I have worked as a subcontractor for a subcontractor. I can tell you, all the ”training” is up to the person doing the work. Sometimes you hear companies complaining that they can’t find those ”old time professionals”. Those guys don’t grow in trees, they were trained by some organization.
I 100% agree they want zero investment but all the profit. They don't want to train new guys but will complain that the new guys are no good or they won't hire them at all. I've also noticed work just being passed on but will inject plenty of bureaucracy and paperwork just to show proof of there said job.
This is true in Australia also. A Prime Contractor quoted us $80k, they subcontracted to a second organisation for $40k, spoke to the actual subbie doing the work and he's getting $11,500. We are prohibited to deal direct with the actual people doing the install. Scam.
But why does this happen? Is it a regulatory issue? Does the subbie not know how to win business directly? It seems this is ripe for some technology that collapses the layers of bloat.
@@vmoses1979back handers, schmoozing, layers of bureaucracy that a sole trader couldn't possibly deal with and the fact that you can actually make more money as a sub contractor.
I worked at Veolia as an engineer for a bit. My boss would tender for work he knew he didn’t have capacity to do, then would subcontractor the already won tenders. Scraping a margin of 20%. Anyways got the fuck out of the reliving business for several reasons lol
Truth is that the regime could have sorted this out years ago, rather than relying on market forces (agencies) to bail them out. It didn't help that the regime implemented tuition fees on nurses either. But the simple fact is that nurses were qualifying, then promptly leaving the UK in search of a better life/more money. Had the regime actually done things to help make life more bearable in this country, people wouldn't vote with their feet. Currently we have a huge exodus of skilled and wealthy people leaving the UK because, let's face it, this country doesn't look after us. Why stay in a country that treats you badly?
@klawlor3659 terrible staff to patient numbers, crumbling buildings, long waiting lists and it's still just as (or more) expensive to run as when it was good. The nursing agencies are the tip of the iceberg of inefficiency.
@@markysgeeklab8783 can't disagree with a word you said there. I've noticed the crumbling buildings, malfunctioning equipment and lack of staff myself. Can't see things improving sadly.
@@klawlor3659 I agree it's not getting better anytime soon, especially when people leave Nursing or leave the UK because they feel like they can't look after the patients properly due to systematic failures (debatable if it was a "failure" or happened "as intended" when the Tory party are in power in the UK). Only circumstantial evidence, but last time I checked my wife's group of 8 nurse friends from uni only has 3 nurses still working in the UK NHS. 2 left the UK (including my family) 2 run cosmetic clinics (botox etc) and 1 on NHS waiting list due to an at work injury. We would consider a move back to the UK if it had anything to offer us that we were interested in, but I don't want high crime, low wages and an expensive & restrictive society (where I can't even legally get an ebike that assists faster than I can ride normally).
Yep, fed up with being "self employed" ... at the bottom of the pile, paying for every card and cert required to lift a hand, and unpaid training days etc.
I was a Subby Sparky for 30 years before I retired 7 years ago. I could earned twice what I would have earned being a cardy, yes I got no paid holidays, but I worked when I wanted to, paid my own taxes & claimed my legitimate expenses.
As a bloke with a screwdriver job it's so nice to hear somebody point out the issues with all the contracting out of work. The problems coming down the road for the country are huge as much of the slack in the systems needed to train newcomers in an industry has gone along often with the technical knowledge of how to do things in an effective way. Often degree qualified bods have little to no actual hands on work experience but over inflated ideas on how useful they are. Big problems in bound I promise you.
Spot on Richard. All along the line there are people taking money for doing nothing more than passing responsibility on to someone else and we end up with a worse system.
Changing a bulb in the NHS will cost over £200. That's why many rooms are in semi darkness. NHS cannot afford to change a bulb and other staff are not allowed to do it under the contract terms and H&S.
Subcontracting was meant to give main contractors additional capabilities, depending on the specialist subcontractors doing something only the subcon can do to complement a contractor This has to be regulated
In indonesia 🇮🇩 A 100.000 project : 1. Bribe to get the project 50.000 2. Subcon tier 1 30.000 3. Subcon tier 2 15.000 4. Subcon tier 3 5000 5. Below standard result ? Who care That's my experience as 3rd tier subcon 😅
Telecom engineer for fifty years, when I started had about one manger for approximately 100 workers when I retired five mangers for one worker and any redundancies it was always the worker.
@@david-pb4bi But they only laid off workers so it does not matter how many managers they had. Were you not management material because surely you should have been promoted in 50 years
My dad worked for Telecom Australia for about 35 years. And then, after privatisation, Telstra for about 3 years before buggering off. Here's a story I remember from childhood. The small, rural town we lived in once had its phone service go out on a Saturday for a large part of the town. Know what my dad did? Went to the exchange, fixed the fault in about two hours. He did this. And he got paid for it - overtime, since he wasn't meant to be working. He was allowed to do this. He was able to do this, because he lived there. After Johnny Howard's privatisation kick, the newly-private Telstra withdrew the vast, vast majority of its works from the bush, retreating back to Sydney and Melbourne. Dad asked if there was a role for him in the regions, management said no, unless he wanted to be a subcontractor. Last year, that town's sole mobile phone tower went down. Took a week before the suits down in Sydney bothered to find out how to fix it, because it's not like that part of the country was profitable enough for 'em. Barely made the news - after all, as a private company, they're allowed to decide how to allocate their own resources.
