Labour brokers will not be banned in South Africa, labour law consultant Andrew Levy said on Friday.

"The immediate short-term consequence would be an upsurge in unemployment should labour brokers disappear," he told the SA Chamber of Commerce and Industry's annual conference in Johannesburg.

Labour brokers made over 500 000 placements daily, employed about four percent of the total workforce and contributed around R23-billion a year to the country's economy.

He said the issue had to be "approached on a delicate basis".

"The stigmatisation of people as slave traders doesn't help," he said.

Levy said government's silence on the matter was perhaps an indication of political manoeuvring and an indication that it did not want to confront the issue.

He said part of the problem was that companies did not always understand the country's labour legislation and convinced themselves that any dismissal process would be onerous.

They therefore felt it was better to deal with labour brokers.

According to Levy, there was now a gap between the level of wage settlements in the public sector and those in the private sector.

"This happened after the 2007 strike in the public sector... their wage increases moved to double digit settlements."

The private sector, however, received only single digit increases.

Levy asked that if business was judged by delivery, what could one say of any business if its failure to perform was causing protests in the streets and yet wages of its employees continued to rise ? an obvious reference to the recent service delivery protests.

"If this was in the private sector, the company would go out of business," he said, adding that the union movement now had its biggest strength in the public sector.

General Secretary of the Federation of Unions of SA (Fedusa) Dennis George told the conference it was very important to engage in active debate regarding the fate of labour brokers.

He said the matter had already been a topic of discussion at Fedusa's 2008 national congress.

"Fedusa raised its concern that the overall quality of employment was undermined through practices of outsourcing, sub-contracting and the use of labour brokers by employers.

"We firmly believe that the labour broker industry should be strictly regulated by government, business and organised labour, because through regulation most aspects of 'decent' work can be addressed," George said.

According to George, regulation of the labour broking industry would also ensure that unscrupulous brokers would be exposed and eventually be forced out of the industry.

George said examples of regulation could be found in most European countries, adding that there was a law in the Netherlands that covered 90 percent of temporary employment services workers.

Another example was the National Level Agreement in the UK between the government, the Trade Union Council and the Confederation of British Industry which had been concluded last year.