During the 1990s, the forestry industry in South Africa outsourced most operations to contractors. This was done to increase flexibility, to save on equipment costs and the fixed costs associated with full-time employees, and to avoid labour legislation introduced by the government. However, this system does not always benefit forestry contractors or workers.

Research from the International Institute of Environment and Development, UK, and the University of Western Cape, South Africa, investigates how forestry contracting contributes to poverty alleviation by providing jobs and enterprise opportunities. The researchers used country-wide interviews, documented sources and field work in northern KwaZulu-Natal to produce a national appraisal of forestry contracting.

A major problem with outsourcing forestry work is unequal power relations: the companies set the rates paid for forestry work and contractors have little power to influence these. Companies save up to 60 percent of costs by outsourcing forest work. In other words, outsourcing means forest owners invest less money in local areas and take more out. To some critics, this means that poor people subsidise large multinational companies.

Forestry contracting enterprises have a high rate of failure, for several reasons:

• Low profit margins and the high risks of forestry work, such as poor weather conditions, the availability of transport and access to processing mills.
• A lack of business support for emerging contractors, including access to credit and training.
• Low and declining levels of productivity amongst the workforce as a result of lack of adequate nutrition and ill-health. HIV and AIDS are prevalent amongst workers and forestry work carries a high risk of chronic physical injury.

Forestry workers also suffer under this contracting system. Jobs provided by forestry contractors are not enough to lift the vast majority of forestry workers out of chronic poverty, or prevent them from falling further into poverty. Wages are low and there are no pensions or medical assistance schemes. They are not represented by unions and have little power to influence wages or working conditions. Furthermore, many workers lack access to basic medical facilities and are in poor health.

Contracting enterprises need support to strengthen their position in the forestry industry. The research recommends:

• The rates paid to contractors by companies that own forests should increase to reflect the rising costs and risks facing contractors.
• Contractors must increase their collective bargaining power and influence, through strengthening the South African Contractors Association (SAFCA), the organisation that represents them. 
• Companies should improve their social standards and regulate themselves. This may include developing industry-wide social standards for commercial forestry.
• Measures must be taken to improve conditions for forest workers. The research suggests:
• Existing laws to protect forestry workers must be better enforced. 
• Workers must be better organised and represented. Unions and other civil society groups need to take up the challenge of providing a voice for workers employed by forestry contractors.
• Workers need better access to low-interest loans. Self-help savings and loan schemes, funded and run by informal sector workers themselves, have been successful in other sectors and other countries; these could provide lessons for the forestry sector in South Africa.

Source(s):
‘Forestry contractors in South Africa: what role in reducing poverty?’ IIED and PLAAS Discussion Paper, IIED: London and PLAAS: University of Western Cape South Africa, by Jeanette Clarke and Moenieba Isaacs, 2005 Full document.

Funded by: Dutch Ministry of Foreign Affairs, German Federal Ministry for Economic Co-operation and the European Union

id21 Research Highlight: 31 March 2006

Further Information:
Jeanette Clarke and Moenieba Isaacs
Programme for Land and Agrarian Studies
University of the Western Cape
Private Bag X17
Bellville 7535
South Africa

Tel: +27 21 959 3733
Fax: +27 21 959 3732
Contact the contributor: jclarke@gem.co.za

International Institute of Environment and Development, UK

University of Western Cape, South Africa

Other related links:
'The benefits of working together: small and medium forest enterprises'

'Does the privatisation of plantations help poor people?'

'The challenges of certifying sustainable management of small forests'

'Fighting illegal activities in Asian forests'

See id21's links for forestry