Mitigating the effects of the National Minimum Wage increase using a TES

By Tania Govender, Sales Director at Worldwide Staffing

The National Minimum Wage (NMW) is reviewed each year and increased to try and improve the standardisation of income-earning potential among workers. While this benefits millions of people, it can significantly impact business operations, given that labour cost is the highest overhead cost for most companies. To mitigate the effects of higher wages, businesses may opt to raise prices, which will have a negative impact on the general cost of living and could essentially negate any advantage gained by workers. A more effective and less disruptive approach is to reduce the cost of labour, either by reducing operating hours or moving from a permanent to a temporary employment model. A Temporary Employment Services (TES) provider can be an invaluable partner in this exercise.

While increasing the NMW is aimed at improving standards of living, the reality is that it could also lead to an increased cost of living as well as job losses. Automation (where possible) is one way of mitigating this, but it can be an expensive exercise. Reducing operating hours and overtime can also assist in switching from permanent to temporary employment models. However, all of these mitigations come with additional complexity. So how can partnering with a reputable TES provider help?

A TES provider can step in to assist by providing labour flexibility and reducing fixed labour costs by supplying labour only as and when needed, therefore reducing overhead costs without impacting productivity. In turn, workers employed by the TES provider will have more opportunities to source additional temporary work to supplement their income. This benefits the workers while allowing them to increase their experience across different industries, thus, increasing their overall chances of employment.

An additional benefit of partnering with a TES provider is that they offer recruitment, screening, vetting, and maintaining a pool of skilled and experienced candidates for quick replacements. Additionally, a TES partner supplies businesses with HR, IR, and payroll functions, and handles their communication and dealings with unions and community leaders, which would otherwise be at an additional cost to the business. The company can therefore be rest assured knowing that these services are bundled into the labour partner’s offering.

In addition, a TES partner can offer temporary employee benefits, including medical health plans, employee assistance programs, funeral cover, short-term personal loans, leadership, internships and training.

Finding the right TES partner

While a labour partner can be invaluable, it is essential to work with one that offers the right services. A reputable TES provider will take on the business and operational goals of their client, ensuring that staff placed on site have the same goals and objectives. In addition, a TES partner should mitigate any employee-related risks by monitoring all labour-related matters.

A labour partner should provide solutions and services that enable their clients to fully focus on their core function while taking care of any and all matters that are labour-related. The right TES partner will provide their clients with peace of mind, knowing that all staff matters are handled with full compliance in line with all labour laws and regulations.

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