Housing crisis, health crisis, cost of living crisis, debt crisis, inflation crisis, EU war crisis, middle East crisis, bank crisis, retirement crisis. How many crises can a koala bear?
bravo! I've worked in real estate for over 25 years and have neglected a major stock portfolio, but I need a different plan now... mind if I look up the professional guiding you please?
And you even forgot the worst one... The climate crisis, not to mention the resources crisis that also brought us a polycrisis... Farewell to us workers, we have a great deal of work to do...
I worked in central France a couple of years ago, just after the Notre Dame fire. I discovered that a local forest had been growing there for centuries, with trees specifically set aside to replace the oak beams, should such an incident occur. The forward planning, the lack of "sell it now" mentality and the fact that there are still many nice hardwood forests at all, made such a stark contrast to how things are in 21st Century UK.
France has the same problems as UK, but in its own context. Grass is always greener on the other side of the fence. France has a notoriously inefficient and expensive state. People who work carry better paid non-workers on their own backs.
@@ZettaiKatsu2013 State inefficiency has always interested me as a concept. What is inefficiency? Is it the act of not turning a profit or turning an inadequate one? If that is the case then the militaries of the world must surely be the most egregious examples of inefficiency imaginable, they soak up billions and don’t return a penny! You could say the same for socialised healthcare as well. What about all those parts of civil society that serve the common good? Just because a thing is expensive does not make it inefficient!
@@Hurc7495Military was always good business for western or eastern oligarchs and disaster for all poor people. Western oligarchs earned good money on weapons for which you paid from your taxes and on contracts to rebuild countries destroyed by those weapons not saying about money they earned on resources stolen from destroyed countries. Will still say that military is inefficient... ?
These layers of subcontracting are also referred to as "hand offs"; the more "hand offs" in a production system, the more expensive and less efficient it becomes. As an ex-Civil Servant these "hand offs" were the scourge of my working life because whenever I tried to actually produce or deliver something, my line management would totally discourage this in favour of contracting out. Is it so surprising then, that the general public get so frustrated when they both see and experience an apparent intransigence of local and central government to deliver services? This then only feeds the falsehood that outsourcing to the private sector is the solution to public sector performance, thereby reinforcing the already disfunctional service delivery.
I think it might have something to do with liability in addition to profit maximization, they didn't have the pay the subbies whilst they were learning their trade. However they also usually don't know if the subbies are trained or not, simply who has the lowest bid.
Carillion employed 30,000 people, which sounds a heck of a lot, but they were all quantity surveyors, accountants, etc. Nobody who could knock a nail in.
Yes I worked for them as an engineer. We were ignored in favour of the commercial people. I couldn’t believe how they managed jobs by having commercial people manage subcontractors with no technical or project management expertise. They treated their supply chain badly, even internal suppliers were screwed. Playing one off against the other, late payment was normal.
In 2009 in Canada I finished the Squamish Hospital renovation with a company highly regarded in Canada and specialized in inst. and hospitals. Vanbots. I then heard at the 2010 Winter Olympics that they had been bought by some midland Brit outfit I'd never hearf of. Obviously, Carillioin was simply kicking the finance can down the road and covering their backside with confusion. Vanbots is still very much in business, a great company in Canada. Hope they are doing well. Const., conventions, and industries like that can be hard to oversee, especially if you dont' WANT to be audited well.
Yep Earned a goog living in 15 year period 2000 on from them Did a good job but often lost out on larger jobs to companies that got whole job for overpriced contracts Then would employ me to do the specific task I did because I knew the sites Or I would be employed after the fact to put it right at extra costs bourne by the principle ( NHS orMod) Never the major contractor or Carillion would always covered the real fault up Lots of management houses were very well taken care of shall we say I was there artisan he talked about
@@teryd5672n Agreed, the horror shows at the hospitals in Smethwick and Liverpool run by Carillion were particularly bad examples. In the latter case, the roof and floors had to be redone, causing a £50 million plus overspend and a 4 to 5 year delay in opening. One plumbing company I know who worked on the project were screwed for around a quarter of a million, frequently payment was witheld for 6 months or more.
I spent 60 years of my life as a ind. maintenance tech. in a variety of Co's ,furniture/wire/packaging to name a few. I have witnessed to change from inhouse maintenance to randomly called emergency breakdown contractors most of whom arrived not knowing what equipment they would face most of them never having seen what they would now have to repair, no knowledge of how these m/c's functioned or what they where ment to do ,before they malfunctioned. Even after I was forced to retire at 68 I was constantly called back when these guys where there and where stumped, not knowing how to calibrate these m/c's or even how to diagose the problems involved. Days of production will have been lost before the company finally to call me, this waste of money had always prevented by having inhouse engr. who lived with this equipment and trained the next generation. Every time this foolishness occured there was a bean counter behind it on the basis that it would save money,I would like to know how that went for them?
