Labour

9. Fair labour

Fair labour relates to direct employees, as well as through the company’s exposure to its supply chain by virtue of its brand profile in the minds of its customers and the public at large.

Sub-issues:

• Employee engagement and relations
• Collective bargaining and union practices
• Fair remuneration
• Compensation (following accidents, etc.)
• Managing downscaling and retrenchment
• Employee benefits
• Fair labour practices and human rights
• Housing and living conditions
• Child labour
• Forced labour
• Meeting post-employment obligations

A key aspect in FarSight’s rating (under understanding and context) is employee engagement. How honest, frequent and robust is the engagement and communication with employees such that the organisation is able to resolve concerns, build trust and productive employee relations? How fairly does the organisation arrive at fair wages and salaries (commensurate with work performed and consistent across race and gender)? (This issue places emphasis on companies that employ relatively under-skilled workers.)

Aspects to consider:

• Freedom of association & right to collective bargaining power
• Annual independent (to ensure anonymity) employee satisfaction surveys
• Maturity and level of response to all valid concerns raised

Leading flags:

• Use of employee satisfaction surveys
• Reference to methods of dealing with employee concerns
• Voluntary establishment of employee forums / worker committees
• Reporting transparently and fairly on outcomes.
• Mutual agreement on pay and incentives – proactively and voluntarily negotiated between employer and workers (note initiatives inside and outside of union negotiations).

Expected behaviour: clear and transparent pay scales – market related and in line with local labour laws.

Red flags:

• Lack of recognition or refusal to engage with certain employee groups
• Excessive use of labour brokers or contractors rather than employees
• Cases of harassment or discrimination confirmed

Fair labour in the supply chain

Organisations, particularly those with long supply chains and those in the public eye, should vet their key suppliers for social stewardship concerns and have structures in place to deal with breaches in behaviour, or non-compliance. Continued non-compliance should lead to contractual breaches and/or the termination of business ties (This includes both product suppliers as well as contracted personal such as security services).

The behaviour of security personnel in this regard is a particular aspect that may require scrutiny.

10. Occupational health and safety

How well does the organisation measure, manage and promote the health, safety and wellness of its employees?

Red flags: Lack of leading indicators of an unsafe environment (such as time lost to injuries); increasing rate and severity of injuries; poor recognition and response.

Expected behaviour: a structured health, safety & wellness programme; assessment of general levels of wellness and use of indicators in reporting, such as absenteeism rates; assessment of prevalence of dread disease in local region, industry and organisation; structured wellness programme incorporating dread disease awareness, training, counceling and medication regime.

Best practice: comprehensive risk assessments are regularly conducted, active monitoring of all identified health, safety and security concerns, awareness creation and regular H&S training interventions, the introduction of safer technologies; identification of individuals at risk; programmes catering for mental health, optimisation of the workplace experience, promotion of healthy lifestyles, etc.; quality of reporting.

11. Skills development

Skills development relates to how effectively the company develops the knowledge and skills of its employees, to increase work performance, build post-employment resilience of employees, and to fast track employment equity candidates.

The South African manufacturing sector has under-invested in artisan skills resulting in a shortage of manufacturing skills. Apprenticeships and artisanal training programmes have long been abandoned and their intended replacement, internships, have been slow to catch on, being mired in bureaucratic schemes of government, such as SETAs and B-BBEE legislation. However, this should not prevent companies from acting in their own self-interest by reinvesting in structured in-house training and apprenticeships aimed at their specific needs.

Talent management should be aligned to corporate strategy. Companies should identify the resource requirements needed to deliver on strategy, and work towards matching their workforce to these requirements. This includes the identification of key positions/skills within the organisation requiring special attention in the form of succession planning/career development/frequent performance reviews and feedback sessions.

Indicators include recording and reporting on volume of training (amount spent, training days etc.) by employment category. Leading flags include the prioritisation of key skills and EE with significantly higher than mandatory ‘skills levy’ spending (% of payroll); reporting on outcome of training (return on investment in terms of measurable improvements in productivity).

This issue is also related to key talent acquisition, development and retention, categorised by FarSight under OP/FIN: IP & Manufactured capital. Mismanagement of key talent results in little social externality, thus key talent is not dealt with as a GELSCE issue.