Financial Daily from THE HINDU group of publications
Monday, Jun 27, 2005
Industry & Economy - Employment
`Temping' on the rise; recruiters seek changes in law
Raja Simhan T.E.
Chennai , June 26
TEMPORARY staffing (temps), also called flexi staffing or contract staffing, is emerging as a major industry in the country. The workforce is over 400 million strong and the market potential for temps is estimated to be 10-12 million in the next five years.
Currently, there are about 70,000 temps who are on the payrolls of recruitment firms, but work for different firms across multiple industries, including information technology, IT-enabled services, retail and telecom, say temp recruiters.
However, the temporary staffing industry is facing a major hurdle - lack of flexible labour laws.
The Contract Labour Regulation Act (CLRA) is limiting. The law was made for a different era where contract labour was used only for unskilled manual tasks.
While the law tries to abolish contract labour and regulates where it cannot be abolished, the provisions are limiting in many ways, says Mr E. Balaji, General Manager, Staffing Solutions Group, MaFoi Management Consultants, a Chennai-based placement firm.
It will be in the interest of various stakeholders to legalise contract employment through organised and licensed players, where it will be possible for the Government to enforce the protective framework easily.
This not only ensures protection of labour interests, but also can generate 12 million temp jobs in five years, says Mr Balaji.
Consider this in the context of unemployment at 30 million in the organised labour. "We need eight million new jobs each year to plug unemployment," says Mr Balaji. These growth rates are difficult to achieve, and in this context flexi employment is the only alternative, he adds.
The Government should make use of contract labour through approved staffing companies and ensure the laws applicable to permanent employees also apply to contract labour - - ESI / PF / minimum wages and working hours, says Mr Balaji.
Mr Ashok Reddy, Managing Director, TeamLease Services, a Bangalore-based recruitment firm, said that in a recent report on temporary staffing the company had recommended a few changes to help the industry.
There are five main issues - - concept of principal employer, core and perennial work, industry restrictions, timing and location restriction, compliance philosophy and decentralisation and high mandatory payroll deductions - - that need immediate attention of the Government.
Due to these issues, there is blurred accountability with dual employer responsibility, lower usage of temps, higher outsourcing to the unorganised sector, higher out-locations to the unorganised sector, sham consulting agreements and barriers to first-time job seekers and labour market outsiders, the report said.
The Government should recognise contract-staffing companies as the principal employers.
It should allow contract/temporary staffing in all functions and industries and abolish restrictions on timing and location.
The Government should create a national licensing for contract staffing and move away from contract-by-contract.
The Government should make PF and ESI applicable for temps only after six months of employment with a temporary staffing firm, and exempt all temps who have a salary of more than Rs 6,500 a month from PF/ESI, the report said.
The employment under a temp mode is by choice and is a transparent relationship between the candidate/associate, the `temp'ing company and the corporate.
The salary (as in the cost to company) is in line with the market and gets structured to cover all benefits (PF, ESI and gratuity). The CTC (cost to company) gets determined based on the industry, function, experience and other criteria, he said.
Mr Gautam Sinha, CEO, TVA Infotech, says that three major issues will drive the temporary staffing business in future.
First, with the business cycles fluctuating, companies want to have the flexibility to remove staff during downturns and temp staffing gives them that flexibility.
Second, there is a clear move towards identifying `core' and `non-core' activities by each company and companies have realised that keeping large number of people who are `non-core' on the rolls takes up too much management bandwidth to make sure that these people are motivated and are delivering.
Companies would, therefore, be more comfortable with being able to keep these staff on someone else's rolls and get that company to spend the time on keeping these people productive.
Finally, the stigma attached to being a `temp employee' will slowly come down and even employees will enjoy the flexibility that it offers in terms of being able to move into different companies.
Therefore, getting manpower to work as a `temp' would become easier and feed into the demand, he said.
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