06/03/2026
MEDIA STATEMENT
06 MARCH 2026
SOUTH AFRICAN FEDERATION OF TRADE UNIONS (SAFTU) SUBMISSION TO PARLIAMENT IN SUPPORT OF THE INSOURCING BILL [B19—2025]
Portfolio Committee on Public Service and Administration
1. PURPOSE OF THIS SUBMISSION
1.1 SAFTU submits this memorandum in full support of the Insourcing Bill [B19—2025] (“the Bill”).
1.2 The Bill is an essential intervention to end the system of wholesale outsourcing that has produced:
• the exploitation of workers;
• the erosion of fair labour practices;
• the hollowing out of internal state capacity;
• deepening inequalities through poverty wages;
• and the expansion of tender-driven corruption.
1.3 SAFTU is a socialist-oriented federation. Our support for the Bill is rooted in:
• the constitutional duty to realise socio-economic rights,
• the requirement to build a capable developmental state,
• and the need to restructure the economy away from extractivism and neoliberal austerity.
2. THE BILL: WHAT IT DOES AND WHY SAFTU SUPPORTS IT
2.1 The Bill correctly identifies the crisis created by outsourcing
2.1.1 The Bill’s Preamble correctly recognises that outsourcing has generated:
• administrative problems,
• corruption in the tender system, and
• the need to enhance accountability in service delivery, and it explicitly links the Bill to the duty to end the exploitation of workers and to the constitutional right to fair labour practices (s23). (Insourcing Bill, Preamble and s1 definition of “insource”.)
2.2 The Bill creates a framework to make insourcing the default
2.2.1 The Bill applies to all organs of state and lists the services that must be insourced, including:
• security, cleaning, gardening,
• general maintenance (repairs/refurbishment),
• catering, auditing, transport,
• IT and administration,
• healthcare-related services,
and any other prescribed services. (s2(1)–(2).)
2.2.2 The Bill requires the Minister to develop an insourcing policy that:
• requires insourcing for listed and prescribed services,
• limits outsourcing and promotes job security,
• sets criteria for when outsourcing may occur,
• requires annual skills audits and a skills database,
• and promotes fair labour practices. (s3(a)–(g).)
2.2.3 The Bill obliges accounting officers to implement the policy and ensure resources, deployment, and monitoring systems are in place. (s4.)
2.2.4 The Bill makes insourcing obligatory, and permits outsourcing only where circumstances prevent or severely hinder insourcing, and even then, only after confirming the service cannot be provided by existing staff (using the skills database) and requiring training by suppliers to enable future insourcing. (s5(1)–(5).)
2.2.5 The Bill limits exemptions to narrow grounds (national security, international supplier, public interest) and requires annual reporting to Parliament on implementation, failures to insource, and training. (s6–s7.)
2.2.6 Transitional provisions prevent disruption of existing contracts but require training where feasible for contracts exceeding 12 months. (s9.)
SAFTU supports this design because it shifts the state away from “contract management government” to a state capable of direct delivery, accountable to Parliament and the public.
3. CONSTITUTIONAL FOUNDATION: THE DISTANCE BETWEEN PROMISES AND REALITY
3.1 Socio-economic rights and the duty to build state capacity (Section 27)
3.1.1 The Constitution guarantees access to healthcare, sufficient food and water, and social security, and requires the state to take reasonable measures to progressively realise these rights.
3.1.2 A state that permanently outsources routine and recurring services:
• weakens direct accountability,
• erodes continuity and institutional memory,
• and becomes dependent on private intermediaries for constitutional obligations.
3.1.3 The Bill strengthens the state’s capacity to meet these obligations by rebuilding internal capability and ensuring accountability.
3.2 Fair labour practices (Section 23)
3.2.1 Outsourcing entrenches two classes of workers in the same workplace performing the same functions:
• permanent public servants with protections,
• outsourced workers with inferior wages, no pensions, insecure contracts, and weak bargaining power.
3.2.2 The Bill correctly identifies the duty to end this exploitation and restore fair labour practices (Preamble; s3(g)).
