Balancing Stability and Opportunity
Nouzab Fareed is a consultant specialized in corporate restructuring, business strategy and governance. He has a Masters of Arts in Economics and a MBA. He is a past president of Fiji Institute of Accountant and past vice president of Fiji Chamber of Commerce. He is on Twitter (@ Nouzab) and on Linkedin
Contractual employment, refers to a work arrangement in which an employee is hired for a specific period of time, typically for a specific project or task, and is not considered a permanent employee.
The employment relationship is governed by a written contract or agreement that outlines the terms and conditions of the arrangement, including the duration of the employment, the compensation and benefits, and any other terms agreed upon by both parties. Contractual employment is common in industries where there are fluctuations in demand for labour or where specific skills or expertise are required for a limited time. Examples of such industries include construction, engineering, consulting, event planning, and project management.
In these industries, employers may need to hire workers for shortterm projects, and contractual employment provides the flexibility to do so without committing to longterm employment.
There was a tendency towards contractual employment in the past decade.
One of the advantages of contractual employment for employers is that it allows them to hire workers with specialised skills for specific projects without having to invest in training or offer long-term benefits such as retirement plans or health insurance.
Employers can save money on labour costs and have more control over their workforce, as the contract specifies the terms and conditions of the employment relationship.
In addition, contractual employment allows employers to adjust their workforce as needed, depending on the demand for labour. However, contractual employment also has some disadvantages for employees.
For one, the job security is limited as the employment is for a specific duration, and the employee may not be guaranteed employment once the contract is over. Additionally, employees may not receive the same benefits and protections as permanent employees, such as health insurance, retirement plans, or protection against unfair dismissal.
Also, in some cases, the employee may be required to work long hours or have limited control over their work schedule.
It is also used as a tool to encourage for employees to work harder, smarter and achieve expected results. Failure to do so will lead to non-renewal of contracts.
There are many corporates around where 100 per cent of the employees are on contractual basis.
In addition, it is simply a legal arrangement between two parties as such many clauses are included in order to ensure the best is retained,
Permanent
Permanent employment, on the other hand, refers to a work arrangement in which an employee is hired for an indefinite period and is considered a long-term member of the organisation.
The employment is characterised by relationship a stable and secure job, with benefits such as health insurance, retirement plans, and paid time off.
In this type of employment, the employee typically has a permanent position within the organisation, and their job responsibilities and duties are defined by a job description.
Permanent employment is common in industries where there is a consistent demand for labour and where the employee requires training and development.
Examples of such industries include healthcare, education, government, finance, and information technology.
In these industries, employees are expected to work for the organisation for a long time, and they receive benefits such as health insurance, retirement plans, and paid time off.
In addition, employees in permanent employment have job security and the opportunity for career advancement within the organisation.
One of the advantages of permanent employment for employees is job security.
Permanent employees have greater protection against unfair dismissal and are entitled to notice and severance pay if they are terminated.
In addition, permanent employees typically receive benefits such as health insurance, retirement plans, and paid time off, which provide financial security and stability. Furthermore, permanent employees have the opportunity for career advancement and may receive training and development to enhance their skills and knowledge. For employers, permanent employment provides stability and continuity of the workforce, which can lead to increased productivity and efficiency.
Permanent employees tend to be more loyal to the organisation, and they are more likely to invest time and effort in their work. Furthermore, permanent employees tend to have a better understanding of the organisation’s culture and values, which can lead to better alignment between the employee
Public Sector
In the public sector, contractual employment is a common practice, especially for short-term or projectbased work.
This allows government agencies to hire personnel for a specific period of time or task, without the need to create permanent positions.
This type of employment can be used to supplement the workforce during peak periods or to cover for employees on leave or vacation.
It can also be used to bring in specialised expertise for specific projects or initiatives.
However, contractual employment in the public sector can also be controversial as it may lead to a lack of job security for employees, as they may not have access to the same benefits and protections as permanent employees.
It may also result in higher costs for the government, as contractors often charge a premium for their services.
The use of contractual employment in the public sector is a complex issue that requires balancing the need for flexibility and cost-effectiveness with the need to ensure fair treatment of employees and accountability to taxpayers. Permanent employment in the public sector refers to employment that is ongoing, with no predetermined end date.
Public sector employees who are permanent typically have job security, access to benefits, and may have opportunities for career advancement.
This type of employment in the public sector is important for ensuring stability and continuity in government operations.
It allows for the development of a knowledgeable and experienced workforce that can provide essential services to the public. In addition, permanent employment in the public sector can help to attract and retain high-quality employees.
It provides employees with a sense of security and stability, which can be important factors in job satisfaction and productivity.
However, permanent employment in the public sector can also be a source of criticism as it can lead to inefficiencies and resistance to change, as permanent employees may be less flexible and adaptable than contract workers.
There is also concern that permanent employees may be harder to terminate if they are not performing adequately.
Global Scene
There have been instances in several countries where civil servants have been moved from permanent to contractual employment.
The move from permanent to contractual employment in the civil service has been a controversial issue in many countries, with concerns raised about job security, working conditions, and the erosion of employment rights.
It is less common for civil servants to move from contractual to permanent employment, as governments tend to use contractual employment to provide flexibility and cost savings.
However, there have been instances where contractual civil servants have been converted to permanent employees in some countries.
The trend in the public sector has been towards greater use of contractual employment, rather than permanent employment.
However, there have been instances where governments have recognised the importance of job security and working conditions for civil servants and have moved towards greater use of permanent employment.
What is Best
The type of employment, whether it be contractual or permanent, should not be based on whether the job is in the private or public sector.
Rather, the decision should be based on the nature of the work and the needs of the organisation.
In both the private and public sectors, there may be circumstances where contractual employment is more appropriate than permanent employment.
For example, a private company may need to hire contractors for short-term projects, while a public agency may need to bring in outside expertise for a specialised task.
Similarly, there may be situations where permanent employment is necessary in both sectors.
For example, a private company may need a stable workforce to provide ongoing services to clients, while a public agency may need permanent employees to ensure continuity in the provision of essential services to the public.
Ultimately, the decision to use contractual or permanent employment should be based on the specific needs and circumstances of the organisation, rather than on the sector in which it operates.