Transforming ‘Manpower employment’ to decent work of quality

by Priyanka Jayawardena

“I can’t build a house. I can’t afford to go for a family wedding. We are cornered by the society” - Manpower worker of a State Bank

This is how a manpower worker was voicing the uncertainty of his future. These workers and their families lack stability and security to make long-term decisions and plan their lives due to the uncertain nature of their jobs and low wages.

The discrepancies faced by manpower workers are evident by protests carried out by them. This article explores some hidden information in the manpower business, based on a recent IPS study titled ‘Why people choose to participate in non-standard employment in Sri Lanka’, to explore ways of transforming manpower employment to decent work of greater quality.

Who are manpower workers?

Workers who are not directly hired by the organisation they work for, but are hired by third party agents or sub-contractors are referred to as manpower workers. Usually it is a disguised or ambiguous employment relationship.

They lack access to social protection, receive low wages, and have substantial obstacles in joining a trade union or bargaining collectively. It is a part of a global business strategy practised by employers, to shift risks and responsibilities on to workers.

Manpower workers are not given a contract letter either by the company they work for, or the manpower agency. It is a precarious work arrangement and raises serious concern as it is often unclear who is responsible and accountable for the rights and benefits of these workers. Due to the ambiguous nature of manpower employee contracts, there is limited data available on the matter.

Recruiting employees through manpower agencies

For about 10-15 years, it has been the common practice in the private sector to use manpower agencies to recruit employees to fill low-skilled, temporary and supplementary jobs (janitors and security guards). This has now gradually moved into main business activities of the company -- machine operators, cashiers, and sometimes even managerial levels.

Agency or sub-contractors enter into agreements with companies where they supply labour, but the terms and conditions of these agreements are not disclosed to the manpower workers.

“I didn’t have to sign a written contract when I was recruited. All I had to do was submit an application form before starting work” - Female manpower worker, Biyagama FTZ

Some manpower employees work continuously at a particular factory while some are hired on a daily basis. These daily workers are transferred from company to company, depending on the available vacancies. This is entirely handled by the manpower agency.

The agency hired employees receive their wages through the manpower agency after their commission is deducted, and are not given salary slips. Companies prefer hiring manpower workers as it is convenient for them as there are no direct obligations towards these workers. Most of the manpower workers are either from rural areas, less educated, or are school dropouts who have limited job opportunities. Therefore, in most cases, these manpower workers do not pay attention to their rights as they are helpless and have no other means of employment.

Public sector Manpower workers

In recent times, many government service establishments too have begun widely recruiting manpower workers. For instance, manpower agencies supply labour to organisations such as Sri Lanka Telecom (SLT), state banks, Ceylon Electricity Board (CEB), the Water Board and Central Bank. A majority of them are recruited as office assistants or janitors. For instance, in a leading state bank, 95% of office assistants are recruited through manpower agencies. These workers are under the impression that they are employed at a reputed institute; however, in reality they are supplied to these companies by manpower agencies.

Manpower workers are also known to be treated differently to their permanent counterparts. For example, normal working hours in the public sector is eight hours but these workers have to work nine hours per day. In the public sector, agency hired workers are permitted only seven days paid leave for the year. These workers are not permitted 14 days annual leave, whereas an employee is entitled to under labour law [Shop and Office Employees (Regulation of Employment and Remuneration) Act, 1954)]. To avoid the need to pay gratuity or the chance to be made permanent, these manpower workers are transferred to a different agency even without their knowledge.

Why should we worry about Manpower workers?

Manpower workers are discriminated. The downside of manpower employment is the lack of protection and the exploitation of labour. These agency hired workers do not receive equal rights, despite handling similar workloads as their permanent counterparts.

“My starting salary was Rs. 12,000, after four years of working I receive only Rs. 15,000. But permanent counterparts of the same position are paid over Rs. 50,000” - Manpower worker of a State bank.

“Permanent staff members receive other perks such as bonuses and office trips. As a manpower worker, I only get food and tea, which is also deducted from my basic salary” - Female manpower worker, Biyagama FTZ

Most agency hired workers in the private sector, are not given paid leave. They are allowed to take leave at any point, but will have to forego that day’s salary. Thus, most such workers are compelled to report to work even when they are sick, as they cannot afford to stay at home. Some in the private sector work long hours to earn more.

“I get paid on a monthly basis, a daily wage of Rs. 600 per shift. My normal shift lasts eight hours per day. But I have the option of working another full shift (eight hours) and obtain Rs. 1,200, but this would mean that I have to work 16 hours at a stretch” - Female manpower worker, Biyagama FTZ

These manpower workers are in a vulnerable situation; they do not receive private sector social security benefits such as EPF, which even temporary workers are entitled to. It has been revealed that although deductions are made for EPF and ETF, there is no transparency and most workers are unaware whether they are even registered for EPF. They are afraid to voice their opinion as it would jeopardise their employment. Any protest could lead to a transfer or losing the opportunity to work at that company.

They also do not have any upward mobility and hold the same position for many years, without any incentives. The nature of such employment not only negatively impacts these employees but also the companies that hire them. Lack of accountability of these employees towards the employer, can result in low quality production. Thus, an overwhelming number of manpower workers in a company can lead to long-term impacts in productivity, efficiency and economic growth. These workers also affect the permanent staff as they lose their bargaining power and dilute their rights.

What should be done?

It is difficult to completely eliminate this type of labour as it has been integrated into the labour market. One option to transform manpower employment to decent work is to regulate ‘manpower business’, while safeguarding rights of the workers.

Manpower workers are not protected by law; it is important to have regulatory mechanisms to protect their rights, including equality of employment conditions, and social protection. Therefore, as a first step, issuing employment letters to all manpower workers should be made compulsory for companies that use such hired labour. Also, the government can play an exemplary role by ensuring the rights of manpower workers of State enterprises in terms of job security, wages, social security and other benefits, which permanent employees are entitled to. In addition, government enterprises should take immediate steps to stop recruiting agency hired workers for main business activities.

The use of temporary workers must be limited to legitimate needs – for example, to meet the seasonal demand of businesses, to provide supplementary services such as security and janitorial services. The contract period of seasonal workers should also be limited to a maximum of six months.

The plight of manpower workers points to the crucial need to address the issues they face. The effective implementation of these measures will be a step towards transforming manpower employment to decent work of greater quality for these employees.

The writer is a Research Economist at the Institute of Policy Studies of Sri Lanka (IPS).