It is now more important than ever to have low labour costs. The pandemic and the measures to curb the spread of the virus severely damaged the economy, slowly down businesses countrywide while fuelling a host of employment issues, such as:
- Budget cuts
- Staff shortages
- Talent flight
- Lower job satisfaction
- Overworked staff
- Strained management
In such an economic landscape, labour costs can quickly spiral out of control and can end up costing businesses a lot of money. There are many ways to reduce employment and labour costs, but seven stand out as being particularly effective.
This article will discuss these seven strategies that businesses can use to reduce their labour costs. We will also explore the benefits of using a labour broker to reduce employment and labour costs.
If you’re looking for a more straightforward or urgent solution to your employment and labour needs, don’t hesitate to contact MASA now. We are a leading temporary and permanent employment specialist providing expert staffing solutions locally and globally.
Types of employment and labour costs
Before we dive into the strategies businesses can use to reduce their employment and labour costs, let’s take a look at the different types of labour costs. Labour costs fall into two broad categories:
Direct labour costs
These are the wages paid to employees for the work they do and include:
- Bonuses and commissions
- Overtime pay
- Holiday pay
Basically, any cost associated with an employee’s time spent working is a direct labour cost, and these costs can quickly add up.
Indirect labour costs
These are the associated costs of employing staff, such as:
- Payroll taxes
- Employee benefit
- Training and development
- Recruitment and advertising
Now that we have a better understanding of the different types of labour costs let’s look at how businesses can reduce these costs.
5 strategies for reducing employment and labour costs
As an employer, there is a continuous search for ways to reduce every cost possible while still maintaining a productive workforce. The strategies businesses use to achieve this will vary depending on the company, but there are some standard methods that are particularly effective in reducing employment and labour costs.
Here are seven of the most effective methods that you can implement in your business to achieve measurable cost reductions.
1) Reduce staff turnover
One of the best ways to reduce labour costs is to reduce staff turnover. Businesses can achieve this by investing in employee retention strategies such as offering competitive salaries, providing training and development opportunities and creating a positive work environment.
2) Outsource non-core functions
Companies can outsource labour-intensive tasks such as data entry, bookkeeping and customer service to save on labour costs. For example, businesses can free up their staff to focus on more revenue-driving tasks by outsourcing the often time-consuming payroll process to a specialist like MASA.
3) Reduce overtime
Overtime is one of the most significant contributors to labour costs because you essentially pay employees for the time they are not working. To reduce over time, businesses can invest in labour-saving technologies, such as time and attendance software, and schedule employees more efficiently. They can also offer incentives for employees who do not take advantage of overtime pay.
4) Use technology
There are many ways businesses can use technology to reduce labour costs. For example, online ordering systems can reduce the need for customer service staff, while automation can eliminate the need for manual tasks such as data entry. While you will have to pay for software, some options encompass multiple functions under one system, which can save costs in the long run.
5) Labour outsourcing
One way to reduce labour costs is to outsource certain tasks or functions to third-party providers or labour brokers. This strategy can be a highly effective way to reduce costs because you only pay for your services when you need them. Companies can use labour outsourcing for various tasks, such as customer service, data entry and bookkeeping. It can be an especially useful tool for businesses that experience seasonal fluctuations in demand.
Labour brokers: the ultimate solution
Labour brokers are employment specialists who source, screen and place employees with businesses. By partnering with a labour broker like MASA, companies can outsource their recruitment process and tap into a pool of skilled workers when they need them.
Labour brokers can also provide businesses with access to specialist skills and knowledge, saving on training and development costs. Here are a few more advantages of using a labour broker:
- Labour brokers have a deep understanding of the labour market and can source the best talent for your business.
- Labour brokers manage all aspects of the employment relationship, from recruitment to performance management.
- Labour brokers provide businesses with flexibility and can scale up or down according to your needs.
- Labour brokers offer a cost-effective solution for businesses looking to reduce their labour costs.
By using one or more of these strategies, businesses can effectively reduce their employment and labour costs. Labour brokers are often the best solution because they offer a comprehensive approach to reducing labour costs. When you use a labour broker, you can be assured that you’re getting the best possible solution for your business.
Take action now
If you’re looking to reduce your employment and labour costs, then it’s time to take action. Get in touch with MASA today and find out how we can help you save on labour costs. We are the leading provider of labour outsourcing services in South Africa and can help you find the best talent for your business.
Labour outsourcing is the future of employment, and our team of experts will work with you to find the best solution for your business.