Small and micro enterprises accounted for 55.3% of construction jobs in South Africa in 2024, up from 40.6% a decade earlier (Statistics South Africa). At the same time, the largest 100 firms’ share of industry income fell from 40.0% to 26.7%, highlighting a significant shift in the structure of the construction sector that employs approximately 1.2 million people, including the building industry as a significant component (International Labour Organisation).

These shifts reflect an industry that, over the past 15 years, has become increasingly reliant on subcontractors and smaller businesses to deliver projects. While this has created opportunities for enterprise development, it has also raised important questions around accountability, compliance and worker protection.

For the Building Industry Bargaining Council (BIBC), the key question is simple: as contracting chains become more complex, who takes responsibility for the people doing the work?

According to Danie Hattingh, spokesperson for business at the BIBC, the issue is not subcontracting itself.

“Subcontracting creates opportunities for smaller businesses, supports entrepreneurship and gives contractors access to specialist skills,” he says. “The challenge is ensuring accountability remains clear as work moves through increasingly complex contracting chains.”

The BIBC says understanding the difference between specialist subcontracting and labour-only subcontracting is central to the discussion around worker protection and accountability.

“Specialist subcontractors provide expertise, supervision and technical capability. Labour-only arrangements primarily provide labour, creating a different set of compliance and accountability considerations,” says Luyanda Mgqamqo, spokesperson for labour at the BIBC. “When that distinction becomes blurred, accountability can too.”

Hattingh says specialist subcontracting can improve productivity, quality and skills development. However, labour-only arrangements can make it less clear who is responsible for wages, benefits, employment records and other statutory obligations.

“It is not uncommon for a principal contractor to appoint a subcontractor without full visibility of additional subcontractors engaged further down the chain. As more layers are added, accountability becomes harder to trace and compliance more difficult to monitor,” he says.

During compliance inspections, designated agents sometimes encounter workers who cannot identify their employer or produce contracts or pay slips, making it difficult to determine who is responsible for their wages, benefits and employment obligations.

“This is where the human impact becomes visible,” says Mgqamqo. “Workers may not know who employs them, who is responsible for their benefits, or where to turn when something goes wrong.”

The Council also believes that the phrase ‘informal employment’ is often misunderstood. The Main Collective Agreement makes no distinction between permanent, temporary or project-based employees, with agreed wages and benefits applying to all workers covered by the agreement.

“The misconception is that certain workers somehow fall outside the system,” says Mgqamqo. “That is not the case. Every worker is entitled to the protections provided for in labour legislation and collective agreements.”

While those obligations are clear, meeting them can be challenging for some smaller subcontractors. Tight margins, delayed payments and intense competition can place significant pressure on businesses and increase compliance risks.

“When non-compliance becomes a way of reducing costs, compliant employers can find themselves competing against businesses that are not meeting the same obligations,” says Hattingh. “That undermines fair competition and risks turning compliance into a competitive disadvantage.”

The BIBC believes accountability should extend throughout the contracting chain, with principal contractors and developers playing a key role in promoting compliance and fair competition.

This principle is reflected in both the BIBC Main Collective Agreement and Section 200B of the Labour Relations Act, which recognise that responsibility may extend across contracting chains and associated employers in certain circumstances.

Hattingh says accountability extends beyond wages and benefits to all statutory obligations across the contracting chain. “Subcontracting should transfer work, not responsibility,” he says.

“As contracting chains become more complex, transparency and accountability become even more important.”

Looking ahead, the BIBC does not advocate eliminating subcontracting or returning to historical employment models. Instead, the Council supports a contracting environment where smaller businesses can grow, workers are protected and compliant employers can compete fairly. The goal is to preserve the benefits of subcontracting while maintaining clear accountability throughout the contracting chain.

“The future of subcontracting should support both sustainable businesses and decent work,” concludes Hattingh. “The real question is not who employs the worker, but who takes responsibility.”