ramaphosa, who has staked his reputation on cleaning up deep-rooted corruption and reviving Africa’s most developed economy, providing ammunition for enemies including an ANC faction loyal to his predecessor Jacob Zuma.

Ramaphosa initially told parliament that the money received by his son Andile was obtained for services he had provided, but he later corrected this by saying the payment was actually a donation towards his campaign.

The remedial actions Mkhwebane recommended included the speaker of the national assembly to demand publication, within 30 days of receiving the report, of all donations received by Ramaphosa.

She also instructed the chief prosecutor to investigate whether Ramaphosa’s campaign had laundered money in its handling of donations.

Ramaphosa’s supporters accuse her of acting as a proxy for Zuma’s faction, which she has denied.

 

(Reuters)

Public Protector Busisiwe Mkhwebane has said that President Cyril Ramaphosa deliberately deceived Parliament with regard to a R500,000 donation from Bosasa to fund his African National Congress election campaign, Eyewitness News reports.

Mkhwebane said that Ramaphosa breached the Executive Ethics Code by failing to disclose financial interest accrued to him as a result of the donations received for the CR17 campaign, writes News24.

Mkhwebane also found that the means through which the R500,000 donation were funneled - transferred through several accounts before being paid into the president's campaign account - raised suspicion of money laundering, saying: "The allegation that there is an improper relationship between President Ramaphosa and his family on the one side, and the company African Global Operations (AGO/Bosasa) on the other side, due to the nature of the R500,000 payment passing through several intermediaries, instead of a straight donation towards the CR17 campaign, this raising suspicion of money laundering, has merit."

Mkhwebane referred the allegations of money laundering to authorities to investigate. Previously, Bejani Chauke, former CR17 Campaign Manager, said in a statement that there was "no basis whatsoever for even a suspicion of money laundering". Chauke's statement posted on The Mail & Guardian elaborated: "The CR17 campaign was funded by a broad range of individuals from across South Africa who supported the objectives of the campaign. These funds were paid into accounts established for this purpose and were used to cover the costs of the campaign such as stipends, travelling, communications and promotional material, meeting venues and accommodation. In the process, all legal and regulatory requirements were met."

Mkhwebane's statements come after Ramaphosa said that he was "willing and able" to appear before the Zondo Commission into state capture.

 

Credit: allAfrica.com

Corruption in South Africa isn’t simply a matter of bad morals or weak law enforcement. It’s embedded in processes of class formation – specifically, the formation of new black elites. This means corruption is primarily a matter of politics and the shape of the economy.

In a recently published paper, I attempt to shed fresh light on the unconvincing narratives that have been presented in the media, NGOs and academic circles about the events of the past 10 years.

These narratives generally depict events as a struggle between two opposing forces. On the one side are a network of politicians, officials, brokers and businessmen centred on former President Jacob Zuma and the Gupta family. All are bent on looting, state capture and self-enrichment. On the other are a band of righteous politicians and citizens. This group is seen as drawing together the “old” ANC, activists, “good” business and citizens in general. They are intent on rebuilding institutions and good governance, the rule of law, international credibility and fostering growth and development.

I argue that a much deeper set of social forces underlies and shapes the struggles within the governing party, the African National Congress (ANC), and the society more broadly. These political struggles are inseparable from struggles over the shape of the economy.

Limited access

The primary process to change the economy has been the drive to accelerate the emergence of new black elites. But institutional interventions, such as black economic empowerment, have been insufficient.

Already, during the Thabo Mbeki period as well as the presidency of Nelson Mandela, an alternative informal political economic system was emerging at national, provincial and local levels. Through this, networks of state officials, ambitious entrepreneurs as well as small time operators, were rigging tenders or engaging in other kinds of fraud so as to sustain or establish businesses, or simply to finance self-enrichment.

Because of a number of factors there was little alternative for channelling the aspirations and burning sense of injustice of black elites and would be elites in post-apartheid South Africa. These factors include the property clause in the Constitution, the conservative strategies adopted by the ANC government and the fact that large corporations and white owned businesses dominated the economy.

