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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Transaction costs and labour contracting in the South African forestry industry
Authors:Goedecke, E.J.
Ortmann, G.F.
Periodical:South African Journal of Economics
Geographic term:South Africa
Subjects:labour contracts
law of contract
Abstract:The first part of this paper offers an economic explanation of exchange and contracts. It suggests that transactors modify their individual behaviour so that an efficient contract is effected, where all costs, including production and transaction costs, are minimized and both parties are better off. Transaction costs are then dealt with, providing explanations for institutional structures which may not at first glance seem to be economically optimal. The latter part of the paper focuses on labour contracting in the South African forest industry and the relationships between certain forestry companies, labour contractors and trade unions. Contracting is said to have emerged in response to increasing labour costs. The paper therefore proceeds from a general discussion on efficient contracting to an example of efficient labour contracting in the forestry industry of South Africa, given the social, economic and political environment of the country. Representatives of two major forestry companies, the Printing, Paper, Wood and Allied Workers' Union (PPWAWU) and five labour contractors were interviewed to gauge the relationships between the forestry companies, contractors and trade unions. Policy implications pertaining to the future of labour contractors and unions in the forestry industry are also discussed. Bibliogr.