The price of supplying labor includes more than just the staff member's salary — understanding what you're paying for improves your decision.
The Components of Labor Supply Pricing
| Component | The approximate percentage of the price |
|---|---|
| The staff member's salary and allowances | 55-65% |
| Social insurance and health insurance | 10-15% |
| Recruitment and qualification | 5-8% |
| Supervision and management | 8-12% |
| The company's profit margin | 10-15% |
Why Is Outsourcing Sometimes Cheaper Than Direct Employment?
- Economies of scale in recruitment and training
- No turnover costs, which may reach 30% of the salary
- No costs of the job vacancy
- The flexibility of raising and lowering the numbers
Conclusion
A good price in labor supply reflects all these components — much cheaper may mean a shortcut in qualification or supervision.