• John Macedo

Looking for the Cheapest Labour Hire? Here's What You Should Know.

Updated: Jul 28


When it comes to hiring labour, it all boils down to the kind of work you require and how much you are willing to pay for it.

▶️ Many businesses want to reduce costs as much as possible, to obviously gain the highest profit margins on a quarterly and annual basis in order to increase their net value and investment potential.


To do this efficiently, one of the most common cost-reducing methods many companies try and implement is reducing the cost of labour workers within their company.


When you as a company decide to hire the cheapest labour hire company you can find, you are, in a sense, willing to accept the fact that you might reduce the quality of your workers.


That being said, however, you do get as many savings as possible on an hourly rate due to the fact that the workers will now, essentially, cost a lot less for you.

So the question on everyone’s mind right now is, is it the wisest idea to reduce costs in your business by just hiring a cheaper labour workforce than the one you currently have which might be a bit more expensive?


HIRING CHEAP WORKERS EXPLAINED

The first step we need to do in order to evaluate how good of an idea hiring cheap workers is, is to first analyze the traits of a quality worker.

To do this, we will be looking at them in different levels.

On the lowest point on the work chain, we have the unskilled general labourer.


Just like with any other workers, you would have certain expectations of even the newest recruit, including:


➡️Experience to understand the task at hand.


➡️Commitment and a sense of ownership to get the task done .


➡️Keeping a decent work-space etiquette.


➡️Professionalism.


➡️Work Ethic.


Now, when we discuss a more complex work-position, you would need to evaluate the skillset the worker has, and how well that person can handle the equipment that are required in order to get the job done correctly.


Now, universally, across the entire labour workforce, you need to ensure that each and every one of the employees has the following skills.


1 - Communication – one of the most essential traits of any business, the worker needs to be able to effectively hare information with the co-workers and managers in order to ensure that everyone has all of the details they need, and the worker needs to be able to receive information, keeping him informed of his surroundings.


2 - Teamwork – another essential trait, as the workers function in a larger group, and are typically tasked together to accomplish their team goals and help the company survive as well as thrive in the future.


3 - Organization – being able to shift between the priorities, track their own progress, and find a critical tool or document that can impact the overall productivity. If an employee is not organized, it could halt progress or slow it down significantly.


4 - Problem Solving Ability – unexpected events can occur with just about any job. This includes things such as equipment breaking down, as well as customers experiencing some issues, or just things generally getting lost in all of that work-loop. When an employee has the ability to assess the situation and develop a course of action to solve the issue at the time, the employee can be a part of the solution, making him a valuable asset to the company.


5 - Punctuality – when a single one of the entire work-fleet arrives late at work ,the entire company can be a bit late with the end-result. Even if the worker does not play a critical role, or has vital information, the delay can potentially prevent other workers from accomplishing their tasks in time, and in turn, put everyone behind.


Why is this important?

The moment you choose to employ cheap labour workers, you are unfortunately putting the things mentioned above at risk. In other words, you have no guarantees that your cheaper workers will have those traits, and you are in turn, sacrificing them.

You should ask yourself the following questions before making the decision to hire cheap labour here:


➡️Is it worth it?

➡️Does it pay off in the long term?


PROS/CONS OF HIRING CHEAP LABOURERS

Now, since we have the general information out of the day, let us discuss the positive and the negative sides of hiring cheap labour workers.


We will get the pros out of the way first, since these are obvious.


❌You are getting labour workers that are much cheaper.

❌You are saving costs on an hourly basis.

❌You have access to more resources to commit elsewhere in the company.


Now, we will get into the cons.


✅You are risking a lot of money in the fact that a cheap worker can make a lot of mistakes that can set your entire company back.

✅You are losing someone who is communicative, can work with a team, is organized, has the ability to solve problems and is punctual.

✅The costs of the mistakes can end up costing you more, than the money saved from hiring a cheaper worker in the first place.


Now, let us look at this from a different perspective.In this example, we will be looking at:


Quality Focused Labour Hire vs Cheap Labour Hire

The Cheap Labour Hire is $2 per hour, or in other words $16 per 8 hours.

The Quality Labour Hire is $16 per 20 minutes.


If you hire the General Labourer from a Quality Labour Hire, and that worker is productive, makes fewer mistakes, and is generally better at what they do, to the point where they can buy you 20 minutes back daily, than the one gained from the Cheap Labour Hire, you even out the difference at the end of the day.


Another thing you need to consider is the fact that, the Quality Labour Hire has insurance, SWMS, and all other paperwork, while the Cheap Labour Hire does not. This may cause you to lose an hour of your time. If your hourly rate is $50, the Cheap Labour Hire would have to work for 4hours just to compensate for the time lost.


You then also have communication issues that can occur between supervisors and labourers, the hire office, which all adds up to more time and resources lost.


▶️ In other words, while the Cheap Labour Hire might be saving you money in the short term, it could potentially cost you thousands in the long-term, depending on the quality of the worker.



THE EXPERIENCE SUMMARIZED

After all of this is said and done we can come to a certain conclusion that a lot of companies need to follow for an efficient and cost-effective work-force.


Always look for the best combination of cost-effectiveness and benefit ratio.


This means that you need to consider all of the variables, including:

▶️ Communication Teamwork Efficiency Productivity Organization Work Ethic Problem Solving Punctuality


At times, even the cheapest workers can cost you more than you think.

The best way to come to this conclusion is to hire both types of workers at different time periods and pay attention to what you are getting as a service.

If you are not onsite, get your supervisor to analyze the situation and give you feedback.


✅ A good worker will have all of the traits mentioned above and will save you a lot of time and resources by not making as many mistakes, and even solve potential issues the moment they occur, saving you a lot of money in the long term.


With cheap workers, that are not as experienced, you may even experience a completely different experience where a mistake can cost you a lot more money than the worker on an annual basis.


This is why you must test both kinds of Labour Hire workers in order to evaluate which one is the best fit for your specific business, company and project.


Want to get started with testing today? Consider hiring Spades for your next project.


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JOHN MACEDO

Founder and Director.
I believe together we can create a "people first" Australian Construction Industry 

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