The flourishing nature of labour brokerage in South Africa: An investigation into the role of employment and performance uncertainty

Abstract

The objective of this article is to investigate the rationale behind the thriving nature of labour brokerage in specific labour market environments in general and, in particular, the flourishing nature thereof in South Africa. The factors and structures underlying labour brokerage are more complex than are generally assumed and propagated. This paper proposes an argument and explanation as to how non-price factors contribute to reasons behind the uncertainty to be employed and the existing underemployment. The uncertainty of employment enables labour brokers to appropriate rent and to profit from worker effort in the long run. In spite of the appropriation of rent, the presence and activity of brokers create employment at a discount wage for those who are not able to get a job. Labour brokers create jobs by profiting from uncertainty without impacting on the premium wage of insiders and the dynamics in a more secure formal labour market. A case study was done in South Africa to determine if the theory fits the sample.