Photo by Verne Ho on Unsplash

Women Are the Real Victims of Outsourcing

The externalisation of cleaning jobs has dire social consequences that disproportionately affect women of colour.

“Help us win against these modern slave-holders, don’t sleep in an Accor hotel.” This desperate cry for help dates from November 2002, when housekeepers of the sixth-largest hospitality company in the world went on strike in France. Back then, the social movement drew attention to a fringe phenomenon: the outsourcing of cleaning services.

Nearly twenty years later, in 2020, employees of the same company entered in a year-long strike for yet again the same reasons, shouting hopefully “you don’t ask for power, you grab it!” What was fringe in 2002 has become ubiquitous, and the dire social consequences of the business practice a harsh reality for hundreds of thousands around the world. Due to the industry’s demographic makeup, this injustice disproportionately affects women, particularly immigrant women of colour. According to a 2010 study conducted in Canada,

In the Greater Toronto Area, approximately 30,000 people work in the hotel industry. Immigrant women of colour, who are disadvantaged by their dependence on cheap, racialised, gendered work, make up the majority of these workers. Among those working on cleaning and laundry, 93 per cent are immigrants, 82 per cent are visible minorities and 80 per cent are women. Housekeepers and hotel laundry workers are among the lowest wage earners: the median annual wage for a Toronto hotel worker is around $26,000, falling short of the low-income cut off of $34,572 for a family of four in 2004.

The plight of these vulnerable women goes by mostly unreported. Far from their countries and families, they toil to send money back home all but ignored by the general public.

They suffer in the shadows as hotel guests bask in luxury.

A 2015 Guardian article explains the fundamental issue with the outsourcing of cleaning services:

Cleaning at their hotel, like many services, is outsourced. Four months ago […] they were paid £6.50 an hour to clean 13 rooms in eight hours, every day, five days a week– a long way short of the London living wage of £9.15 an hour. Then the contract was taken over by another cleaning services company […]. The women say they were assured there would be no change. Now, they clean 15 to 17 bedrooms in seven and a half hours a day; more work, less pay.

“More work, less pay.” This, however, is an issue not limited to cleaning services. It is a fundamental flaw in the economics of outsourcing itself.

All illustrations courtesy of the author.

Outsourcing, a term first coined in 1989, has become the cornerstone of contemporary corporate strategy. The novel management concept promised to reduce operational costs, improve productivity, and create a better work environment for employees. By encouraging companies to focus on their core activities and outsource non-core operations, workers would perfect their skills and businesses would increase their profits. However, in a world fixated on profit growth, it was only a matter of time before companies would outsource core activities.

A hotel only has a limited number of ways to increase its revenues. It can boost the price of its rooms or add more of them; it can offer side services at a premium. At some point, to increase profits, a hotel must reduce its costs. You start by streamlining operations and outsourcing the apparent tasks: accounting, legal, HR, marketing. Then, to continue growing, you must find other costs to cut. That’s when you start outsourcing jobs like valet service or minibar refurbishing; eventually, you outsource one of the most vital operations of any hotel: housekeeping.

Outsourcing requires a specific kind of work to be mutually beneficial to the company and its contractor. It is best-suited for knowledge work or scalable tasks but is not adapted to non-scalable service jobs. In their quests for ever-increasing profits, companies didn’t stop and thought of the consequences of their Board-room decisions on the lives of the most fragile and vulnerable of their employees, soon-to-be contractors.

Four kinds of work.

Following the framework established by Peter Drucker in The Post-Capitalist Society, we can divide workers into two categories: service and knowledge workers.

Service workers' revenues come from their labour-time: the only thing they can sell in the market is hours of their time. These jobs cannot be performed “from home” and are usually unqualified. These workers are what economists call undifferentiated, and as such, these workers are price-takers. Their ability to negotiate their salaries relies on collective bargaining. Alone, they can’t do anything.

The revenues of knowledge workers, on the other hand, depend on expertise or education. These jobs are differentiated and require specific skills that lead to a strong ability to negotiate compensation, beyond what one would consider a fair market price. For example, think of a lawyer who can ask $1,000 an hour while another may only quote $300. These workers are, to a certain extent, price-makers.

Another way to classify different jobs is to separate between scalable and non-scalable activities. A scalable job can be performed more efficiently through automation, technology, or experience. What distinguishes different kinds of work is their scalability threshold. A computer programmer can optimise their work infinitely; a housekeeper can only marginally improve their performance while maintaining quality standards.

How to reduce costs in each work type

When outsourcing to a third party, one assumes that the contractor will perform the tasks more efficiently. Once again, this is a financial obligation: to offer a service of similar quality or better at a lower total cost, the contractor must optimise its operations. Based on the kind of work, this leads to the optimisation strategies shown above. This article focuses on the lower-left corner.

Reducing costs for non-scalable service jobs.

The only solution to decrease the cost of a non-scalable service job is to discount the work. There are two ways to do this: lower the work-unit pay of their employees or reduce the number of work-units performed for a given cost. In both scenarios, however, the worker ends up with a lower salary. There is simply no way for a third party company to generate a profit while at the same time guaranteeing an equivalent amount of work and similar employee compensation.

The 2020 strike in France was the latest public manifestation of a social problem, variations of which have been repeated ad nauseam in many countries for the past decades. The victims of this legal racketeering scheme suffer in silence, forgotten or neglected. Mostly women of colour, immigrants far from home, they represent the most vulnerable of all workers; they drudge without proper legal representation in a world that doesn’t care about them.

The outsourcing of cleaning services isn’t confined to the hotel industry. An investigation conducted in 2020 in France revealed that many public hospitals outsource their cleaning operations, leading to more work-hours, lower salaries, and lower hygiene standards. Corroborating this last finding, an Oxford University study conducted throughout 126 hospitals in the United Kingdom found a significant correlation between nosocomial infection incidence, i.e. your chance of contracting a disease while hospitalised, and the outsourcing of cleaning services to private-sector companies. NHS hospitals who rely on outsourced cleaning have a 50% higher rate of MRSA infections. On the other hand, they save money: £236 per bed per year on average.

Boosting hospitals’ profits comes at the cost of ruining two sets of lives: those of the workers, and those of the patients.

In the end, we’re left with the eternal question: what can we do about it?

As a general principle, I don’t believe that guilt-tripping customers is the proper way to go. We can all decide not to give business to companies that engage in harmful work practices, but the research involved is often beyond the ability of most.

Regulating the labour market is the government’s job; its best tool to effect change and incentivise behaviours is proper taxation. By tying a company’s average tax rate to its workforce composition and its average salary, regulators could incentivise keeping good-paying jobs in-house.

The predicament of the cleaning workers should be a concern for all of us. If the pandemic has demonstrated anything, it is the crucial importance of jobs we often neglect or wilfully ignore: cleaners, cashiers, security guards, nurses. We incense and praise knowledge workers and forget service workers, yet the latter sustain our economy and lifestyles. More importantly, as we have seen, these jobs tend to be performed by women, often women of colour. The crisis we are going through disproportionately affects them; women held all the positions lost in December in the US. All of them; 100%.

As a whole, society has a vested interest in the well-being and prosperity of its most essential workers. It’s time we fight for their rights.

I write about politics, business, society and culture on Medium. For startup/business content, check my newsletter: fundraisedd.substack.com

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