This means that opportunities are few, demand is high and competition is fierce. In this context, the state is where people who are locked out are most likely to gain some access.

This links to the issue of violence. The emergence of new elite classes is often a ferociously contested, ugly and violent affair. South Africa is no different from many other post-colonial countries – or indeed the histories of the Euro-American elites that currently dominate the globe.

In South Africa this violence takes the form of burning down homes and state facilities, intimidation, assault, the deployment of the criminal-justice system to protect some and target others, and, increasingly, assassination.

I argue that this set of practices constitutes an informal political economic system. By a system I don’t mean a structure which is centrally coordinated or planned. What I’m referring to is a pervasive and decentralised set of interlocking networks that reinforce and compete with one another in mutually understood ways, and include the use of violence as a strategic resource.

Former South African president Jacob Zuma in court on corruption charges. EPA-EFE/Rogan Ward / Pool

This system preceded Zuma’s presidency, and extended far beyond the Zuma-Gupta network. The recent revelations about corruption at the Zondo commission into state capture, VBS mutual bank or in the book, How to steal a city by Crispian Olver, make this abundantly clear.

It should also be abundantly clear that the informal political-economic system necessarily entangles President Cyril Ramaphosa’s core network of institution builders.

Ramaphosa’s challenge

Ramaphosa’s key challenge is to build a stable coalition within the ANC so as to embark on his project of institution building. His trajectory, and the future shape of corruption in South Africa, will be determined by the character of the coalition he can forge – or that will be forced on him – among party barons within the ANC.

For the purpose of building institutions and attracting investment, it will be necessary to establish as stable a coalition as possible. This means it will have to be a broad coalition. One thing is sure: the coalition will include corrupt figures. It already does. The informal system of patronage politics will remain pervasive.

Even so, Ramaphosa’s power is precarious in the ANC. The odds are stacked against success in establishing stability. For the medium-term the trajectory of politics is likely to be characterised by multiple contestations over material opportunities, political power and symbolic representation. This will give rise to an increasingly volatile, unstable and violent political space.

To return, then, to the prevailing narrative and its misreading of the politics of corruption.

Deep structural issues

The problem with the narrative is that it assumes it’s possible simply to remove some “rotten apples”“, and it sets standards Ramaphosa cannot possibly match.

Perhaps, though, it is a useful fiction for the mobilisation of civil society, journalists and judges, which at the very least may contribute to containing corruption?

There is some validity in this. Yet it fails to direct attention to the deep structural issues which give rise to corruption as an aspect of class formation.

The only long-term and stabilising solution would be to draw into the formal system some of the purposes of the informal system. This would require a much more fundamental redistribution of assets and wealth, which could be deployed in the large-scale formation of a new black business class, primarily located in manufacturing and agriculture, as well as to fixing the education crisis. The result would be the formation of professional, scientific and technical middle classes.

This kind of solution will not emerge from the Ramaphosa administration, which is much more fixed on reproducing the policies of the Mbeki era. The problem is that these were what created the opportunity for the rise of Zuma in the first place.The Conversation

 

Karl von Holdt, Senior Researcher, Society Work and Politics Institute, University of the Witwatersrand

This article is republished from The Conversation under a Creative Commons license. Read the original article.

It’s been almost a year since the Commission of Inquiry into allegations of state capture in South Africa began to hear testimony.

Also known as the Zondo Commission, it is headed by Deputy Chief Justice Raymond Zondo, who has listened to 130 days of live testimony from more than 80 people. It is probing allegations that the government was captured by private business interests for their own benefit.

During it all, echoes of former South African President Jacob Zuma’s alleged involvement have become deafening. Through various testimony, Zuma has been directly implicated by current and former senior government officials and ministers. They have alleged, among other things, that Zuma leaned on them to help the Guptas – Zuma’s friends who are accused of having captured the state – and to fast-track a nuclear deal with Russia that would have bankrupted South Africa. Also, the governance failures that have resulted in the looting of parastatals, have been blamed squarely on state capture.

Zuma’s turn to give evidence has arrived. Not only does he deny that state capture exists – he’s called it a fake political tool – he’s also cast himself as a hapless victim.