4. WHY SAFTU IS NOT “OUT OF TOPIC”: THE SOCIAL CRISIS INSOURCING MUST ADDRESS
SAFTU places the Bill within South Africa’s lived reality because insourcing is not a technical procurement tweak it is a structural remedy to a systemic crisis.
4.1 Unemployment crisis
4.1.1 Stats SA QLFS Q4:2025 reports a persistently catastrophic labour market.
(SAFTU’s submission draws on Stats SA’s official release and presentation for the quarter.)
4.2 Poverty, hunger and nutritional inadequacy (PMBEJD)
4.2.1 Stats SA’s poverty analysis shows that food poverty persists at massive scale, and Stats SA itself reports about 10.8 million people as food poor (2023).
4.2.2 SAFTU insists we cannot discuss poverty honestly without discussing the cost of nutritional adequacy not only constrained expenditure.
4.2.3 The Pietermaritzburg Economic Justice & Dignity Group (PMBEJD) February 2026
Household Affordability Index provides a Basic Nutritional Food Basket benchmark and explicitly links it to “the inadequacies of low wages and social grants.”
4.2.4 PMBEJD reports a Basic Nutritional Food Basket cost for February 2026 (national benchmark).
4.3 Social grants are lifelines but insufficient for nutritional adequacy
4.3.1 National Treasury confirms Budget 2026 grant values and SRD continuation.
4.3.2 SAFTU’s clear framing (for Parliament):
• The Old Age Grant covers only around a third of a nutritious food basket.
• The Child Support Grant covers less than a tenth.
• The SRD covers only a small fraction.
Therefore: social grants are lifelines but they are insufficient to secure nutritional adequacy.
4.3.3 This is precisely why insourcing matters: insourcing improves wages and conditions, raising living standards and reducing hunger.
4.4 The contested terrain: poverty measurement and rebasing
4.4.1 Stats SA explains methodology and revisions in poverty reporting (including poverty lines and rebasing).
4.4.2 SAFTU cautions Parliament: technical revisions must not be weaponised to claim that poverty is “solved” while households cannot afford nutritious food.
The PMBEJD basket evidence is crucial precisely because it measures nutritional adequacy rather than constrained expenditure.
5. THE NEOLIBERAL TRAJECTORY: GEAR TO OPERATION VULINDELA AND GAIN AND WHY IT FAILED
5.1 Outsourcing must be understood as part of a broader neoliberal policy trajectory: the state withdraws from direct provision, relies on private intermediaries, and treats public services as contract markets.
5.2 The core promise of this model is: “stabilise fundamentals, private investment rises , growth and jobs follow.”
5.3 The evidence shows the opposite: investment remains weak, growth stagnates, unemployment persists, and inequality deepens.
5.4 Investment is the decisive indictment
5.4.1 National Treasury Budget Review 2026 reports fixed investment at 14.2% of GDP, with private investment at 10.1% and public sector investment at 4.1% (same series).
5.4.2 SAFTU’s political conclusion is therefore unavoidable:
It is a typical case where a surgeon declares the operation successful, but the patient has died.
The “fundamentals” may be praised.
The lived reality is mass unemployment, hunger, collapsing services, and deepening inequality.
6. MANUFACTURING COLLAPSE, IDLE CAPACITY AND FINANCIALISATION, WHY INSOURCING IS ECONOMICALLY RATIONAL
6.1 South Africa’s crisis is structural: deindustrialisation, extractivism, weak beneficiation, and financialisation.
6.2 The economy’s productive base has weakened while finance dominates investment decisions and capital allocation.
6.3 Stats SA’s capacity utilisation release shows manufacturing utilisation at 76.0% in February 2025 meaning under-utilisation of 24.0%.
6.4 SAFTU’s point: nearly a quarter of industrial capacity is idle while millions are unemployed. This is not a shortage of “flexible labour markets.” It is demand weakness, underinvestment, and structural failure.
6.5 Insourcing improves wages and job security, which:
• raises household demand,
• improves utilisation of capacity,
• strengthens domestic markets,
• and supports industrial recovery.
