Challenges in the South African Private Security Industry

April 24, 2012 - PRLog -- In order to fully understand the Private Security Industry and its phenomenal growth during the recent past years, it is significant to understand the challenging factors that underpin the Private Security Industry.

Unrealistic union demands plays a large role in the challenging stance of the private security industry’s environment, in the sense that poor pay is a relevant issue. “The majority of security companies realize low margins, with an average of 5% net profit, thus demanding a wage escalation of between 50-80% is unrealistic”, says Alex de Witt, Chief Executive of Omega Risk Solutions. De Witt is further of opinion that clients will either refuse to pay this, or look at technology to replace the human factor, which could lead to jobs being lost. Security companies need to collaborate with unions, reinforce their relationships with these unions to protect the labour force, as well as focus on refining training and development; and enforcing a code of conduct. This solution should be applied, in the sense that valuable and skills and experience is being lost, and reflects negatively on the image on the private security industry.

A concern for security firms, is that PSIRA (The Private Security Industry Regulatory Authority) has recently released new regulations which drastically change the regime of regulatory fees which are payable by the security service providers and security officers to PSIRA. These fees have been increased by approximately 40%, which registered companies are obliged to pay upfront on an annual basis, and no longer on a monthly basis, as published on The Skills Portal. These regulations are not only in complete contrast with the government policy on the support of small and medium businesses in South Africa, but also impact on larger security companies. A reason for the increase in these fees could be that PSIRA is not funded by government and driven on the revenue derived from security guards and companies’ levies. “Government will be taking responsibility for regulation i.e. they will be funding regulation”, says PSIRA director, Manabela Chauke. Diavastos, Group 4 Securicor HR Director and SIA executive committee member is of opinion that security guards, who already are earning a minimum wage, should not be contributing to the regulation of the industry out of their own pockets. Furthermore, Police minister Mthethwa states that should the government fund this regulatory body, PSIRA’s service delivery will improve, recruitment of more inspectors will drive compliance monitoring in the industry, and better information and communication technologies infrastructure will assist with compliance

With elevated crime rates and a weak economy already creating pressure, the effects of this new regulation, could result in negative effects on the private security industry. The Security Industry Alliance (SIA) is taking action in communicating with the government in an effort to stop the increase, which Steve Conradie, CEO of SIA, says could lead to a rise in unemployment in this sector.

The low barriers to entry into the industry are further a challenge. De Witt is articulates that there is a lack of co-ordination between regulatory departments and inspectors and that the regulatory aspects are often described too vaguely, rendering the implementation of these regulations being weak and deficient. Furthermore, according to the Private Security Chamber Chairperson, Anna Maoko, the ratio is 95%:5% in favour of private institutions, resulting in employers believing that higher success can be achieved through on-the-job training. This is an indication of the dissatisfaction at the quality of training being provided by the training institutions. “Training is expensive and it takes months to complete criminal checks and register new security guards, which leads to a loss of trained individuals whom go to work for unregistered companies, or seek employment in other industries”, says de Witt.

Regular demands for bribes are at the highest levels of the industry, from both clients and other role players. An ethical code of conduct needs to bring accountability on both those lobbying and paying bribes; they should face the full effect of the law. De Witt feels the industry is over regulated, but that the regulation is not put into practice.  Most clients want to commoditize security without considering consequences or specialized services.  Regulatory bodies need to act as arbitrators in the contract process. A further challenge in this regards, is that some clients pressure non-compliant security firms into signing open-ended contracts, or demand the standards of professional companies.

Although many security companies are actively registered with PSIRA, as described above, there is a concern regarding the number of unregistered and non-compliant businesses, which lead to fly-by-night companies that do not pay the minimum wage to their workers, resulting in them undercutting the market, says Conradie, and thus making it difficult for the registered companies to compete fairly. These fly-by-night companies provide services that are below standard, further reflecting negatively on the image of the security industry. “Most are thinly disguised labour brokers,” Conradie says; “they don’t offer any specialized services.” Lastly, De Witt believes there may be as many as 200 000 unregistered security officers working within the industry.

A further challenge that the private security industry is faced with, is the slow rate at which the SA Police Service (SAPS) processes applications for firearm competency certificates that allow individuals to carry guns. Security firms that arm their employees need these certificates to operate. “The reason for this delay, is when police process applications, they occasionally find security companies and security guards that are not registered with PSIRA, and are not registered with the Companies & Intellectual Property (IP) Commission, also coming across situations where a dealer accepts a payment from more than one party, resulting in a duplicated license submission for the firearm”, Capt. D. Adriao, SAPS National spokesman articulates.

Elite SA Security Solutions is a private security services provider located in Centurion, South Africa and can be visited online at http://securityguardinginpretoria.co.za/challenges-in-the... . With 16 years of expertise in the security industry, Elite SA specializes in providing guarding operations, special investigations, undercover operations, security training, and risk management to its industrial and corporate clients.