Refusing to engage the concept, he said:

There are people who did things to others in one form or the other‚ and you can call it in any other name‚ not this big name “state capture”.

The allegations against him are that he orchestrated a network of corruption that hijacked South Africa’s developmental project.

The importance of Zuma testifying before the commission should not be underestimated. It will set a precedent that will either show that those that abuse power will be held to account or that the cycle of impunity will continue, reinforcing the unjust systems that enable state capture.

Understanding state capture

Originally, the theoretical concept of state capture referred to a form of grand corruption. In the case of South Africa, it can be defined as the formation of a shadow state, directed by a power elite. This shadow state operates within – and parallel to – the constitutional state in formal and informal ways. Its objective is to re-purpose state governance, aligning it with the power elites’ narrow financial or political interests, for their benefit.

State capture rests on a strategy to align arms of state and public institutions and business to support rent-seeking.

In the events being scrutinised by the commission, the evidence being led shows that actors made sure that all the conditions were created and processes lined up to extract more money than the actual goods and services cost as a way to enrich themselves.

This reveals the systemic nature of state capture. To be successful, it requires the deep cooperation and complicity of the highest office in the land to secure rents, hollow out accountability and maintain legitimacy.

The graphic below, by Robyn Foley, a senior researcher at the Centre for Complex Systems in Transition at Stellenbosch University, outlines the alleged strategy of capturing state-owned enterprises, installing compliant officials, undermining the functional operation of government institutions and discrediting critical voices.

The graphic points to a presidency where state capture became syndicated within the state and rent-seeking. Capture is a radical departure from the norms and values upon which a democratic developmental state depends. Like most liberal democracies, South Africa’s constitution provides for checks and balances that are supposed to limit such abuses of power. When these checks are undermined, and the balancing forces are biased, the system becomes a reinforcing loop of bad behaviour, spiralling towards an oligarchic authoritarian state.

In other words, a silent coup.

How did we get here?

Zuma set his presidency on the ticket of state-sponsored development. This entailed using state-owned enterprise procurement, tighter state control and Black Economic Empowerment to realise what has been termed radical economic transformation.

But it was precisely within this agenda, and the governance arrangements that supported it, that seeds for state capture were sown. Tighter state control meant that the flows of information were controlled by only a few, while state-owned enterprises used the biggest share of procurement rands.

There was already billions moving through these state owned enterprises and radical economic transformation was the perfect ideology to bring it all together.

But black business hardly benefited at all from the profits of state capture. If radical economic transformation were to be effected through the constitutional state, it would be enacted through economic policy that supported livelihoods and employment creation. In addition, state capture has hollowed out the very institutions that would have been able to realise radical economic transformation through the constitutional state.

The unravelling

Numerous events over the past decade point to a slowburn abuse of key state resources. One of the first was the irregular landing of a civilian plane at Waterkloof Military Air Base in 2013. The plane was carrying foreign guests to a family wedding hosted by Zuma’s friends, the Gupta family.

Two years later evidence emerged that millions of rands of public funds had been used illegally for upgrades to the then president’s Nkandla homestead. This spending was outlined in a report prepared by the former Public Protector Thuli Madonsela.

The turning point came only months after the release of the Public Protector’s State of Capture report, when Zuma fired then Finance Minister, Pravin Gordhan and his deputy, Mcebisi Jonas in March 2017. The events sent a shock wave through South Africa, triggering mass protests and mobilised public outrage, forcing Zuma to initiate the robust inquiry into state capture.

Our unpublished research shows that, to date, there have been 28 public state capture investigations, inquiries and commissions. There are also 118 outstanding cases of corruption involving government officials and politicians in the intray of the newly appointed head of the country’s National Prosecuting Authority, Advocate, Shamila Batohi.

The true cost of the damage cost by state capture, including the destruction of institutions and lives, is unquantifiable.

South Africans may well be seduced by the prospect of Zuma taking the stand at the Zondo commission. But he was not alone in driving the state capture project. And, the network of actors and influencers is extensive and still very much active. This much has been laid bare in testimony before the commission.

