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WP 02/069 - Special Problems in Securing A Reduction in Working Hours: The Case of Security Workers

Author: 
Paul Lundall

Date of Publication: 
July 2002

Abstract: 
The paper considers the complex process of introducing a regime of shorter working hours in the private security sector in South Africa. While the process of reducing the working hours of security workers in 1999 was bold, there is potential for real gains and losses to be derived from the process and this depends on the system and levels of compensation that are negotiated for the period of transition to the new schedules in working hours. A reduction in normal working hours can affect the size of the normal wage and it has an impact on the proportion of remuneration that can be earned from overtime work. A tension can exist between the method of compensating wages during the phase in which working hours are being reduced. This tension exists between maintaining the old hourly rate or maintaining the old aggregate salary levels of employees. The former shifts the burden of a reduction in working hours onto employees, while the latter results in the burden falling upon employers. The former path was the one followed when working hours were reduced in the South African security sector. Where the old hourly rate is maintained, a reduction in working hours will not have a dramatic impact on the costs of employers and is therefore likely to coincide with an increased demand for labour in the sector. Alternatively, if the reduction results in the cost burden being borne solely by employers, particularly through an adherence to the old aggregate wage levels, wage employment elasticities suggest that it will result in disemployment effects. The paper contrasts the trade-offs between these distinct outcomes.

Download Working Paper: DPRU WP 02/069