Competition Act Corners Recruitment
Are wages fair in an economy when employers collude and hide their own information about pay from job applicants?
Without specific regulations curbing unfair employer power, profits can be extracted from labour and continue boosting inequality.
To provide for the establishment of a Competition Commission responsible for the investigation, control and evaluation of restrictive practices, abuse of dominant position, and mergers;The Competition Act
Competition Law can stimulate a fair competition for talent and prevent stagnating or unfair wages. If payslips are prevented from the recruitment process, black people and women will be offered the same wages as others.
Sure, one job applicant may be offered more based on their specific skillset, but their offer would be based on policy and organisational pay scales, not a former or current employer.
Pay Slip and CTC Demands is Abuse of Power
The Organisation for Economic Co-operation and Development (OECD) have been highlighting and expanding on the protections required to protect labour markets through Competition legislation for years.
Many firms demand pay slips or ‘cost to company’ (CTC) from job applicants.
Yet spying on rival employer pay and abusing a dominant labour market position are clear violations of the Competition Act!
Poach and Price-fix Pay
When recruiters and employers obtain competitive compensation information, it’s easier to poach talent, offering a marginal raise to out-compete a current employer.
Even the Competition Commission has been caught conducting anti-competitive recruitment by making it compulsory for job seekers to submit privileged cost to company information.
Compulsory means job seekers are forced to submit, the Commission understood that the disclosure is not a willing one and that applicants must be obliged to submit to an unfair demand.
The Competition Commission condones the use of widespread employer advantages during recruitment.
This is bad news for the public as CompComSA exists to protect an inclusive competitive economy, their conduct sets a precedent for other employers who also want to exploit labour markets in this manner.
Competition Law should be used to prevent employers from colluding on pay and conditions of employment to gain market advantages.
Competition means employers make competitive offers to attract job seekers, to benefit from their skills and add value to organisations. When employers don’t compete for talent, they push the view that people work to have a job, they don’t work to pursue better economic opportunity through wages.
Catch our question posed to the Competition Commission about labour market competition.
When employers have too much power it’s referred to as monopsony.
Employers reach for monopsony power during recruitment. This gives them the power to pay wages lower than what their business can afford.
Unfair employer power must be regulated in South Africa so that labour markets conform to S23.1 of the Constitution ‘everybody entitled to fair labour practice.’
Please help us take action and advocate for a fair economy accessible to everyone.
Sign our petition, make it fair!
Lilenstein, K., Woolard, I., Leibbrandt, M. (2016). In-Work Poverty in South Africa: The Impact of Income Sharing in the Presence of High Unemployment. A Southern Africa Labour and Development Research Unit Working Paper Number 193. Cape Town: SALDRU, University of Cape Town http://opensaldru.uct.ac.za/handle/11090/852
Global Forum on Competition ‘DOES COMPETITION CREATE OR KILL JOBS’ Contribution from the United States, 20-Oct-2015 https://www.ftc.gov/system/files/attachments/us-submissions-oecd-2010-present-other-international-competition-fora/1510jobscompetition.pdf
Wage determination in perfectly competitive labour markets https://www.economicshelp.org/labour-markets/wage-determination/