 

Nina Callaghan, Robyn Foley, senior researchers at the Centre for Complex Systems in Transition at Stellenbosch University, contributed to the article.The Conversation

Mark Swilling, Distinguished Professor of Sustainable Development, Stellenbosch University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

South Africans can now visit 99 countries visa-free or with a visa-on-arrival, according to the latest Henley Passport Index.

This latest ranking of passport power and global mobility – which is based on exclusive data from the International Air Transport Association (IATA) – shows that overall, African states continue to fare poorly, although there have been some recent positive changes as more countries on the continent relax their visa policies.

South Africa dropped to 54th place on the ranking (down from 51st) after Djibouti changed its policy from visa-on-arrival to an e-visa system.

The Seychelles continues to occupy first place in the Sub-Saharan region, moving up to 27th place globally, with a visa-free/visa-on-arrival score of 150.

Mauritius remains in regional 2nd place, with a score of 145, and South Africa retains its 3rd place regionally. At the other end of the mobility spectrum in Africa, Somalia sits in last place, with citizens able to access just 31 destinations without a prior visa.

Globally, Japan and Singapore jointly hold first place, with a visa-free/visa-on-arrival score of 189. South Korea now sits in 2nd place on the index along with Finland and Germany, with citizens of all three countries able to access 187 destinations around the world without a prior visa.

With a visa-free/visa-on-arrival score of 183, the UK and the US now share 6th place – the lowest position either country has held since 2010, and a significant drop from their 1st-place spot in 2014.

“With a few significant exceptions, the latest rankings from the index show that countries around the world increasingly view visa-openness as critical to economic growth and mutual trust,” said Amanda Smit, managing partner at Henley & Partners South Africa.

“Asian countries’ dominance of the ranking is proof of that, showing the effects that progressive diplomacy has on global passport power.”

These are the countries South African passport holders can access without a visa:

* Indicates visa on arrival or eTA.


Africa

Angola Madagascar* St. Helena*
Benin* Malawi Swaziland
Botswana Mauritania* Tanzania
Cape Verde Islands* Mauritius Togo*
Comores Islands* Mozambique Tunisia
Ethiopia* Namibia Uganda*
Gabon* Reunion Zambia*
Ghana* Rwanda* Zimbabwe
Guinea-Bissau* Senegal  
Kenya Seychelles*  
Lesotho Somalia*  

Asia 

Cambodia* Malaysia Sri Lanka*
Hong Kong (SAR China) Maldives* Tajikistan*
Indonesia Nepal* Thailand
Kyrgyzstan* Philippines Timor-Leste*
Laos* Singapore  
Macao (SAR China) South Korea  

Europe 

Ireland Kosovo Russian Federation

Oceania 

Cook Islands Micronesia Samoa*
Fiji Niue Tuvalu*
Marshall Islands* Palau Islands* Vanuatu

Caribbean 

Antigua and Barbuda Dominican Republic St. Lucia
Bahamas Grenada St. Vincent and the Grenadines
Barbados Haiti Trinidad and Tobago
British Virgin Islands Jamaica Turks and Caicos
Cayman Islands Montserrat  
Dominica St. Kitts and Nevis  

Americas 

Argentina Ecuador Nicaragua
Belize El Salvador Panama
Bolivia* Falkland Islands Paraguay
Brazil Guatemala Peru
Chile Guyana Uruguay
Costa Rica Honduras Venezuela

Middle East/Other 

Armenia* Israel Qatar
Georgia Jordan*  
Iran* Palestinian Territory  



Source: BusinessTech

South Africa is one of the 10 most heavily taxed countries in the world (tax-to-GDP ratio), according to the a report by the International Monetary Fund (IMF).

Personal taxes have increased by 125% over the past decade. From 2017 to 2018, personal income tax accounted for R1.22-trillion in taxes collected by the national government and ranks as the country's number-one source of tax, accounting for 38% of all tax revenue. Just behind this is value added tax or VAT accounting for 24%, followed by company income tax, which accounts for 20%.

