Outsourcing: Short End For Workers And The Economy

Outsourcing is a growing, cost-cutting business tool that many organisations are eager to key into.

Organisations are increasingly adopting recruitment using outsourcing as measure and to improve competitiveness.
Outsourcing has been defined as the transfer of aspects of management or day-to-day execution of business to a service provider. In labour context, it is a situation whereby an organisation hires its work force through a third party, also referred to as a “labour contractor.”

In Nigeria, outsourcing has raised concern over the protection of workers; by law, workers are supposed to be entitled to all the rights guaranteed by national law and international best practices.

Precisely, workers have the right to form and join trade unions, enjoy protection against discrimination, be guaranteed work safety and health, adequate remuneration, access to training, maternity rights and benefits, minimum age provisions, rest period, holiday with pay (annual leave), right to redundancy employment, among others.

As a result of outsourcing, different workers unions in Nigeria have engaged employers of labour over the violation of these rights, as many of the contract workers cannot unionise. This has led to declining income for unions, as workers in this category do not pay union dues.

A contract staff with one of the new generation banks said the level of discrimination between the contract and regular staff is terrible. “We do the same number of hours yet they pay us peanuts. The few regular staff earn 10 times what we earn and we are the core workers in charge of operations. Without us there can be no banking operations. We even close, sometimes at 8pm like permanent workers, yet we are not entitled to 13th month, and other allowances, despite the fact that our wages are far lower.”

The General Secretary of the National Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE), Malam Muhammed Sheikh, said outsourcing in the banking sector started when the sector was liberalised during the regime of General Ibrahim Babangida.

According to him, the practice is more prevalent in the oil and gas sector and the financial institutions, where he alleged that employers hide under globalisation phenomenon to exploit some of the workers because of the high unemployment rate.

He said the bottom line of employment by proxy is to optimise the use of labour and maximise profit. “It is operational globally, the prism is smaller workforce; lean workforce by banks so they can focus on core banking. “

Muhammed said outsourcing, as a practice is not suitable in Nigeria because of the level of underdevelopment. “The economy of developed countries has grown to the point where people don’t take up full time jobs, because their economy can sustain it, but here our economy is dependent on one product, which the price is determined far away from our influence. Our grouse is that we are not practicing it as it should be done. Outsourcing grows the econmy in other climes. Here, it shortchanges the workers, the organisation and also kills the economy.”

He said the battle against recruitment by proxy started during the period when Adams Oshiomole was the president of the Nigeria Labour Congress (NLC). He said the goal then was to regularise employment, reduce contract staffing or develop it to suit our own enviroment.
The union, according to him, embarked on mass picketing of such organisations that fell short of the NLC labour requirement. As the struggle continued, he said, the same contract workers went back cap-in-hand to the organisations, to resume work, not minding the working condition.

Muhammed gave the major reason for outsourcing in Nigeria as cost reduction, adding that many of the commercial organisations apply it to avoid high operational cost.

“Some of these organisations are avoiding payment of gratuity, redundancy and other over head cost; exploiting labour to maximise profit without adding value to the national economy. Nowadays, contract staff are made to resume early and close the same time as staff, and they are afraid to complain because they may lose their jobs. Some employers ban their workers from unionism and threaten to sack them.”

He said the NUBIFIE has been working hard to stop infringement on workers’ rights in financial institutions. “We have cashed on the government backing we have on that issue, and we are ensuring that banks, insurance organisations and any service provider supplying workforce puts a human face to it and allow contract workers have their freedom of association by joining a union, so that due process can be followed in the event a contract worker decides to leave without any compuncture, so there can be negotiations on how the exit would be.

“Government on its part needs to review the labour law, because it partially recognises the practice, without the full details of who can be considered a contract staff. The labour law should strengthen the fact that a contract staff can join a union. There should also be a condition of service for contract staff and such persons should be protected within the confines of the law. Any organisation that has the capacity to give full employment should do so, unless otherwise decided by the unions in that sector.”

On the implications of outsourcing to the financial sector, he said, “a worker is supposed to have filial commitment to the organisation where he works, but when a contract worker works the same schedule and capacity as the staff, and he sees other staff earn more, it creates an uncommitted workforce, non-committal attitude and demotivates workers.

“As a consequence, there is the tendency to appropriate any advantage they can get, which might also result in fraud or absconding with company property. If a contract worker handles key issues and a customer becomes aware, they will not be at rest over their deposit. Then, there is the lingering unrest that it can generate. Also, there is the likelihood of general apathy and restlessness in the work place and you cannot get optimal performance from these people. “

The acting Secretary General, National Union of Petroleum and Natural Gas Workers (NUPENG), Joseph Ogbebor said the development is was affecting the revenue generating capacity of the union, as workers in that category do not pay expected dues to the union.
“In the 70s and early 80s, oil and gas sector jobs were permanent in nature. All workers were on the payroll, even the drilling department in the oil companies. But with the advent of globalisation, liberalisation and privatisation, the trend changed. They started doing things at the expense of workers and this led to massive job losses. Contractors were brought in to hire workers that were redundant. The companies started to categorise job schedules and started to engage contractors to supply them workers. Sensing that the trend will deplete our membership, and impoverish the workers, the union started drawing attention of the government, until 1991,when the unions started issuing threats.”

According to the NUPENG chief scribe, the oil companies have employed a new strategy, which is making their workers not to be unionised.

“The new trend they are trying to adopt is that they are changing from workers services to real services as they now place nearly all their departments under services contract and everything relating to workers is now being handled by contractors. They are now moving from labour service to service contract and we are saying no. That is where we are now. They have labour contract which they are trying to change to service contract because they know labour can be unionised. They are doing it to maximise profit. In our own sector, we have tried to unionise contract staff, but it is not easy. What they are doing now means revenue loss to the union as many workers under service contract are no longer paying union dues.”