Minimum Wages
In India, the client companies offer payment as per the Minimum Wages Act (MWA) which stipulates a salary that does not fetch two square meals a day. Interestingly, the minimum wages differ from State to State, from city to city and even from profession to profession! The average minimum wages, in short, is between र3000 and र5000.
“How can anyone expect to run a family with just र3,500 or र4000 salary per month?” asks Balram J Menon, Director, Adroit Facilities Management Services Pvt Ltd.
“Many of the janitors, who commute to their place of work from far away homes, leaving their children behind, spend almost 12 to 14 hours of the day out of their house.”
While one may wonder that a र6144 should be a good salary for an unskilled worker, but at the same time, it is also important to know the actual amount the worker takes home. Out of र6144, basic salary is only र.4750. The basic salary in other sectors is much lower, like Hotels & Restaurants is र3050 or drugs and pharmaceuticals is र3120 and in the case of sweepers it is र3200.
“If I can say proudly that some of the women janitors are working with us for the last 15 years, it is mainly because they are confident that they will get at least their salary on time. This is a commitment from our end. I tell the clients that cash flow is like blood – you, to me and the worker. If there is no blood how can one work?”
Manpower Crunch
The dearth of unskilled, skilled or trained manpower to take up the janitorial profession has driven the cleaning industry to tap the rural resources. Is there a choice?
Given that there are no training institutes or educational courses besides an unattractive pay-scale and working ethics, the urban set-up has very few takers for this profession. A day may come when janitors will walk out and refuse doing the cleaning job.
“Today, getting labour at such costs is becoming a challenge. No one wants to take up this job because it does not pay well or on time,” says Balram. Each profession has its demands, dos and don’ts. Similarly, cleaning is a profession which most clients either do not understand or do not want to understand. “Every client wants trained manpower to do the cleaning. Where do we get the manpower? This is the only industry where people from the lowest strata of the society get livelihood. We employ people from far off places; some are even in the poverty line. We give them basic knowledge, train them in the cleaning science and groom them for the corporate world and above all, save them from becoming an anti-social element. In fact, the cleaning sector is one of the largest manpower employers. The dearth of manpower due to improper wage system is something that needs to be looked at seriously,” adds Balram.
Who should be blamed for this situation? The client for not giving them enough to run their lives? The Government for designing a wage structure that cannot meet the basic needs of a worker? All said, just imagine one day in office when none of the cleaning staff turn up at work!
Who decides?
Displeased with the present system of client companies deciding not just on what a worker should be paid but also the number of workers, the equipment, tools and cleaning chemicals, Balram asks, “Why are the client companies deciding our work. It is our job to decide how many workers are required to get the job done. It is the building service contractor’s prerogative.” Sadly, that is not the case. The scene at present is not conducive to performance. “It is as good as slavery. The client will determine the kind of people to be taken, the kind of chemicals they want us to use and they will also complain about the service. A timely and quality delivery of the chemicals and consumables will go a long way in maintaining the premises to the required level of environmental cleanliness. A delay from the client’s end to provide the chemical on time is going to affect my job,” laments Balram.
Subhash lists some of the common methods of cutting costs:
- Non compliance of minimum wages – the labour force here suffers and doesn’t have a social security, sound future, no medical support, etc.
- Use of harmful chemicals – Acids & phenyls are used which not only harm the environment we work & live in, but also is harmful to human.
- Cross contamination – non use of colour code approachin cleaning.
- Untrained Manpower
- Inappropriate machines application
Headcount
Every contract signed with the service company is based on the head count. “If one is to question the client’s knowledge on the cleaning aspects like the number of people required to clean a certain area, the time involved, the equipment required or the cleaning chemicals needed for the desired results, the clients wouldn’t know anything at all.” A client may insist on having 60 workers to clean the premises, “but as an experienced service provider, with 25 workers and the right equipment and cleaning chemicals, may be I could do the job better and get the desired cleaning results.” There could be a couple of reasons for such behaviour pattern – one, the client is unaware of the results of man-machine combination; two, he is obsessed with the idea of having a number of workers around to get an actual feel that the place is being cleaned; three, he feels he is being cheated by the contractor by providing less workers for the money offered. An excess headcount is a loss to the client more than to the service provider.