Because of these excessive figures, South Africa finds itself among the world's top-ten-highest-taxed countries in the world according to the International Monetary Fund (IMF).

"We're up there with the New Zealands and the Denmarks of the world. It's bad when you're not getting a return," Wayne Duvenage, chairperson of the Organisation Undoing Tax Abuse, told The Money Show.

"There is sufficient money, it all comes down to governance. Iinstead, we have cronyism, maladministration, corruption. If we can fix that, we'll have the best country in the world," he added.

Out of 115 countries with substantial tax data, South Africa ranks as the 8th-most-taxed country in the world, just behind New Zealand and Sweden. Namibia and Lesotho are even more highly taxed, however, featuring in second and third place just behind Denmark which took the top spot as the world's most taxed country.

The world average for tax according to the IMF was 15.4% in 2017 and South African residents pay more taxes than the United Kingdom (25.7%), Australia (22.2%), Brazil (12.7%) and the United States (11.9%).

 

Credit: CapeTownEtc.COM

South Africa’s four major telecommunications companies have asked President Cyril Ramaphosa to support Huawei in South Africa, reports the Sunday Times.

In a letter dated 7 June, the CEOs of Cell C, MTN, Vodacom and Telkom wrote to the president to ask for help in dealing with the repercussions of an executive order signed by US President Donald Trump against Huawei.

In May, the Trump administration issued an order that could restrict Huawei from selling equipment in the US. Washington also put the company on a blacklist, threatening its supply of American components – from semiconductors, to the Google apps that run on its smartphones.

The CEOs said that blacklisting Huawei in South Africa would hinder the rollout of a new 5G network, as well as impact the country’s existing 3G and 4G networks.

Ramaphosa’s spokesperson Khusela Diko said that the president would align with his Chinese counterpart, president Xi Jinping, and back Huawei in its fight against Trump.

“Huawei provides a strong backbone to our telecommunication sector and is the frontrunner in 5G network,” said Diko. “The advancements made in that sector are largely because of the investment Huawei made in South Africa.

“The president expressed his concern at any efforts to curtail the efforts of Huawei to deliver a comprehensive, and what we believe to be an advanced solution in the telecommunication space.”

Investment

Huawei has previously pledged to invest heavily in companies that welcome it with open arms.

“Huawei will invest heavily in those countries where we are welcome,” said global vice president of marketing insights Andrew Williamson

“Restricting competition in 5G infrastructure will have huge costs. Governments and companies around the world will have to address those costs against the supposed risks of national security” .

Williamson added that rolling out 5G technology around the world will be a challenge if the US goes ahead with its sanctions.

Trump eases restrictions on Huawei

After a meeting with Chinese President Xi Jinping, Trump told reporters on Saturday that he would delay restrictions against Huawei, letting US companies resume sales to China’s largest telecommunications equipment maker.

Trump later tweeted that his meeting with Xi was “far better than expected.” He said Chinese President Xi Jinping had promised to buy “tremendous” amounts of US agricultural products in exchange.

After Trump and Xi met at the G-20 on Saturday, the two countries plan to restart trade talks that broke down last month.

Trump told reporters he wouldn’t put additional tariffs on China for the “time being,” and that he would allow US companies to supply Huawei.

“US companies can sell their equipment to Huawei,” Trump said. “We’re talking about equipment where there’s no great national security problem with it.”

 

Source: Business Tech South Africa

The South African government believes that the business processing industry is key to job creation. And the sector has indeed created thousands of jobs, in particular for the country’s youth – a group that bears a disproportionate share of joblessness.

But unlike in India, the growth of South Africa’s business process outsourcing sector has not generated the kind of jobs that offer workers the chance of progressing up the career ladder. In South Africa, workers tend to get stuck in the same, low-level and poorly paid jobs with very few prospects of promotion or career development. Their working conditions are also generally poor.

South Africa’s outsourcing industry grew significantly between 1997, when it hosted an estimated 185 contact centre operations, to 2010, when the figure was well over 1000. More recent data isn’t available. But data from 2017 estimated that 228 642 people were employed in the sector.

