Are occupational safety and health standards for contractor employees poorer than those for the direct hires? Why should clients require high safety and health standards from their contractors and suppliers?

Manufacturing industry, particularly petroleum refineries, petrochemicals and heavy chemical plants, traditionally employ site contractors for maintenance, turnaround, inspection and several other routine and specialized jobs of varying hazards and duration. Employers have inherent interest in the safety and well being of their contractors personnel. Corporations which strive for safety and health excellence expect their contractors and suppliers to maintain the same principles and standards. This is for two reasons. Firstly, because effective safety and health management is a good indicator of management competence. On the flip side of the coin, the second reason, they cannot afford business interruptions due to incidents arising out of contractors.

Many large enterprises are committed to helping their smaller contractors and suppliers achieve high standards of safety and health because they recognize that it is unethical for contractors' workers to be provided with a lower standard of care than their own direct employees. Also many clients realize that their reputation and public standing - upon which their commercial success increasingly depends - is influenced by their contractors' health, safety and environmental performance. When incidents occur the public do not differentiate between the firm's direct employees and contract workers. Nor indeed do other enterprises to which many large firms are themselves contractors and suppliers.

Best Practice Strategy

The tribal wisdom of the Dakota Indians, passed on from one generation to the next, says that when you discover you are riding a dead horse, the best strategy is to dismount. However, in modern business, because of the heavy investment factors to be taken into consideration, often other best practices strategies have to be tried with dead horses. One of the most popular strategies seems to be hiring outside contractors to ride the dead horse.

Over the last forty years, and especially last ten of them led by a tremendous growth of service sector refining and petrochemicals industry has seen a marked growth in the outsourcing of business activities. This is due to pressure to concentrate on core business activity of plant operation, to downsize staff strength, to reduce costs and to promote competition between suppliers of services. Petro organizations though growing bigger in capital are actually getting slimmer in management structure and number of employees. There is an upsurge of contract staff, growth in number of small firms, of contract and subcontracted companies and the self-employed competing for and working on contract. Dramatic specialization in technology alongside globalization of production and markets has fuelled this trend further.

The management prefers contract resourcing for several reasons including:

  • being able to concentrate business efforts on core activities (which is generally operating the plant)

  • reduced number of direct hires is perceived as reduced headache on personnel issues like training, health and safety, worker's compensation, etc.

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