“Resultantly, such an attitude also leads to illegal compliances, which could put the principal employer or the client in trouble at a later date,” cautions Dr JPS Bakshi, Group MD, Global Excellence. The client is oblivious that in many instances a deduction of security benefits is made from the employees’ salary, but the same does not get deposited in the employees’ PF or ESIS account! Being the principal employer, the client company will be held responsible for such non-compliance, warns Bakshi.
Adds Subhash: “Clients segregate the contract value into portions – Manpower, Machines, Chemicals and Consumables. What a client should be interested is that the housekeeping company has a contractual responsibility of upkeep and maintenance of the property. And this is fulfilled by collating the portions together to delivery quality results. What is debatable here is that clients tend to deduct amount if there are lesser manpower or machine breakdown. But, they don’t realise that the housekeeping company has fulfilled its responsibility of maintaining the property to its best ability by churning resources, like overtime allocation of manpower or using alternative application of machines. Clients always have the right to penalise the service provider if the set objective is not met with and should refrain from the practice of deduction portion wise.”
Delayed Payments
The delayed payment cycle has taken a vicious turn with every segment of the cleaning market facing a cash crunch.
“The cleaning industry struggles to get monetary support from finance institutions. Our only resort is receiving payments on time from our clients and PMCs,” states Subhash. “Clients and Property Management Companies (PMCs) who outsource services to housekeeping companies for service delivery, often follow a payment term of 30 to 90 days which is too tight for a healthy survival of the cleaning industry. Housekeeping companies have to pay workers by the first week of every month and in cases where there is delay, they look for a change of job. Even resources like machines and its maintenance, chemicals and consumables for the month have to be arranged for which needs funds. In such scenarios of delayed payments from clients the housekeeping companies go through a rough time. Clients and PMC’s should realise our problems and stand by us as partners. I strongly believe, if they support us on timely payments we would be in a better position to deliver more than 100% every time.”
Even the MNCs and facility management companies that engage multiple vendors for soft services, squeeze the housekeeping companies into agreeing at a low cost service. Here again, the payment to the housekeeping vendor is made after 50 or 100 days.
The service provider is unable to meet costs, the workers do not get their due payment for their services, they do not get salaries on time, the equipment suppliers get their payment after a long wait!
The outcome of this chain of delayed payments that has been growing over the years correlates to the economic factors leading to the diminishing value of the cleaning sector.
Attitude towards cleaning
Why do client companies outsource soft services? Dr Bakshi lists some of the main reasons:
One, they themselves do not know how to clean in the most effective manner and hence want to outsource.
Two, even though they can get the work done at their end and know the cleaning job, they want to focus on their core business and hence outsource cleaning.
Three, they do not want to get involved in managing such a large workforce because they feel it is a “hassle”. In order to overcome issues like where to get the manpower, how to recruit, how to monitor… and over and above employ few more seniors staff to run after them… they outsource.
Taking on the third point, Dr Bakshi says if they do not outsource they will have to pay the salary of so many employees on a particular date before the 10th of every month. Now if they outsource, there are so many housekeeping companies prepared to take these employees on their roll. Hence, the company gets the opportunity to delay payments as they are not bound by any low or time factor to make payments on the first of each month. This extended or delayed payment period stretches up to even six months in many cases.
Four, they do not want to make a capital investment in equipment and other materials and hence outsource it to a company that can buy the same for them. At the same time, they also have advantage of making the payment for the capital cost as and when they want.
Five, they can save a lot of money by imposing penalties or making deductions when making payment to the service providers.
“There are very few or rather less than one per cent of the client companies that outsource because they want to keep their premise clean or want to maintain the health of the building and the health of the occupants. These factors have greatly retarded the growth of this industry. In the garb of cleaning, the cleaning industry today is doing manpower management,” asserts Dr Bakshi. In fact, nobody is doing cleaning and neither are the client companies expecting any cleaning; they do so only when they have to deduct money.
“That is one of the basic reasons why every other sector is venturing into the cleaning business. Be it a security company or horticulture or pest control, they too can provide manpower for such cleaning. Eventually, there are no standards of cleaning followed by the service provider – all kinds of wrong chemicals, wrong equipment, wrong practices and wrong methods are used for cleaning. This leaves no scope for the service provider to improve or the cleaning industry to grow,” laments Dr Bakshi.
