The country is facing a looming labour market crisis as a proposed outright ban on triangular employment (labour brokering) threatens to wipe out more than 20 000 jobs, destabilising key economic sectors and imperil business viability across the country.
This was revealed in the Impact Analysis Report on the Prohibition of Triangular Employment, presented by Business Eswatini Chief Executive Officer (CEO) E. Nathi Dlamini in response to the Employment Bill No. 12 of 2024, which contains Section 129; an unprecedented legislative move to outlaw triangular employment arrangements.
The launch was attended by representatives of government ministries, diplomatic corps members, captains of industry, worker organisations, academics and the media.
The report warns that while the prohibition may be well-intentioned in its aim to protect workers’ rights, it risks triggering mass unemployment, financial insolvencies, operational disruptions and widespread socio-economic instability.
It underscores that triangular employment, where workers are supplied by private employment agencies to end-user companies, is a structural feature of Eswatini’s labour market and deeply embedded in sectors critical to livelihoods and the national economy.
What is triangular employment?
Triangular employment, also known as labour outsourcing or labour hire, involves three parties: the worker, the agency that holds the contract and manages payroll, and the company where the employee performs their duties.
The system has long been a cornerstone of flexible labour markets worldwide, allowing firms to manage fluctuating demand, reduce costs and access a diverse workforce.
In Eswatini, the arrangement directly supports about 11 700 jobs and indirectly sustains another 8 000 through supply chains and associated economic activity.
These jobs are largely in low-skilled roles such as security guards, cleaners, drivers and warehouse assistants, with the majority filled by young people and women.
For many companies, triangular employment has been essential in maintaining operational agility and cost efficiency in a highly competitive and resource-constrained environment.
Potential impact of the ban
According to the report, the proposed ban would force the termination of all triangular contracts within 12 months of enactment and this would result in catastrophic consequences, with job losses projected to exceed 20 000 once both direct and indirect impacts are considered.
The study further reflects that more than 11 700 people employed through agencies would be directly displaced while a further 8 000 in supplier and ancillary roles would be affected.
Business Eswatini’s analysis shows that only about 28% of those workers could realistically be absorbed into direct employment by end-user firms, largely because of the higher costs and compliance requirements involved.
This comes against the backdrop of an already dire labour market, with unemployment in the country estimated at 34%; among the highest in the Southern African Development Community (SADC) region.
The displacement of thousands of vulnerable workers would likely drive many into the informal sector, worsen underemployment and heighten socio-economic marginalisation.
Financial implications for businesses
The financial implications for businesses are equally severe. Nationally, severance and termination costs for triangular workers are estimated to exceed E250 million, a burden that 68% of surveyed firms admitted they could not carry without risking insolvency or default.
Sectors such as forestry, agriculture and security are especially exposed, with average liabilities of around E4.2 million for large firms. Small and medium enterprises, which make up about 90% of the country’s formal businesses, face the gravest risks because of their limited financial reserves.
A wave of business failures could cascade into loan defaults, supplier contract breaches and increased insurance claims, undermining supply chains and depriving government of vital revenue from PAYE, VAT and corporate income tax—funds that sustain public services and social programmes.
Operational disruptions in key sectors
The report states that the ban would be deeply disruptive across key industries.
-
Security sector: employs approximately 15 000 triangular workers to safeguard government buildings, financial institutions and private enterprises. The sector could face severe service gaps, rising costs and even compromised national security infrastructure.
-
Forestry & agriculture: depend on more than 22 000 seasonal triangular workers for planting, harvesting and processing. The ban would force payroll restructuring, leading to retrenchments, reduced production and economic decline in rural areas.
-
Sugar industry: heavily reliant on seasonal labour during harvest. Potential disruptions could affect production, contractor viability and community support services such as housing, health and water supply.
These disruptions could in turn reduce foreign exchange earnings, destabilising Eswatini’s broader economic health.
Constitutional and social implications
The report reveals that 72% of employers expect workforce reductions if the ban proceeds, while 55% anticipate accelerating automation to offset rising labour costs—both trends that would compound job losses.
Meanwhile, 76% foresee supply chain disruptions, especially in export-oriented industries.
Beyond economics, the prohibition raises important social and constitutional issues. While its intent is to shield workers from exploitation, a blanket ban may paradoxically leave thousands unemployed and vulnerable to even harsher conditions in the informal sector.
Section 32(1) of Eswatini’s Constitution guarantees the right to engage in lawful trade or business, which a prohibition could infringe upon for both agencies and employers.
The International Labour Organisation (ILO) has also advised against outright bans on labour hire, instead recommending regulation through licensing, contract transparency, joint liability and strengthened labour inspection.
Recommendations
Business Eswatini’s research captured overwhelming opposition from the business community, with 97% of surveyed firms rejecting the prohibition and calling instead for enhanced regulation.
Proposals included licensing and accreditation of agencies, stricter inspection regimes, phased transition periods and sector-specific exemptions. These align with models in neighbouring countries such as South Africa and Namibia, where labour hire is regulated but not banned.
The report urged government to:
-
Withdraw or amend Section 129 to allow regulated triangular employment
-
Ratify ILO Convention 181 on private employment agencies
-
Create a national policy framework for licensing, codes of conduct and stronger inspection systems
-
Implement a phased transition plan over 2–3 years
-
Introduce social protection measures such as retraining and re-employment programmes
Dlamini concluded that the country stands at a critical juncture in its labour policy. While the desire to protect workers is legitimate, the risks of mass unemployment, business collapse and socio-economic hardship cannot be ignored.
Triangular employment, he emphasised, is not a marginal practice but a vital part of the country’s economic fabric. He stated that a blanket prohibition threatens not only thousands of jobs, but also the survival of key sectors and the livelihoods of rural communities.
The path forward, he argued, lies in balanced regulation that safeguards workers while preserving the flexibility businesses need to remain viable.