7. THE CORE OF THIS SUBMISSION: THE COST OF OUTSOURCING AND THE FULL DEFENCE OF INSOURCING
7.1 Outsourcing is justified by a false efficiency narrative
7.1.1 Outsourcing is sold as:
• cheaper,
• more efficient,
• better quality.
7.1.2 In reality, outsourcing restructures costs and creates an extraction layer.
7.2 The real cost structure of outsourcing
7.2.1 Outsourcing replaces a direct cost (wages/benefits) with a composite cost:
contractor wage (often lower) + profit margin + tender risk premium + administrative overhead + contract monitoring + compliance/legal costs + contract variations and extensions.
7.2.2 So-called “savings” are often achieved by suppressing wages and externalising insecurity onto workers, not by efficiency gains.
7.3 Wage suppression is a cost transfer to workers
7.3.1 Outsourcing “saves” money by:
• reducing wages,
• avoiding pensions,
• avoiding benefits,
• using precarious contracts,
• weakening bargaining power.
7.3.2 Insourcing reverses this injustice by raising wages and standardising conditions, consistent with developmental goals.
7.4 Outsourcing carries a corruption premium and inflated pricing risk
7.4.1 Former Chief Procurement Officer Kenneth Brown publicly warned that 30–40% of procurement spending could be eaten by inflated prices and fraud (widely reported and corroborated by multiple sources).
7.4.2 AGSA’s PFMA reporting consistently identifies procurement and contract management failures as major governance weaknesses and drivers of irregular expenditure.
7.4.3 SAFTU’s structural argument is simple and powerful:
Outsourcing multiplies contracts.
Contracts multiply discretion.
Discretion multiplies corruption risk.
Insourcing reduces the corruption surface area.
7.5 Outsourcing creates an administrative burden and “contract management government”
7.5.1 Outsourcing forces departments to invest in:
• bid specs,
• adjudication,
• oversight,
• litigation risk,
• performance management.
7.5.2 Instead of building service capability, the state builds contract management capacity, and becomes dependent on contractors.
7.6 Outsourcing creates lock-in and long-term escalation
7.6.1 Contracts begin with “competitive pricing” and escalate through:
• variations,
• extensions,
• scope creep,
• vendor lock-in.
7.6.2 Insourcing avoids dependency and restores long-term control.
7.7 Insourcing is therefore fiscal discipline, not fiscal recklessness
7.7.1 True fiscal discipline is eliminating:
• profit extraction from routine services,
• procurement inflation,
• tender leakage,
• and contractor dependency.
7.7.2 Wage bill containment while outsourcing expands is a contradiction: it shrinks capacity but grows procurement rents.
8. BEE, ELITE EMPOWERMENT AND INTRA-BLACK INEQUALITY
8.1 SAFTU supports genuine transformation and decolonisation of the economy.
8.2 But outsourcing has frequently been justified through BEE procurement narratives while producing:
• elite contractor enrichment,
• politically connected intermediaries,
• widening inequalities within the Black population.
8.3 Insourcing changes the class trajectory of public spending:
• from contractor profits to worker wages,
• from rent-seeking to service capability,
• from elite capture to broad living-standard improvement.
9. THE “BLOATED STATE” MYTH AND WHY IT IS USED TO JUSTIFY AUSTERITY AND OUTSOURCING
9.1 The ideological claim of a “bloated state” is used to justify:
• austerity,
• wage bill cuts,
• early retirement drives,
• and expanded outsourcing.
9.2 OECD Government at a Glance reports that general government employment averaged 18.4% of total employment across OECD countries (2023).
9.3 Nordic welfare states often held up for service quality sustain substantially larger public employment shares.
9.4 SAFTU’s conclusion:
South Africa’s crisis is not too many public servants it is too much outsourcing and too little internal capacity, worsened by austerity.
10. WAGE BILL CONTAINMENT AND EARLY RETIREMENT: A CRIMINAL SOCIAL OUTCOME
10.1 SAFTU rejects the wage bill offensive that seeks to push large numbers of public workers into early retirement while contractors expand.