Most business process services jobs such as in the call and contact centres are taken up by young workers. In the context of the country’s high youth unemployment of more than 52%, government sees the sector as one vehicle for absorbing young workers. However, the sector’s failure to create opportunities for career advancement is proving a trap for young people.

Upgrading technology and processes

The sector is always changing, upgrading its technologies and processes. But do these changes translate into positive impacts for employees? We set out to answer this question in our new research article. We wanted to know whether the upgrading by firms contributed to social upgrading: that is, improvements in wages, working conditions, workers’ freedom of association and bargaining power.

We found that upgrading by firms could lead to social upgrading in the form of improvements in livelihood opportunities. But our research also found that the upgrading by firms led to intense workplace monitoring, insecure employment relations, a lack of career opportunities and adverse physical and psychological impacts.

Our findings suggest that policy makers must ensure working conditions in contact centres are regulated for workers’ well-being.

A stressful environment

Workers view contact or call centres as a good entry point into formal employment as well as a good way to earn at least some income.

But they are also often overcrowded spaces. One person told us they and their colleagues felt like “packed sardines” in their tiny cubicles. The working environment was described variously as “stressful” “strenuous” “demotivating” and “frustrating”.

Contact centre firms have strict workplace controls. Worker performance is carefully quantified and measured based on sales targets or how many calls workers make. Their work quality, specifically how they interact with customers, is also measured.

And the introduction of various technologies, like predictive dialling and automated customer-relationships management tools, worsen employee stress. This is because workers have to juggle more systems and technologies while responding to customer queries and complaints.

Contact centre jobs are rarely stable and secure. Firms adopt flexible employment structures, a mix of permanent and temporary workers. To keep costs down, they prefer to hire workers through labour agencies and contractors. However, this often results in the exploitation of workers.

This flexibility makes workers vulnerable. Union representation remains low among call centre workers. Workers are often fired without the option of arbitration or settlement, affecting their future career prospects. BPESA, the industry association, estimated that in 2016 the industry’s attrition rates stood at about 37.6%, compared to India’s 30%.

Lack of labour mobility

Another problem with this flexible, precarious environment is that there’s little room for agents’ internal progression within a firm. This is largely because of a high volume of temporary and part-time employees hired through labour agencies or contractors.

This stands in contrast to India, where contact centre workers have a greater chance of achieving upward labour mobility. This is due to India’s position as the world’s leading player in outsourced services. India’s bigger business processing outsourcing industry enables workers to bargain for promotions and higher incomes.

Job creation in South Africa has slowed down since 2000, and employment is becoming more skill intensive. The business processing industry is also showing signs of economic upgrading. The unskilled and semi-skilled workforce, therefore, faces limited employment opportunities.

Youth, particularly black South Africans, struggle to secure meaningful employment in the local labour markets. Those who find work in contact centres have less hope for career progression. While the average tenure of agents in call centres is around two years, we met a few workers who were agents for more than five years in the industry and asked them why they were still working in the sector. One agent replied that they had no choice but to continue to work and to hope that working conditions would eventually improve.

Recommendations for policy makers

The South African government needs to rethink its reliance on job incentives for employment generation in the business process outsourcing sector. Incentives have generated some jobs. But the questionable working conditions in the contact centres can have detrimental long-term impacts on workers.

Without adequate job opportunities generated elsewhere in the local labour markets, contact centre workers face constrained labour mobility, risk of long-term unemployment and poverty.

The state, in partnership with the industry and the education sector, should also step up skills training provision (technical and soft skills) for the new workforce to be better suited to the demands of the contemporary labour markets.

High unemployment and the prevalence of low-paid work, primarily in the informal sector, can affect young work seekers’ material, psychological and social well-being.


Read more: South Africa's informal sector: why people get stuck in precarious jobs


To avoid the real potential for an erosion of working standards and systemic exploitation that comes with some of the jobs in the business process outsourcing sector the government must ensure that it has the institutional capacity to monitor working conditions in contact centres.The Conversation

Mohammad Amir Anwar, Post-doctoral Research Fellow, University of Oxford

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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