Absenteeism & Labor Turnover

Anuj Jindal

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 Table of Contents
Absenteeism & Labour Turnover ..................................................................................................................................... 4
Meaning of Absenteeism ............................................................................................................................................. 4
Meaning of Employee Absenteeism Rate ................................................................................................................... 4
Meaning of Labour Turnover ....................................................................................................................................... 5
Effects of Labour Turnover ........................................................................................................................................... 5
Causes of Labour Turnover .......................................................................................................................................... 6
Remedies for Reduction of Labour Turnover .............................................................................................................. 7

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Absenteeism & Labour Turnover
Meaning of Absenteeism
According to Websters’ Dictionary, “Absenteeism is the practice or habit of being in ‘absence’,
and an ‘absenter’ is one who habitually stays away”.

As per Labour Bureau, Simla, “absenteeism is the total man-shifts lost because of absence as a
percentage of the total number of man-shifts scheduled to work”.

➢ In simple words it denotes the absence of an employee when he is scheduled to work.

An employee is considered ‘scheduled to work’ when the employer has kept the work ready
for him and the worker is aware of it but still does not report for duty. A leave taken by an
employee is not absenteeism.

➢ The degree of absenteeism may differ from place to place, occupation to occupation and
industry to industry. It may be high in some occupations and industries as compared to others.
Even in a particular industry, the degree of absenteeism may vary in different departments.

Meaning of Employee Absenteeism Rate

➢ Absenteeism rate is the ratio of days lost to the total number of days for which
employment is available. For calculating absenteeism rate, the number of persons
expected to report for duty and the actual number of those who are present should be known.

➢ A worker is considered present even if a worker reports for part of shift. A worker enjoying
sanctioned holidays is not counted in the persons expected to be present.

Department of Labour has recommended following formula for calculating absenteeism rate:
Absenteeism Rate = Number of man days lost/Man days worked + Man days lost x 100

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Meaning of Labour Turnover

➢ Labour turnover refers to the establishment of a relationship between the number of

employees leaving during a period to the average number of employees during that
period. It may also denote the percentage change in the labour force of an organisation.

➢ A higher percentage of labour turnover will mean that employees are not stable and
new employees join while old employees leave the organisation. A lower labour turnover, on
the other hand, means that only small number of employees have come in and gone out of
the organisation.

Effects of Labour Turnover

A higher labour turnover will not only mean expenditure on hiring new persons, but it also
increases labour cost. It has been observed by employers that a normal labour turnover, which is
between 3% and 5%, need not cause much anxiety. But a high labour turnover is always detrimental
to the organisation.

Some of the effects of labour turnover are discussed as follows:

➢ Hiring of new persons involves the loss of time and money. A higher labour turnover rate
will necessitate spending more resources on employing new persons.

➢ The employment of new persons will require their training facilities also.

➢ There will be a loss of production during interval between separation and employing of new
workers.

➢ The machines and equipment will remain idle during the interval of replacing the workers
and their training period.

➢ The rate of production will be low in case of new employees. There will also be more
depreciation of machines and equipment because new workers will take time to learn their
jobs.

➢ The separation of employees will disturb production schedule. To meet order in time
overtime payments may have to be made. Higher labour turnover will increase labour cost
per unit.

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 ➢ New workers being inexperienced workers cause more depreciation of tools and
machinery. Due to faulty handling of new workers, breakdown of tools and machinery may
also occur very often and hamper production.

➢ New workers being inexperienced workers are more prone to accidents. Consequently, all
costs associated with accidents such as loss on account of output lost, compensation for the
injured workers, damage of materials and equipment due to accidents etc. increase the cost
of production.

Causes of Labour Turnover

The various causes of labour turnover can be classified under the following three heads:

1. Personal causes- Workers may leave the organisation purely on personal grounds, e.g.

• Domestic troubles and family responsibilities.

• Retirement due to old age.
• Accident making workers permanently incapable of doing work.
• Women workers may leave after marriage in order to take up household duties.
• Dislike for the job or place.
• Death.
• Workers finding better jobs at some other places.
• Workers may leave just because of their roving nature.
• Cases involving moral turpitude.

2.Unavoidable Causes- In certain circumstances it becomes necessary for the management to ask
some of the workers to leave the organisation. In all such cases, labour turnover is unavoidable,
and the employer can practically do nothing to reduce the labour turnover.

These circumstances may be as follows:

• Workers may be discharged due to insubordination or inefficiency.

• Workers may be discharged due to continued or long absence.

• Workers may be retrenched due to shortage of work.

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3. Avoidable Causes- These refers to those elements which can be avoided by taking some
corrective action by the management or the employment.

• Low wages and allowances may induce workers to leave the factory and join other factories
where higher wages and allowances are paid.
• Unsatisfactory working conditions e.g., bad environment, inadequate ventilation etc. leading
to strained relations with the employer.
• Job dissatisfaction on account of wrong placement of workers may become a cause of leaving
the organisation.
• Lack of accommodation, medical, transport and recreational facilities.
• Long hours of work.
• Lack of promotion opportunities.
• Unfair methods of promotion.
• Lack of security of employment.
• Lack of proper training facilities.
• Unsympathetic attitude of the management may force the workers to leave.

Remedies for Reduction of Labour Turnover

The normal labour turnover is advantageous because it allows injection of fresh blood into the firm.
But excessive labour turnover is not desirable because it shows that labour force is not contended.
Therefore, every effort should be made to remove the avoidable causes which give rise to excessive
labour turnover.

Following remedies may be taken to reduce the labour turnover:

▪ A suitable personnel policy should be framed for employing the right man for the right job
and giving a fair and equal treatment to all workers.

▪ Good working conditions which may be conducive to health and efficiency should be
provided.

▪ Fair rates of pay and allowances and other monetary benefits should be introduced.

▪ Maximum non-monetary benefits (i.e., fringe benefits) should be introduced.

▪ Distinction should be made between efficient and inefficient workers by introducing

incentive plans whereby efficient workers may be rewarded more as compared to
inefficient workers.

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 ▪ An employee suggestion box scheme should be introduced whereby workers who suggest
improvements in the method of production should be suitably rewarded.

▪ Men-management relationships should be improved by encouraging labour participation in

management.

▪ The personnel department should prepare periodical reports on the labour turnover
listing out the various reasons due to which workers have left the organisation. The report
should be sent to the management with the necessary recommendations so that corrective
measures may be taken to reduce labour turnover.

In all the reduction in labour turnover as well as employee absenteeism is in the best interest of the
firms as it shall help in the reduction of the overall cost of production and shall help in improving
efficiency of operations.

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