A big thing here is wages. My grandad worked for Northern Electricity I guess in the 60's, 70's and into the 80's (no real idea on this) - but the point being he was paid enough to support a whole household, as Richard is kind of saying anyway. Appreciate purchasing profiles have shifted, however, now most 'workers' get little and 'mangers' seem to take all. Things like 'super-heads' disturb me, one person doing the job of 3 or so and getting paid about 5-8 times an average wage - there's so many things in these scenarios that just don't make sense. Essentially we are saying that large swathes of the population are useless at their jobs, that's the message. Amazing stuff from Richard - and yes we need these 'rent collectors' to be given a hard stare (they are suffocating our economy as they suck it dry), and we also need to look at the vast amount of people who are just left marginalized, subcontracted and/or surviving on benefits.
Well said and a classic example of that is the local government councils that have gone bust over the past two years or so. In Birminghams case the commissioners that have been brought in at enormous expense have declared that the systemic failures of the city are too complicated to solve. The Gordian knot comes to mind and how it was solved.
Especially when, as is very common in the NHS, the agency staff are exactly the same people that once worked for you. All you've done is insert an extra layer of costs.
@@lor-px8wo Alexander reputedly (because I think it's an apocryphal tale) applied a BF&I (Brute Force & Ignorance) solution to the problem. The truth is,, though, that Alexander did rule almost all of Asia, and not entirely through the application of brute force and the sword...
That policy is common in a lot of commercial areas now, maintenance contracts used to be the norm years ago now it accountants working from home controlling everything.
I am so glad you made this post - you are SO right about this. I live in a town (High Wycombe) that seems to be full of well-off businessmen whose businesses are feeding off the state in some way (classic example - supplying 'temp' personnel to the NHS, paying the staff peanuts and charging them out to the NHS for a fortune.). One suspects that the tendering processes may be a bit 'bent', and the whole system a bit corrupt.
100%, It's a farce. Mum's newly installed cooker was left inoperable for 4months because the retailer, installer and manufacturer were in conflict with one another. This country is in the gutter with no accountability.
This video speaks the truth. Contracters handing out to subcontractors sucks... As a Janitor for my local council, we have had some changes over the past couple decades. My supervisors spoke to me of the older days, before everything had to be done by contractors or subcontractors. It is bonkers how it has become.
Correct, very correct, the problem is that modern management theory suggests that risk can be removed from a project by sub-contracting and outsourcing it ( the problem is that this obscures lines of responsibility and accounyability). This video has been needed for at least 10 years.
You’ve knocked the nail on the head. Productivity is the UK’s biggest economic problem. Get people trained is useful jobs creating real value for our nation.
It is the culture of denialabilty and lack of accountability. Being responsible for something is hard work, demanding commitment and integrity and the risk of getting it wrong and criticism. So much easier to subcontract. But such systems, when they go wrong end up with the tragedy's such as Grenfell Tower fire.
Had an issue with a leak in the communal area in our block of flats. There were about 4 layers of contractors, all apart from the polish guy at the bottom were utterly useless.
Twenty years ago I had a team of people I could organise and direct to deliver exactly what the organisation I worked for at the time needed. Today, I ask a colleague to ask a contractor for a price, argue for weeks or even months about budget and cost, get 'procurement' involved which means I can't say what I want, I have to talk about 'requirements' which are vague, and maybe, some day, I'll get some work done which wasn't what I wanted in the first place. No wonder we're in so much trouble.
HR are the leech’s that suck the blood and the motivation out of any company. They have become an industry in themselves with out of company organisations and loyalties. It’s one of the worst things ever to happen to businesses. Why has this happened? Managers didn’t want the bother or stress of dealing with problems themselves with the bonus of increasing the numbers of people they were notionally in charge of ……. regardless of the cost to the firm and consequently to the customer.
This sounds very familiar. I ran a 20 man team of pipework fabricators 10 years ago. We were all separate contractors and we could go in and just get the job done. Our productivity was inversely proportional to the number of meetings I had to attend times the number of regulations I had to follow.
Thanks for the common sense. I was a skilled worker painting hospital rooms. I charged twenty-dollars an hour. The unskilled painter who replaced me charged fourteen dollars an hour but took three times as long to repair and repaint the room. I guess management missed the per hour part, but in addition every day the room was unavailable for patient care the hospital lost two-thousand dollars in revenue from the government. I did it in one day costing my wages plus two-thousand, the outside contractor did the same work in three days at a cost of one-and-a-half my wages plus six thousand. The management at my hospital couldn't do the math and the taxpayer made up the difference in lost money and postponed medical care.
I am told that business majors who end up in management positions have a severe IQ crisis, not sure why that particular path selects for dipshits but it does
And that is why nothing is being built in the UK due to cost, and complicated projects. HS2, crumbling schools and hospitals....and why building all the affordable social homes we need will be more challenging than it should be. Lunacy!!!! It is time our government managed their own projects to get value for money, and building done.
@ruthguthrie1099 The whole UK runs on privatised contracted and subcontracted business. One example is the NHS, it is not delivering a better service in Wales, Scotland or Ireland. And, can you point out where infrastructure repairs or building is thriving in any of those places? Perhaps parts of Ireland under the domain of the EU?
for companies it is imperative that commissioned project never gets delivered, that costs skyrocket again and again and that responsibility for shortcomings never end up on their shoulders.
