In the ongoing tension between capital and labour, South Africa’s private sector is not exempt from the shadows of exploitation and corruption. From chronic underpayment to hazardous working conditions, the plight of South Africa’s workforce demands urgent attention. The recent uncovering of the withholding of pension funds and other benefits from private security guards is particularly representative of the rot within the private sector in South Africa.
There are many pervasive issues within the private sector. Many find themselves trapped in low-wage jobs with minimal job security and inadequate compensation for their labour. Beyond monetary exploitation, workers in the private sector are frequently subjected to hazardous working conditions. One glaring example is the construction industry, where workers face life-threatening risks daily. Lack of proper safety measures, inadequate protective gear and long working hours contribute to a perilous environment. Additionally, the prevalence of precarious employment practices, such as temporary contracts and the gig economy, leaves workers vulnerable to exploitation.
However, what has recently been uncovered in the private security sector on the denial of benefits to workers, shows us the extent of the cruelty of corruption and exploitation prevalent in the private sector. It is essential to shed light on the alarming trend of private security companies withholding pension funds, provident funds and health benefits from their workforce. This reprehensible financial exploitation, affecting thousands of workers who brave daily risks to ensure our safety, demands immediate attention and decisive action.
Revealed by the Financial Sector Conduct Authority (FSCA), more than 3,262 companies and municipalities find themselves in arrears for pension fund payments, with some cases dating back over two decades. Within this disturbing scenario of financial misconduct, the private security sector emerges as the major culprit, accounting for an overwhelming 83% of entities failing to meet provident fund obligations. A staggering 2,224 companies within this sector have neglected their responsibilities to the Private Security Sector Provident Fund, accumulating an outstanding debt of R6bn.
For decades mineworkers in South Africa have faced hurdles in accessing their pension funds, with many going to the grave in poverty, never having enjoyed the fruits of their labour.
This situation is a direct violation of Section 13A of the Pension Fund Act, as these companies exploit legislation designed to protect the financial interests of workers with a brazen disregard for their obligations. This, however, cannot occur without state collusion or laxity in maintaining measures, which is why the Private Security Industry Regulatory Authority (PSIRA), tasked with overseeing these companies, must also be held accountable for permitting such blatant disregard for the law and the constitutional rights of workers.
This is not the first time, or the first sector to face this issue. For decades mineworkers in South Africa have faced hurdles in accessing their pension funds, with many going to the grave in poverty, never having enjoyed the fruits of their labour. In recent years, the Mineworkers Provident Fund faced scrutiny for retaining a deceased fund member’s savings for nearly 13 years. Throughout this period, the deceased member’s life partner and child had to manage without receiving any payouts from the fund. Only after being compelled to address the issue did the fund reluctantly make the necessary payments.
In 2017, a pension fund administrator overseeing Anglo Platinum employees reportedly “lost” a substantial amount of R255m belonging to mineworkers. The collective losses for the Bophelo Beneficiary Fund (BBF) potentially reached R560m, dealing a severe blow to the families of deceased mineworkers who depend on these funds for survival. This incident joins a distressing lineage of financial mismanagement within the pension system.
A particularly devastating episode unfolded in 2007 with the Fidentia scandal. The chief orchestrator, J Arthur Brown, recklessly squandered about R1.3bn in investments, resulting in more than 47,000 beneficiaries — predominantly mineworkers and their families — being left in destitution. These instances underscore the urgent need for stringent oversight and reforms within the pension fund management system to protect the financial interests of workers and their dependents.
The distressing reality of the deplorable treatment of workers extends beyond the workplace, reaching a point where they are unable to see the fruits of their labour. Shockingly, private sector employers seem to face no consequences for their actions. A recent illustration of this systemic issue unfolded when more than 2,000 mineworkers resorted to staging an underground sit-in at Impala Platinum’s Bafokeng Rasimone mine. Their protest was aimed at challenging opaque deductions that lacked clarity and did not bring any tangible benefits to the workforce.
In risking their lives to make a statement and rightfully earn what is due to them, these mineworkers echo the struggles of those at Marikana in 2012, serving as a stark reminder of the dire consequences faced by workers who dare to demand fair treatment and just compensation. The lack of accountability for private sector employers perpetuates a cycle of exploitation, emphasising the urgent need for systemic changes that protect the rights and dignity of the workforce across various industries.
Therefore, there is clearly a huge non-compliance factor with private companies, born of arrogance, and not enough regulation and monitoring on the part of the state and state actors. The issues of minimum wage, Unemployment Insurance Fund (UIF), pension funds and medical insurance are not monitored closely enough to ensure that employees are getting access to the things they are paying for. The issues surrounding the UIF became particularly pronounced, especially during the onset of the Covid-19 pandemic. As workers faced layoffs, attempting to access their rightfully earned funds revealed a slew of scandals. Many were confronted with the shocking revelation that their employers had failed to make the necessary contributions to the fund, despite deductions occurring from employees’ salaries.
As a result, these issues have become prominent cases at the Commission for Conciliation, Mediation and Arbitration (CCMA), but the CCMA itself has not been immune to the challenges facing the broader system. Persistent budget cuts over the years have left the institution severely understaffed and overwhelmed, grappling with an ever-mounting backlog of cases. This backlog is indicative of a systemic failure, emphasising the urgent need for regular checks and balances to ensure that employers consistently adhere to regulations. A proactive approach from the state in monitoring and enforcing compliance could potentially alleviate the burden on the CCMA and, more importantly, prevent cases from reaching the point of adjudication in the first place.
It is, therefore not lost on the EFF, that the ANC government has failed to hold the private sector accountable, particularly because they seem to share the same interests, thereby compromising their ability to protect workers and our economy. The ANC’s astounding complacency allows the private sector to act with impunity, and has led them to commit an ongoing major heist through the blood, sweat, and tears of our people for decades.
This is why the issue of private security guards matters strongly to the EFF, it is representative of the general lack of care experienced by workers in the private sector, and it is our intention to take this further in parliament for a full investigation by the minister of employment and labour, Thulas Nxesi. In a letter dated January 15 2024, the office of the chief whip of the EFF wrote to minister Nxesi requesting an investigation into the exposed companies that are non-compliant, urging for mandated rectification of their negligence or face severe consequences, potentially including the revocation of operating licences.
* Hlengiwe Mkhaliphi is the head of the EFF labour desk.
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