10.2 Mechanically pushing thousands out of stable work into insecurity in a society with widespread retirement poverty is socially destructive and undermines service delivery.
10.3 This is directly contrary to the constitutional duty to improve social conditions, and it undermines the state’s ability to deliver healthcare, education, safety and basic services.
11. SAFTU’S SPECIFIC INSOURCING DEMANDS (CENTRAL TO THIS SUBMISSION)
This section is where SAFTU demands insourcing in concrete terms beyond principle.
11.1 EPWP workers
11.1.1 EPWP was designed as temporary, but in practice it has become a permanent mechanism to perform ongoing functions through stipends and insecurity.
11.1.2 SAFTU demands:
• a national/provincial/municipal audit of EPWP workers performing permanent functions;
• conversion of such roles into funded permanent posts;
• recognition of years of service upon absorption;
• alignment to public sector wage scales and benefits;
• pension and social protection inclusion.
11.2 Community Health Workers (CHWs) and Community Caregivers (CCGs)
11.2.1 CHWs/CCGs are core to primary healthcare and the fulfilment of socio-economic rights.
11.2.2 SAFTU demands:
• full absorption into the public health establishment;
• standardised salary scales across provinces;
• pension and medical inclusion;
• training, career pathing and job grading.
11.3 Early Childhood Development (ECD) practitioners
11.3.1 ECD is foundational to educational equality, yet ECD workers are often underpaid and insecure.
11.3.2 SAFTU demands:
• stable public funding frameworks;
• wage standardisation and labour protections;
• progressive integration into public education employment systems.
11.4 Support staff: cleaning, security, catering, maintenance, admin
11.4.1 The Bill’s service list properly targets the routine outsourced functions that create exploitation and tender corruption. (s2(2).)
11.4.2 SAFTU demands:
• equal pay for equal work in public institutions;
• phased insourcing of these functions;
• termination of labour-broker/contractor dependency;
• full benefits and protections.
11.5 Ending the dual labour regime in the state
11.5.1 SAFTU demands a unified public employment framework so that “public work” is no longer performed through fragmented categories: outsourced, stipend, EPWP, NGO-contracted.
12. HOW THE BILL MUST BE STRENGTHENED AND IMPLEMENTED
SAFTU supports the Bill and recommends Parliament strengthens implementation by ensuring:
12.1 Clear national timelines and measurable milestones for insourcing across all organs of state.
12.2 Worker protection during transition:
• no loss of income,
• recognition of service,
• portability of benefits where relevant.
12.3 Narrow exemptions (s6) must be strictly justified and transparently reported.
12.4 The skills audit and database requirement (s3(e)–(f)) must be properly funded and enforced.
12.5 The training-for-insourcing clause must be enforced:
• section 5(4) must not become a paper clause,
• and procurement must compel genuine skills transfer so insourcing becomes real, not theoretical.
12.6 Quarterly reporting to the Minister (s5(5)) and the Minister’s annual report to Parliament (s7) must include:
• cost comparisons,
• wage and benefit improvements,
• reductions in contract volumes,
• progress on absorption (EPWP/CHWs/CCGs/ECD/support staff),
• and steps taken to prevent re-outsourcing.
13
13.1 SAFTU supports the Insourcing Bill because it is a structural correction to a failed model.
13.2 Outsourcing has:
• suppressed wages,
• entrenched precarity,
• expanded procurement corruption risk,
• hollowed out state capacity,
• enabled elite accumulation through tender markets,
• and failed to deliver development.
13.3 Insourcing:
• restores constitutional accountability,
• improves wages and conditions,
• reduces corruption surface area,
• strengthens internal capability,
• supports domestic demand in a stagnating economy with idle capacity,
• and advances a developmental state.
13.4 Parliament must pass and strengthen the Insourcing Bill without delay, and must treat its implementation as a national developmental priority.
A statement was issued on behalf of SAFTU by the General Secretary, Zwelinzima
Vavi.
For media inquiries, contact the National Spokesperson at
Newton Masuku
newtonm@saftu.org.za
0661682157
Media Officer
Asive Dyani
0719019564
