Inequality and Economic Inclusion

Employment intermediation for unskilled and low-skilled work seekers Part 1: Overview , NB Ideas, with Strategies for Change and Indego Consulting

  • Year: 2008
  • Organisation: TIPS
  • Publication Author(s): NB Ideas with Strategies for Change and Indego Consulting
  • Countries and Regions: South Africa

Unemployment is one of the biggest challenges facing South Africa. Growth has been inadequate, the skills level requirement of new jobs is continually rising, current skills among the workforce are low and inadequate numbers of low end, unskilled jobs are being created. Finding mechanisms to address this challenge is a key to South Africa’s economic success and the social cohesion of communities. This task demands a combination of macro and microeconomic strategies and falls outside the ambit of this project.

However, with over 500,000 unemployed people applying for placement in a job or for assistance with unemployment insurance through the Department of Labour, and tens of thousands more who are not eligible turning to private and non-governmental organisation (NGO) operators to assist them find work, there is an important role for employment intermediation services in South Africa. Most of those approaching the Department of Labour and the private and NGO operators reviewed in this report are unskilled or semiskilled workers servicing the lower skills end of the labour market.

There is, in most countries, a mismatch between the demand for workers and the supply of job seekers. The causes of this vary from country to country and include: limited information and dissemination on job openings, mismatches between the skills of workers and the demand of employers, the increased mobility of labour, changes in the nature of work, a demand for more frequent upgrading of skills, poor job hunting skills by workers, labour market discrimination, and barriers to access, such as geographic location and the high costs of transport. This can contribute and exacerbate unemployment, as well as long term unemployment of certain groups of people, and/or underemployment.

With limited growth and a contraction in jobs in many of the elementary sectors, traditional policy makers in South Africa have focused their interventions on strategies that aim to strengthen businesses and entrepreneurs. It was hoped that doing so would bridge the divide between the first and second economy. Underlying weaknesses in this approach are the assumptions that everyone has the capacity to be entrepreneurial and that there are level playing fields in the market.

Employment intermediation efforts break from this mould and focus on linking the unemployed into the formal job market primarily as workers but also as trainees and business owners. It is one policy vehicle intended to improve the quality and efficiency of the match of work seekers (supply) and jobs (demand). The employment intermediation sector is a lucrative and competitive sector containing a diversity of operators. Historically, the instrument has been used extensively within the professional, skilled stratum of work seekers which is serviced largely by the private, for-profit agencies and by specific sectors, such as the mining and construction sectors, at the bottom end of the skills spectrum. Interestingly, the number of private operators at the bottom end of the market has increased while the number of NGO and church providers has decreased. Despite this, the market is not evenly serviced and large numbers of people do not have access to intermediation services.

There are many benefits to employment intermediation. Firstly, the service provides increased accessibility to market information to the marginalised, thereby broadening the range of jobs opportunities for which they can apply. Secondly, it transforms nameless faces into people, each with their own story, aspirations and skills offering. This profiling assists in marketing the person and her skills in a similar manner as that offered by private employment agencies within the upper ends of the job market. Doing that helps to match work seekers with available opportunities. Thirdly, employment intermediation agencies offer some security to employers who can contact the agency in the knowledge that they have a track record of those work seekers; that increases the chance of a successful placement. Similarly, employees have a lower chance of job rejection, owing to the matching and job screening undertaken by the agency. Fourthly, employment intermediation also offers opportunities to integrate better training and placement services. The employment intermediator generally has a good knowledge of the labour demands in the market and of the skills base of work seekers. This enables them to target training and subsequent placement more effectively. Fifthly, employment intermediators assist in finding, and at times creating, new opportunities with their proactive lobbying of employers to identify job opportunities. Finally, some services, such as labour brokerage, provide additional services such as transport or aftercare support and mentoring.

Employment intermediation works well in situation of economic growth or where mismatches exist. In situations of economic decline or oversupply other strategies are needed.