Sounds like China, every thing is falling down around them because projects are being passed thru. 10/15 subcontract levels down to a point where so much value has been drained out them the guy at the bottom is doing a rubbish job with junk materials to get out of there as quick as possible before they stop paying the already delayed monies. "Welcome tot Maggies and Reagans global economy"
My dad (now retired) was a maintenance engineer for the NHS. He would often commented on the fact that the NHS employed a highly skilled team of engineers to carry out work and maintenance duties within the hospital, and at the same time, the NHS would pay contractors extortionate amounts of money to come into the hospital and carry out the same work and duties which their own employed engineers could do, crazy.
I work in a hospital, and we could need an emergency repair in the middle of the night. The contracted company sends their on call, usually coming from up to 100 miles away, they turn up and it's usally. "I can't repair that, I'm an electrician and that's a plumbing issue."
@@JagdgeschwaderX Very little is now done by PFI in the UK, in my view it needs to be completely banned, as it rarely offered anything resembling value for money.
@@johnners911 Did the tests actually get done? The latest scandal to come from the water companies is water samples which were reported to have been tested, but actually hadn't been, the results were falsified As a former analytical chemist (now retired), I find this unforgivable, showing the water companies once again to be out and out liars.
With so many companies now owned by Private Equity, the focus is extracting as much value from a company as possible; everything else is secondary. As per the McKinsey school of management, outsource and offshore everything, take all of the reward but assume none of the risk.
Very well said Richard. I'm sure you are going to get a lot of examples and here is mine. I am contractually obliged to pay insurance on my flat. When it was discovered that the waste pipe was leaking, the insurers were contacted. 5 subcontractors later, someone came out and said the same they weren't responsible. I paid for a local plumber to fix it and I still don't know what I pay the insurance for.
@@johnners911 Of course the guys refused the job because they didn't have a ladder. Workers don't have ladders any more. Plus they probably didn't have the required "ladder licence" anyway. You can't just walk into any hardware store and buy a ladder y'know. They have to be imported from Egypt and you'll need a permit from the USA for it to be shipped via Canada.
We need to educate the future generations to understand that irresponsibility ruins the world and to value pro-social values instead of grift and laziness.
My sister and I graduated from the same university. I graduated in electrical and electronic engineering and my sister graduated in law and we both worked in the engineering industry. Guess which one of us lives the multi millionaire life style ( hint it's not me) ? Employers complain they can't get engineers and governments set up committees and study groups to find out why - the answer to that is easy just ask an engineer who is working in engineering. Even more laughably governments have set up the same study groups to try to figure out why the policy of getting more women into engineering has been a complete failure. The answer to that is simple as well - all the smart women are in law, accountancy, medicine ,dentistry etc
Seems the women are indeed smarter haha. You're right though, seems when you provide actual value, you don't get paid, but if you're clipping the ticket, you're creaming it.
I'm a structural engineer and left the UK literally earlier this week. There are only a few profitable careers in the UK: 1) Come on an orange boat, you get everything for free straightaway 2) Lawers 3) Finance 4) Doctors That's about it, no space for engineers in the UK unfortunately.
@@gnewgnew2011I’d add dentistry. Pharmacy is reasonable safe paye work, but extremely dull. If you want a safe job and you have a decent degree I’d go there
@@gnewgnew2011 Smart move getting out. I should have done the same. I would say to anyone if you are going to leave do it sooner rather than later before personal and family issues get in the way. Once you have family or a partner who doesn't really want to move it starts to get difficult and may never work out. Good luck.
@@mark4lev It wasn't an exhaustive list ! If you have good maths and science A levels then pretty well any career needing them is better than engineering.
Spot on. Im a contractor and I can see how crazy outsourcing is. The quality and service are degraded for sure. I used to work directly for a bank, we were good workers providing support and working on projects. Then around 2002 we started outsourcing third line to India and then eventually we got outsourced. I could see the quality in service drop dramatically. To the greedy bankers on paper it must have saved them money plus they no longer had to pay redundancy or bother training anyone. The customer suffered. Then eventually I was made redundant and then went into contracting.
Exactly. And it's always so some manager can get a bonus at the end of the year for the money he's "saved" , after which he moves on to the next bank before the "savings" are exposed as massive drops in quality and service.
@@TheThunderdome-il3ez the high street branch became shopfronts for selling the bank's products, effectively converting to a retail operation with sales targets etc. Fast forward 25 years, that retail operation has moved online, enabling banks to close high street branches.
I worked for a bank around 2010 when they got rid of their 90% of their tech team and outsourced to India. Only took a few months for them to completely break literally everything. Some job hadn't ran overnight and it caused a cascade failure. Took about two weeks to get most systems back to working BAU, but they were still dealing with missing transactions six months later when I burnt out and left.
Oh its a lot worse than you might think. Those workers at the bottom are usually older, experienced workers who were trained by the original electricity board. They are now retiring and not being replaced. Have you tried getting a new electricity connection for a business or a new build recently? The cost and lead times are now eye watering; especially in the North-East and South-West of the UK.
Surely not as the whole what is now fossil fuel powered transportation system and everything else is going to be in no time at all plugged in getting all that free abundant clean endless renewable energy from these new connections. The government has told us so it must be true.
Subcontracting is also extremely common here in the third world. This way the capitalists cut the direct relation between themselves and workers, curtailing bargaining power and diluting the relation.
