Using unregistered building contractors is a shortsighted move that promises problems. Simply put if a contractor is unregistered they have no obligation to comply with standards and best practices required from a regulatory body. Using these contractors is detrimental to your business, and the country.
The facts
The Building Industry Bargaining Council (BIBC) investigated and found that unregistered contractors are often incapable of performing the tasks they are paid to do. On top of this, they will miss deadlines and overshoot the budget.
People using unregistered contractors might think that the short-term cost advantage is worth it, but the long-term disadvantages outweigh the positives.
The BIBC’s spokesperson Danie Hattingh says that using unregistered businesses results in “financial penalties” and in many cases, the work has to be redone completely in order to comply with quality standards.
The social impact
Danie Hattingh, business spokesperson for BIBC
Luyanda Mgqamqo, Labour spokesperson for BIBC
Unregistered businesses account for 38% of the total employment in the construction sector. Being unregistered means that these businesses often do not follow proper labour law.
This includes not adhering to the minimum wage guidelines, no overtime pay and a massive problem in the construction sector not abiding by safety regulations.
It is in these unregistered businesses that workers are exploited. From low morale in the workforce to unskilled workers performing difficult tasks without proper guidance or safety the staff turnover rate and injury rate are higher among unregistered businesses.
The BIBC’s council spokesperson for labour, Luyanda Mgqamqo, notes that these employees often encounter irregular working hours, fluctuating income and reliance on temporary work. Even more concerning is that their dependents are not covered in the case of injury or death. which is commonplace with businesses that do not follow labour laws.
On the other hand, registered businesses are obligated to pay proper wages, contribute to retirement, provide annual leave, and even pay bonuses. the BIBC collected and paid out more than R200 million in leave pay and bonuses at the end of 2023 – funds that went directly into the pockets of employees whose registered employers had contributed on their behalf throughout the year.
Registered workers abide by safety protocols.
The moral of the story
Using registered businesses whose employees are treated well comes with social benefits. Happier and more qualified workers who follow safety protocols are able to perform better. Registered contractors have standards to uphold which ensures that the job is done properly the first time around.
