The realities of business are not new. For the past century, through four (now five) industrial revolutions, organisations have needed to adapt to diverse and often unexpected challenges that threaten operational efficiency and profitability.

However, while South Africa mirrors many of the issues that businesses around the world are facing, we also have a few problems that are unique to our operating landscape. In this article, we look at what those challenges are, how they have come about, and how contingent labour solutions can mitigate risks, increase productivity and potentially profitability.

Challenge #1: Loadshedding

Our power outages are so endemic we have a word for them: loadshedding. For well over 15 years, South African businesses have continued to grapple with the unpredictability of loadshedding, which directly impacts productivity. These planned power outages are a response to insufficient electricity supply and while there is no clear solution to loadshedding in the near future, there is a way for businesses to protect themselves from power shortfalls that lead to operational downtime, disrupting manufacturing processes, and affecting supply chain continuity.

Challenge #2: Fuel costs

The escalating price of fuel triggers increased costs of commuting for employees and higher expenses in transporting goods. This scenario leads to inflated overheads, potential delays in delivery, and a squeeze on profit margins. There are many reasons for current fuel prices, including global oil price volatility and exchange rate fluctuations. The entire world is currently dealing with high fuel costs, but when we add these costs to already challenging economic conditions, businesses are placed under even more pressure.

Challenge #3: National minimum wage increases

While aimed at ensuring fair wages, increases in the national minimum wage can strain businesses that operate on tight margins, forcing them to reassess labour costs and potentially downsize. This is particularly complicated when we factor in loadshedding and other increased costs. Manufacturing businesses that are particularly hard hit by loadshedding end up with hours – and even days – of downtime. During these periods, overheads remain fixed without production continuing as usual. As wages rise without production increasing (or even staying level), many businesses have been forced to make difficult decisions.

Challenge #4: Absenteeism

It is not only businesses that are feeling the impact of these challenges; employees are feeling them too. Health issues, societal challenges, economic conditions, heightened stress levels and engagement levels combine to have a negative impact on employee health and wellbeing, leading to increased absenteeism. We all know what happens next: High absenteeism rates disrupt the flow of operations, reduce productivity, and can lead to a reliance on overtime work that further inflates costs. In South Africa, this unrest is often coupled with union activities that can lead to work stoppages, increased wage demands, and compliance complexities, which can disrupt business continuity and affect labour relations.

It is a slippery slope, with each complex challenge impacting the next. However, contingent (flexible) labour solutions are well-placed to solve many of these challenges, not necessarily at their root level (loadshedding and global oil costs cannot be solved by contingent labour suppliers), but at a business’s operational level.

Let’s take a look how in relation to our challenges:

Mitigating the impact of loadshedding: Contingent workers can be deployed flexibly during planned power availability windows to maximise productivity and then flexed down in times of loadshedding, ensuring wage costs are reduced as production is halted. By ensuring that the workforce is scaled up or down as needed, costs can be reduced and aligned to productivity rather than having a fixed wage cost during a low productivity period.

Fuel cost containment: By hiring locally through contingent staffing, businesses can reduce the commuting burden for workers, thus relieving financial stress on the employees and therefore indirectly curbing the impact of fuel cost hikes on productivity.

Wage flexibility: Contingent labour allows for more controlled labour cost management, aligning workforce costs with current demand and productivity, without the constraints of wage legislation affecting permanent staff. Groups of employees can be redeployed, when a business is experiencing down time, across other businesses thus ensuring steady employment for contingent staff without adding fixed overheads to businesses.

Reducing absenteeism effects: A pool of contingent workers can be swiftly mobilised to fill gaps caused by absenteeism, ensuring uninterrupted operations and costs savings by not having an enlarged workforce that in times of low absenteeism sees costs rises due to idle hours and in times of high absenteeism sees costs rise due to overtime or loss in productivity. There’s an added, often unforeseen benefit as well. Contingent labour forces are often more engaged and increase productivity, which has a positive impact on business operations. Removing the stress of fixed overheads also alleviates challenges in a business, which can have a positive knock-on effect on staff as well (creates more job security for the permanent staff).

How BLU can help

By turning workforce management into a variable rather than a fixed cost, companies can position themselves for success in a competitive global market, despite loadshedding and rising fuel costs.

Speak to our team about your contingent workforce  needs today.