So much money is wasted via outsourcing and procurement at ridiculous prices. All anyone cares about is not the delivery of a service but how many middlemen, how many layers of abstraction can you put in between the client and the service being delivered in a half assed way. Look at HS2 and NHS, each of those subcontractors have to make a profit margin and interface with each other requiring huge webs of contracts to manage disputes. Which drives up the costs. And don't get me started on consultants... Richard that is another video in itself.
Consultants - my experience has been senior management/directors bring in their “mates” to fill an imaginary requirement. Substantial invoices for work done. Within 12 months changes made are reverse as they do not work. 🤨🫣
It's not the subcontractors fault. It's the thinking that has been adopted in the public service world. Pushing KPIs on to public servants that cause harm by keeping in house staff numbers artificially low is a problem (often meaning ppl who can do work have to spend time engaging contractors to arrange work instead is an example) . A KPI being having no increase of in house Operational cost might sound good, but if it leads to a 20% overall cost then it isn't. I think the adoption of and requirements for the "KPI" has caused way way more inefficiency than people realise. Because determining a KPI that is actually useful takes a very high level of logic and competence that ordinary humans do not possess.
@@markysgeeklab8783 It's not that the right metrics aren't being emphasized, it's that any metric that is chosen is then optimized at the expense of everything else. Goodhart’s law in action.
I totally agree with you Sir as an economist. The problem is that in a world full of uncertainty as a result of the financial role taking the control of the economy, nowadays it is easier for companies to subcontract, and if the bad time comes they simply break their contracts instead of having to pay layoffs and such. I wish in the future we can focus back on the real economy and get back our functioning enterprises.
It's managerialism. If your skills are in managing contractors (shopping for services) then you can move freely from organisation to organisation whilst knowing little about what they actually do. We have a whole managerial class taking the cream off the top of the economy. You know when you meet one because they are not interested in the details. They are never "technical".
last week I had to sit through an Engineering meeting with 3 fucking project managers working on the project. All of them earning much more than the Engineers and sucking the life out of them for explanations on technical terms.
And sadly, that middle management clipboard class and that life sucking management ladder is the aspiration of many leaving school. Not being constructive in making things, fixing things, but in arguing over contracts and moving things around in a spreadsheet. It's pathetic.
As someone who has worked as a contractor for many years, you are so correct we have been exploited so much. The hourly rates look good but after paying double NI and all the taxes you are screwed, no sick.pay no pension no holiday. No job security. It's a rip off. The system is designed to fatten the middle men but the actual customer or person doing the job benifit the least
Everything stated in this video is wholly correct, since privatisation the quality of services has headed downhill very fast. I worked in the telecommunications industry, a 3 year apprenticeship covering all aspects of the telecoms industry and once qualified, ongoing courses to keep you up to date with technical changes. This all changed with privatisation, now maybe a 3 month course in one area of the job expertise required (if you're lucky) and your whole work schedule is profit driven, so you never try to improve employment environments you simply attempt to reach your monthly targets. Hence no real maintenance is carried out within the industry because you nor your company may never visit the same work site twice. A dreadful way to manage a nation's essential services.
1980 contracting out KILLED the Unions and their apprenticeship programs, fast forward two decades or three, and Red Seal guys now want to retire. RR, Mulroney, and Thatcher all got RID of the "enemy" but didn't come up with a REPLACEMENT. in Canada Ontario and Quebec got some programs going by 1995 (those areas have been around for 500 years or more) but in the west it was easier to pay lip service, do NADA, then poach the training back East while complaining they "can't find anyone" or temporary foreign workers, whose "qualifications" in electrical or eng. is a five month course. NO, youi're NOT "qualified" to do anything other than some house install work.
@@napoleon6928 I have no idea other than it could be that if your company is in the profit driven area of supply it appears that maintenance of infrastructure, both interior and exterior, of the systems is deemed a "loss". When I worked at B.T. if you drove down a road and noticed cables sticking out of on-street distribution cabinets you'd either stop and sort them out or report it. This is simply one example, continual maintenance is being ignored and the advent of mobile telephones is increasing the lack of maintenance or future investment in infrastructure/maintenance.
I’m an engineer in the UK and I think this is a huge issue. Thank you for your explaining it so well. I fear every sector is victim to this, and why everything is so expensive in this country
I ran a small printing company for many years, and we would try and do as much is possible in house even if it meant we got lower margins compared to if we sent the job to one of the big commercial printers. Doing things in-house meant that we could guarantee the final product, and if there were issues or delays we had far more option on how to solve them than we if it was the sub contractor having the issue.
Most of manufacturing has been outsourced to Red China. Who care about Human Rights when they can make it cheaper Not to mention the child sweat shops producing tons of other products for us
What happens if an employee is sick or machine breaks? Ideally we need a system that clearly shows pricing/completion rate/delays. Otherwise companies will underbid and deadlines will be pushed back.
You have far more control over your own employees and equipment than you would ever would for an outsourced product. If theres an in house delay, you would have a good idea how long it would take to fix. If an outsourcer has a delay, you have no idea how long the delay would take.
Very good arguments! The same problem of subcontracting also occurs in Sweden. The idea was to reduce government cost by having companies to compete for contracts, thus reducing price. Subcontracting seems to take the benefits out of that equation. When building something now, there is generally cost overruns, and faults that needs to be corrected.