Reduced Margins
“Even if one has to outsource the pay-roll management or run a personnel department for these staff, it would cost 8-10% of the margin of the service provider. Take a company that charges for doing effective pay-roll management, which includes hiring the worker, maintaining personnel records, making their salary, giving pay slips, distributing or transferring their salaries into their accounts, maintaining their leave records and going for audit inspections. To run this kind of back-end administrative office would cost 8-10% of the cost. Then in 10% how the companies are surviving?” questions Dr Bakshi.
There are specialised companies today in the market that provide administrative or personnel services like this and charge around र300 to र400 per employee record. In the case of service providers, it would cost nothing less than र500 per employee to maintain a personnel department itself. “Then the question arises how can the service providers do business when their costs and expenses are running parallel or overshooting in many cases? How can they imagine profitability out of this business when the payment cycle is more than 90 days? In this whole vicious cycle, either the service provider is losing money or the client company is not getting the due service and is losing money or the Government is losing money by not getting the due charges/benefits.
In short, everyone is losing money in this business. Dwelling into what the clients stand to lose, Dr Bakshi says, “They get a very bad deal. In the garb of cleaning, they are getting bad indoor air quality, high cross contamination, fast deteriorating surface quality and above all, a bad reputation or image of the client company itself. “The service provider, on the other hand, makes no profits. In order to make something out of this business the service provider would have to resort to unethical ways of doing business. No company with few thousand workers can claim they are able to do business with 8 or 10 or even 12% margins. There is a huge risk involved in doing business in such a manner.
“From the Government end, if one were to put on record the number of workers employed in the service industry and the amount of money that has to go to the government by way of ESI or PF, not even 10-15% of the money reaches the government coffers. In short, the Government is losing millions of rupees which are being collected in the name of benefits. The worker too stands to lose the money that is being deducted from his salary in the name of ESI and PF.”
The attitude towards service providers or cleaning itself by the client companies could be attributed to their not understanding what cleaning is all about, says Balram. “But, let’s take a typical example of company which has an executive housekeeper or facility head in place to interact with the service provider. Most understandably, the executive housekeeper understands the requirements of the service provider and forwards the request to the purchase department. It is here that hell goes lose. The purchase department argues that the earlier service provider did the same at much lower prices. He would probably go about bargaining for a lower price and probably bargain even lower from the next vendor.
The client company is cutting and chopping at what price? At such low prices, what will the vendor be left with? How do clients expect the service provider to function? This is why this industry is losing its dignity.”
Client Education
Ideally, every service provider proposes margins at which he can run the business with, says Vinay Deshmukh, CEO, Forbes Facility. If the client does not agree to the terms of the contract, the service provider has the choice of turning down the contract. Why take up such contracts at all? If a service provider is making a quote of र100 and is ready to reduce it to र90 in the bargain but the client refuses to pay anything above र80, then there is no need to take up the job at all.
The direct reaction to this will be that the client opts for the second service provider who is quoting lower. The client can only see that the brand of the equipment is same but does he know that the same equipment comes in various capacities and various sizes and that the cost varies accordingly?
Does the client know what kind or size of equipment is required to service his premises? Obviously, no.
Now, take a simple hand wash solution. The service provider has two options – one, soap oil and two, a proper branded hand wash solution. While a soap wash will cost र50, a proper hand wash will be about र60 or र70
Does the client know the difference between soap oil and a branded soap solution? No, again. Hence, it is important that the client is educated.
Again, there are two types of clients, one who understands the difference and opts for a better soap solution and two, who feels that soap oil will suffice. But, the industry stands to gain.
Editors Note:
By the end of it all, what is important is the realisation by every organisation that clean and a hygienic environment is an integral part for its growth and productivity. By compromising on quality and delaying payments, the management is only unknowingly encouraging inferior cleaning standards. Most of the cleaning companies are small or medium sized with limited resources. The quality of their service delivery, their sustained performance and growth depend very much on the support they receive from the client companies. Very often the equipment are purchased by housekeeping companies on credit and a delayed payment puts the equipment supplier also in difficulties. Timely payment received from the client companies can help the service provider keep up commitment to the other sections of the cleaning industry and to his cleaning staff. We know very well what happens when even a couple of janitors choose to be absent. Cleaning and cleaners are important. Once the awareness gets embedded in the system, things can look up.