Struggling with High Attrition of Contract Helpers in Manufacturing: How Do Others Manage?

Hi,

Ours is a typical manufacturing sector. We are into fabrication works and we will be in need of production helpers in huge numbers. We pay minimum wages, provide canteen facility, double pay for OT works, PF, ESI, etc. But we are facing a problem of attrition. All helpers are through labor contractors. New joiner is not sure of coming tomorrow. We get engineers but not helpers.

I just want to know how the helpers on contract are being managed in other manufacturing companies.

Please give inputs....

Regards,
Vatsa

Hi, I am a final-year MBA student based in Chennai. My summer internship was at Flextronics, and my research project is now being done at Sargam Diecastings Pvt Ltd. Like your company, both of the above organizations are typical manufacturing companies, but their production magnitudes vary. Flextronics is a huge concern with a presence in over 30 countries, while the latter is a medium-sized concern located in Chennai.

Both these organizations face the same problem, with the primary reason being that the minimum wages paid could be easily earned outside without any hardships.

Flextronics engages four labor contract organizations that bring laborers daily as per their requirements, as on average, 30-40 workers do not turn up for work, resulting in loss of productivity and a lack of quality work.

They try to address this issue by pressurizing the contract agencies to recruit only those with the attitude to stay long and also to clearly explain the working conditions.

I am currently researching CONTRACT LABOUR ATTRITION at Sargam Diecastings. Please provide me with your email, and I will send you my thesis once it is finished.

N. Sivasundaram

Management student

JCE

Here in India, we have a surplus of manpower resources. The majority are illiterates. If they request an immediate increase in wages, they can easily find work anywhere in India. For them, the skill level is of no concern.

As they do not struggle to secure employment, they fail to recognize the value of a job.

Once, Akbar and Birbal were on rounds when Akbar witnessed a beggar cleaning his shoes with a silk cloth. Akbar asked Birbal how this could be possible. Birbal explained that the beggar received the silk cloth for free, while he had to purchase the shoes. Hence, for the beggar, the shoes held more value than the silk cloth.

The same principle applies here. When individuals obtain something without effort, they may fail to appreciate its true worth. This lack of recognition is a leading cause of attrition.

In some cases, the contractors who hire these workers do not adequately care for them. These contractors pay the workers at their homes and transport them to the worksite, giving the contractors leverage to compel the workers to work. If the workers believe that the contractors would face financial losses if they refuse to work, they may use this as a bargaining chip against the contractors.

These issues stem from illiteracy. Due to their lack of education, the workers may not fully understand the contracts they sign. Even if a contract is executed on stamp paper, an illiterate worker could claim in court that they were coerced into signing it and demand unreasonable terms, putting the contractor in a difficult situation. It raises questions about whether the media would investigate the truth in such cases and the predicament faced by the contractor.

This is why workers under the contractor's supervision may not show up regularly or perform well. The only effective methods in such situations are motivation through fear or positive encouragement, as other tactics are unlikely to yield immediate results.

These motivational approaches, however, only work in the long term and do not produce immediate effects. Additionally, workers must feel pride in being associated with a reputable company that will support them throughout their careers.

Dear Vatsa,

Please consider measures to improve employee morale. Put forth proposals to make jobs more attractive. Minimum wages are often insufficient for a happy life. Employees seek higher pay. Do not assume that minimum wage is the best pay; begin thinking about fair wages or living wages.

Regards,
PT Ramesan

Dear Mr. PT Ramesan,

First of all, I would like to tell you one thing. The government is paying a good amount only. In between, the mediators (Contractors) are not paying the correct wages. That's the reason for high attrition.

Nowadays, the government is giving assurance on a 180-day work per year scheme, rural employment work for food, and many other schemes.

Do you think the rates fixed by the government are reaching the worker?

Not at all. Government officials are taking fifty percent (really sorry to say the truth), and the balance amount is shared between the workmen and the contractor. So, you can imagine how much will reach the hands of the worker.

The government is fixing the rate as per the cost of living index and the prevailing inflation.

If the minimum wages are set, it will also serve the purpose.

Here, we are paying the minimum wages and 15% profit for the contractors.

Do you think it is insufficient for the livelihood of the contractors?

This attrition is mainly due to illiteracy and the lack of motivation among employees.

Please let me know where your factory is situated. I can help you with some reputable contractors in your area.

Ensuring Worker Retention in Manufacturing

The contractor should be a strong and self-disciplined individual. This ensures that the workers do not dare to leave their jobs. We employ around 890 workers across three different manufacturing companies, mostly in textile and engineering, located in Nagpur. None of the workers dare to leave their job without our consent.

Regards

Please identify whether the real reason for quitting the job is wages or any other factors, such as the work environment or harassment from seniors, etc.

Hello,

What I found is that these labor class people are only interested in the amount which they are going to get at the end of the month. In my point of view, here is what you need to do:

1. Motivation always matters, whether it may be positive or negative.
2. Communicate to them the benefits of PF and ESI.
3. Try to communicate to them that these people are important for the company. In other words, try to develop a feeling of attachment with the company.
4. Tell them how you are different from others.
5. Also, inform them that they are permanent employees of the company.

I am also facing the same problem and find that this could be the best solution.

Best of luck! Hoping it will be beneficial for you!

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