Exactly the same thing has happened in South Africa. One difference is that often the invoice is paid before the shoddy work and sometimes no work is done.
I remember working in Big 6 accountants when our excellent IT department was closed down and the whole operation taken over by Cap Gemini. They, in turn, contracted out the various bits of it to other companies and individuals. So you end up depending on people who know nothing about your business and aren't answerable to anyone in it. It's ideological engineering. The ideological fulcrum of Neoliberalism is that wealth is created by transactions and transactions are guided by the efficiency of market forces. Therefore, the more transactions you have, the more efficient and wealth generating you become! It's madness. But it's where we are.
@@charliemoore2551 I don't understand why it is bad, the company decided to go for low cost and got what it paid for. Or are you saying that the company decided to pay more for less? If so seems like a huge chance for a new player?
@@Volkan-z2v Your argument appears to assume that the people who are at the head of the "company" (as you call it) know what the people in the organisation do and how they use the technology. I've never worked in a large organisation where that was the case - and I've worked in several.
I live in S Africa and over the past 30 years the tenderpreneur middlemen are stock in trade in State Owned Companies, Provincial Government and Metros and Municipalities. Added to this is the fact that in the large Metros, formed from amalgamation of former town councils, all "council" departments were hived off into separate companies, each with Boards, fat executives and very few workers, most work being sub contracted. These companies operate in silos, if the water company digs the road up it can take months before the tarmac is reinstated because that is the work of the roads company. I was in England, specifically Lincolnshire and East Sufolk in August. I was amazed at the deterioration of your roads, potholed just like we have had here for at least the last 20 odd years, scruffy roadside verges too, and road signs obstructed by vegetation.
And no sooner will the tarmac be down but another service contractor will need to dig it up again. Instead of a centrally managed system where everything is done at once. The idea that this is more efficient and provides a better outcome for the public can only be defended by the few who profit from it, or those who aspire to profit from it.
Suffolk County council appear to have an obsession with installing traffic lights on roundabouts despite having prooved for themselves that they create congestion. Any money obtained from central government is hosed up the wall, while infrastructure is not maintained and desperately needed new road schemes are blocked......
Why are our industries falling apart ? Your examples from "old days" compared to "the new reality" was spot on. Your description is excellent. I will remember your video for ever. I our area we have a district heating project running. With 3 layers of subcontracting. Result: The working people are low salary people from low salary countries. They have had no training, -> they have no skills with this job -> they work inefficient and slow. Nobody is supporting them. 3 month ago they were all fired. A new subcontractor has been found and assigned. With better skills and much higher salaries. The project is more than 6 month behind schedule. The cost is increased by 60 %. The cost for all the users have sky-rocketed. I really miss the good "old days". When a contractor had experience with the job he was doing and was able to finish the job according to plan.
I was a Works Planner for a sub-contractor. I got paid £21 800 per year. Work Planners employed directly by the utility company were on £32 000 per year. I suspect the sub-contractor I worked for was charging the utilities company £32 000 for my services and putting £10 200 profit in their pocket.
they would be charging a lot more than the going rate so much more than 32000 as the sub contractor takes the liability away, sick pay , holidays, training, PPE,
Problem with head heavy management, endemic throughout the political and management class, where none of them have any clue how things are done on the ground. Glorified paper pushers, all hidden from any trace of responsibility behind the shield of committees.
That golden word I hear do often… LEAN…. Particularly in distribution and manufacturing… simply about cutting costs at the expenses of good consistent service to increase profits for shareholders. Consultants charging hideous daily rates to implement this practice in short term contracts with no long term accountability when shit hits the fan after they’ve left!!!
Absolutely right , not only is it a massive waste but you have little or no control of the standards of the people who do the work .No wonder our public services are in a mess .
Sub-contractors sign up and say that they will fullfil standards (they would not win the contract from the provider, otherwise). But, in order to squeeze some profit out of the job, the sub-contractor 'cuts corners' and does not operate to those standards because rarely are the standards policed.
@@swojnowski453Sub-contracting rather than hiring permanent staff has been the bane of my work place. The higher ups think more can be done if we have the staff we do have manage projects outsourced to industry. The problem is the software tool being worked on is complex and the subcontractors inevitably wind up spending nearly all their budget just trying to get up to speed. As a result the work we get back is sub par, if it gets finished, and my team and I have to find time to refactor and finish off what's been delivered. Meanwhile the higher ups are still pushing the "outsource the work" agenda and asking why we're doing so much of the work ourselves. It would be so much better if the money being spent on industry was instead spent on hiring more staff to do it all in house
Loomis Canada hired as subs (allowed 30% under a newly neg. union contract that hadn't matured) and they were almost ALL hired by the same guy. He hadn't graduated HS, had "gigged" in a band, sold drugs, and need to say his attitude towards women or co-workers that DIDN"T do drugs. Destroyed the company and gave away it's money. he was finally caught stealing/doing crack at work. Most stories don't cover the impact this idiocy has on OTHER employees who carry the day for the company. HOW he was allowed to do this for so long just "gobsmacked" me. I saw him immediately for what he was.
