Outsourcing and insourcing

4th October 2019 By: Terry Mackenzie-hoy

The wonder of politicians is their extreme stupidity.

Somebody once explained to me that rocket scientists know lots about rockets but not much about anything else. Knowing lots about one thing. They do not know about warheads, for example. So, a less intelligent person coordinates the warhead requirements with the rocket requirements, thus knowing a bit less about a bit more.

So, there is a succession of people who know less and less about more and more until you get to the politicians, who know nothing about everything. Hold this thought. Let us turn to the petrochemicals industry. If a petrochemicals company wants to build a new plant, it takes about 18 months to do the detailed design, the electrical drawings, the civil engineering drawings, the piping diagrams and so on and on, all of which involves many, many people. The whole design project is outsourced to contracted staff at a fixed rate per hour for each staff member. When the design is done, the outsourced contracted staff move on to another project at another location.

There is no chance that they could be permanently employed as a design team, burning hours until the next big project comes along. This is how it is done. And, if in a country like South Africa, outsourcing is banned, then the petrochemicals company owners will simply move their design project to another country, taking their billions with them. Okay?

Now a bit of history. Back in the day, the University of Cape Town (UCT) had, as permanent staff, security guards, caterers, cleaners and so on. One day, they decided to strike for better wages. Their demands were a wage which was more than that of a lecturer with a master’s degree. They burned cars, trashed lecture theatres, burned car tyres and completely succeeded in shutting down lectures for two weeks. Many were charged with malicious damage to property and, within a year, all of those permanent positions had been outsourced.

But now some politicians want UCT (and government) to insource all labour requirements – back to permanent employees. The difficulty with this is that it forces an academic institution to negotiate with unions all the time or face industrial action. The fact of the matter is that the petrochemicals design project system is the best. If you come to work and work efficiently, you will get paid at your rate per hour. If you stay home, no pay. If you riot, then no pay and no job.

I have found, over seven years of being a contracted worker, that I made more money than as a permanent employee. I still paid tax but my pension was my option. I was not forced to join a medical aid and, since fewer staff did more work than permanent staff, our hourly rates were pretty good. There is an argument that you have ‘job security’ if you are a permanent employee. Really not true. You are one retrenchment letter away from no job. But, if you are prepared to accept contract work, you are much more likely to get work than a person looking for a permanent position. Employing permanent people is very difficult. There is a training period. And so on. With the contractor, they get to do the work and that’s it.

But the politicians want people to have permanent jobs. Then they can go on strike and wield political pressure. They can actively encourage overemployment. We all know that State-owned power utility Eskom has about 50% more staff than it needs, all of them permanent. They cannot be dismissed without shutting Eskom down. But if Eskom had been wise enough to employ contracted staff, it would not be in the hole that it has dug as a result of staff costs. I know this all goes against common sense: the phrase ‘doesn’t have a permanent job’ is touted as a curse on a person. It should be a blessing – free to work hard and be well paid. But I doubt, when I see the politicians dozing in Parliament, that they will ever get it.