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Oct, 2023

How to reduce labour costs effectively?

Running a business smoothly in the UAE is not a cakewalk and will have to face many hurdles. Labor or human resource management is one of the most expensive factors in running a business. As laborers are the strength of a company, you cannot cut down the cost involved in maintaining their demands and necessities.

Failure to effectively control these expenses can quickly result in businesses feeling the pinch and having to adopt drastic measures to combat them. As businesses grow, so does their demand for labour requirements. So it is crucial for any organisation to provide their business with sufficient labour supply to ensure smooth functioning. Though these demand higher labour costs which is inevitable there are some smart and effective measures to keep labour costs down effectively.

Doesn't matter whether your business is in retail, hospitality, transport & warehousing, or even the healthcare sector, it’s possible to increase revenue and customer satisfaction while keeping the labour costs in check. Here are the best ways to manage labour costs in the UAE efficiently.

1. Know your business
It is very important to have keen knowledge about your business to succeed. As the competitors have set the bar so high one should know about their industry inside out to get the best results, so indeed, you need to understand your business. Start by asking the following questions:

  • When will your customers come?
  • What are your customers buying the most or what service are they using the most?
  • When do they require the most hands-on help?
  • How is the business growing?

2. Avoid overtime
One of the most effective ways for businesses to reduce labor costs is to avoid overtime. It is true that a little overtime here and there may not seem like a lot, but in long run, it is costly especially if you have a business with a large labour force, their overtime will rapidly add up to a huge amount which is expensive to pay. So if you are considering reducing labour costs then it's essential to avoid overtime as it helps in reducing the high labour cost and consequently it is beneficial for your business. If your business demands a heavy workload, then rather over time, consider hiring part-time workers only when required or inevitable. It is much more productive and cost-effective than overtime because some workers merely do it for the extra money.


3. Hire the right people in the right palace at the right time
By hiring the most suitable and efficient manpower you can save money, boost productivity and increase profit. Make sure you have enough labour supply to meet the demands of your customers as it is essential for ensuring your business is flourishing and makes enough profit. With a smarter workforce, you’ll be able to reduce the amount of time your managers spend on the administrative side like managing and guiding the labours. Efficient workers themselves will have an idea about how to finish the work perfectly within the given time thus helping in lowering costs even further.


4. Non-Monetary Compensation
Non-monetary compensation is a reward given to employees but not in the form of cash. Not everyone is money minded, for some people money will not be the only motive to work. Nowadays, both blue-collar and white-collar labours are concerned about how they feel at work and other non-monetary benefits. It includes things like appreciation, recognition, and job security rather than a large amount of money. So instead of paying them in cash, focus more on work culture, job security, and other non-monetary compensation like a day off, free or discounted parking, free trips, gym membership discounts, retirement plans, mentoring programs, etc.


5. Engage your workers
Never compromise on your employee engagement. According to the latest studies businesses with engaged workers see a rise of 22% in profitability. This is because engaged workers are more productive and innovative. They will take extra effort to accomplish their assigned duty and they will work harder to deliver more for your business.


6. Forecasting
Excellent forecasting is critical for lowering labor costs. It's the art of knowing and identifying customer demand, peak times of business, and other aspects of a business, If you plan your costs and expected results beforehand and make strategies accordingly, you create the most profitable resource tactics. Forecasting helps you with smarter planning and enables you to get the information that you need to make sure you have the right manpower to do your work efficiently and timely.


7. Appropriate Salary Structure
Commission-based salary structure is a very effective measure to control labour costs and acts as an excellent strategy to improve workers’ productivity. So, it is ideal to have a discreet salary package for the staff, which includes a fixed and performance-based payment structure. In this strategy, you can review the profits and salary levels regularly and avoid the extra costs that exceed the industry average.


8. Hire through a manpower supply company
Booming technology has enabled access to a large pool of potential candidates and plenty of ways to advertise a company’s job vacancies. Although this is a positive development, it necessitates additional staff, more time, and most importantly, more cost. As recruiting strategies are now structured with assessment and panel interviews, it calls for extra professionals which adds more cost. But if you hire through a trustworthy manpower supply company, you will get candidates that suit every labour requirement across different industries. A labour supply company provides you with the required workers for a one-time cost, which is way cheaper than hiring an in-house recruiting team. Depending on the labour supply company, some also offer accommodation, transport, food, and even employee support like training and development. So most of the cost you will have to pay separately is covered under a single cost, giving you more time to focus on other core HR activities.


If you’re planning to reduce your labour costs through a cost-effective recruiting strategy, reach out to us at Pact Manpower services. As one of the renowned Manpower supply companies in the UAE, we are committed to providing the best blue-collar manpower requirements for every industry throughout the UAE with prime focus on performance, cost-effectiveness, and efficiency.