You have literally summed up my number 1 pet peeve about the modern world. If I was in charge it is the first thing I would fix, I have no idea how I would fix it but I would. I don’t really care about the properly private sector but for the public sector and private companies providing public services (e.g. utilities, transport etc) it should be largely abolished. The anecdote about getting someone to fix a broken power line summed it up perfectly. The country suffers from chronic short termism. Everything is about how much it costs now or how much money we can save now and not how much it actually costs over a longer term. At the root of it is the 5 year political cycle and terms that large company CEOs seem to take. All anyone cares about is their 5 years and that’s it, if it ruins the company long term they don’t care. To put it to a scenario, a favourite of local councils is outsourcing refuse collection. The council would rather pay £2M a year to a contractor to empty the bins than £1M to do it themselves but every say 10 years you need to spend £5M on new bin lorries. Over the 10 year period they would have saved £5M but someone would have to find the money for the new bin lorries. In private companies it’s worse as forking out the £5M for new lorries would have affected their profit for the year and “growth” figures. The problem is, all these companies and local authorities used to do these things themselves but sold it all off so it would require a massive investment to get it back. The Royal Mail used to run its own vans for example and employed a lot of mechanics and had garages to keep them running, not now, they got rid of the vans, sacked the mechanics and now rent the vans from another company. Ironically the mechanics probably work from them now doing the same job. Whoever was responsible for that would no doubt of collected healthy bonus and promotion for “saving” a load of money and cutting expenses, no one cares that long term it will cost more. I don’t think banning all this would go down well, those with a vested interest would declare it as forcing companies and people out of work but if you think about it, the jobs still need doing, the bins still need emptying, vans still need maintained, so the people actually doing the work will still have a job. The people that will go are the layers of wasteful bureaucracy that are the reason everything so damned expensive and shit. Now just imagine you applied that philosophy to the behemoth of wasteful practice that is the NHS, we would save a fortune.
Totally agree, the across the board adoption of JIT and Lean Systems (promoted by external "consultants") have achieved a culture that has taken away any sense of ownership and lost irretrievable amounts of historic knowledge of our systems and infrastructure.
Lean is not a cost cutting approach. Cost leadership is from Michael Porter (i.e. Strategic Management Theory). Lean says the exact opposite, for example Theory of Constraints opposes the concept of cost entirely and advocates for management of throughput.
Lean advocates for deep knowledge in order to maintain quality; which conflicts with outsourcing, subcontracting and hiring externally (e.g. The Toyota Way principles 8, 9, 10, 11). The idea of managers as a separate class of people goes all the way back to slavery and colonialism (e.g. Scientific Management, which is based on Fred Winslow Taylor's slave owning family).
I think that in the UK, lean systems were sold as a shortcut to cost savings. This was attractive to cash strapped authorities and service providers. The problem is that going down that route fundamentally changes the original guiding principles. I'm afraid those who initially advocated the introduction of market forces did not really grasp the consequences of letting the genie out of the bottle.
You make a very good point about historic knowledge being lost, which in my view is because JIT and 'lean' systems mean that you always get someone new and inexperienced for every different job, so you end up wasting time explaining all the stuff that they should know, had they done the last job.
Totally agree. I work in Semi now but worked in Aero my entire career. So many pointless firms adding ZERO value but all taking their 10% and often dragging things out.
@@nunyabidness3075 "the ultimate merger of corporate and government power" to quote someone on it. It's a school of economic thought that arose in Germany around 1920-30 that proposed that the government shouldn't compete on any service or if so allowed, compete with both hands tied behind their backs, and that the governments job was to specifically not regulate anything that could be exploited and instead prop up private venture when required. Private venture would then provide all the services citizens would need without restrictions and would do it well because of "competition". In practice oligopolies and monopolies form within a year and the capitalists set about extracting all possible wealth from the citizens whilst a neutered government sits by and absorbs taxes whilst providing no benefits. It's the story of most of the world right now, as neoliberalism is intrinsically tied to facism.
@@ThePlayerOfGames It’s funny you have a definition for a political idea that you think has taken over, but hasn’t. I can’t think of a single country where this is the norm. Air traffic control has been set up sort of like that in many western countries, but they were made to be monopolies and the people running them are not fairly described as capitalists. Privatization schemes seem to mostly get approved when the Left and Right conspire against the people. People who do not believe in competitive markets are no more capitalists than some of these dictators are communists.
You can now understand why infrastructure is falling apart in the whole country. Management does not hear about major maintenance problems because everyone is paid if the system keeps failing repeatedly
I'm constantly astonished by Richard's productivity. He posts new videos almost every day, and just about every one of them provides a new and valuable insight in to the way our economy works - or doesn't. It's amazing - but imagine what a total mess this channel would be if Richard acted like a modern corporation - and subcontracted all his hard work to whatever freelance "content creators" he can find, who bid the lowest rates.
@@flakieflake9616 The fact that Richard is a former chartered accountant doesn't prevent him from being an economist too. The two fields are closely related and its quite possible to be expert in both! However, I don't "believe everything he says without question" - you have no grounds for this insult! On the contrary, I question everything - especially on RUclips. What I find is that most of what he says is readily verifiable from other sources and consistent with what I already know, based on my extensive reading of economics and especially political economy, over several decades. That's a perfectly reasonable basis for taking someone seriously - it's certainly not blind faith!
I am an electrical engineer, and in my country, we still maintain a standby workforce model, similar to the old practices in the UK-reflecting the systems we historically adopted from the British. However, we are now transitioning toward outsourcing maintenance tasks to contractors. While this approach can be effective in the short term, especially when skilled professionals are readily available in the market, it poses significant long-term challenges. Over time, the absence of structured training environments depletes the pool of skilled labor, leading to increased costs and inefficiencies for all stakeholders.
An excellent analyse of modern life, if not intended. 90% bureaucracy 10% labour . And ofcourse the bureaucrats get 99% of the rewards and the labour live on benifits.
The whole world basically has the same problems, the question is, would it be because we are all doing the same thing wrong? Here In New Zealand we used to wait until a policy had failed in Britain before implementing it here, things have changed we now wait for a policy to fail in America before implementing it here...what could possibly go wrong? just ask the "man in the street"...
Five layers of outsourcing, means five lots of 15% project management charges. Five layers of outsourcing means five companies trying to minimise costs (and output) whilst maximising profits. The madness seen in the NHS, utility companies, the MOD, banks, builders, etc. The UK is a country of bureaucrats keeping everyone else's wages down, their bonuses up, productivity down, and customer sevices down. A little lesson: Railtrack was the predecessor of Network Rail. They were finally would up after a string of rail accidents and several fatalities. They had lost control of subcontracting arrangements.
I was baffled by that also, thank you for explaining. I am always surprised how many tiers there are, and it explains why so many organisations balloon at mid level and create so many cushy BS jobs just to appear busy (mostly admin and HR), but hardly anybody can actually deliver any service any more. Smart guys with real skills who know how to do start their own companies and pitch their services directly to the sources rather than end up at the bottom of the food chain. You really need to be cunning and well-connected to elevate your social position in the UK - if you just bend your head down and just do the work you will inevitably be taken advantage of.
Evidence no better seen than on our roads. Traffic lights and roads closed off for weeks and no one working. Paying how much for blokes to sit in vans and baby sit traffic lights
@@tortozza The £14 managers and £30k laywers with 60k+ student debt are the issue. Also the directors that have to hire an army of accountants to make sure they're not overpaying tax. Missing the forest from the trees. Over regulation, unclear processes and no accountability.
When the 💩 hits the fan there are so many tiers of contractors it makes it impossible to hold any one entity entirely responsible. Grenfell is a tragic example of this.
The person at the top should always be held responsible. "It's the contractor's fault," is never a good excuse., You appointed the contractor; you are responsible for their failure.
Hitting the nail on the head is an understatement M Thatcher said privatising our public utilities was a good deal if it was so good why is our electric one of the most expensive in the wold
I believe this is what happened with HS2 and why the cost went through the roof until the public ended up paying more and more for less and less and we ended up with a train from a London suburb to Birmingham.
A prime example of this is in security. Certain company's have major contracts but never had the man power to cover it when they signed that contract. They always planned to subcontract the work, creaming of profit from the top. Hence lower wages for security guards
In addition to the wastefulness and potential ‘Chinese whisper’ chaos of layers of inbetweeners there is the compounding delay in payment that the top layer (the last to be paid) has to factor into their finances. Every firm has insurance to pay for so maybe three insurance payments (one for each subcontractor) for the same function. Great for insurers! All of that is subject too to the fact that we are the laziest and least motivated of all workers in Europe - our productivity is appalling. As someone who has worked all around the world from Japan, Korea, throughout Europe and the USA I’ve witnessed first hand how bad we are.
Sorry, but we're not the laziest or unproductive workers in Europe. We're the least invested in workers in Europe. From the cuts in education where we are turning out the wrong types of workers for the jobs needed, from corporations expecting never to train their employees, and Government expecting the magic private sector to take care of manpower planning in the economy, and you get the omnishambles of UK plc, where we are ever more dependent on importing talent ratther than growing it. You get the buzzwords like "lifelong learning" but no funding to provide it. And we do not pay apprentices a living wage, even though they are learning in the job. They don't even get enough to pay their bus fare to go into their apprenticeship. We have unpaid internships, which are exploitative, and there is no guarantee, any longer of security for workers. Indeed if those at the top are only doing the bare minimum, why do you thing anyone else will do more than that? When I hear people say British workers are lazy, I just say "it's monkey see, monkey do." It's time certain corporate leaders led by example, and stopped bitching about how lazy everyone else is but they are. They are many who are lazy, short-sighted, and irresponsible with the power society gives them. I know, I worked for many of them. To the extent, I wish I hadn't. The jobs I loved gave me control over how I did my job, and helped me to do it well. And I turned out results to the best of my ability. That is not the norm. We have to be honest with ourselves as a country, and admit that our problems reflect our priorities, and if we don't like dealing with those problems, we need to look hard at our priorities. Blaming and scapegoating does nothing useful. If you cannot motivate your workers, then that is your problem. Not there's. Even if what you said was true about British workers being lazy - which it isn't; British workers work longer hours than anyone else in Europe - they weren't born that way. They were made that way because their leaders are that way. Look at what Prime Ministers we are creating, and that should give you pause, because if they are the best this country has to offer as leadership, you shouldn't be surprised that others just might be either following their examples, or being apathetic.
Another thing that is often overlooked is that this system is also very susceptible to fraud. Often first and second tier subcontractors know each other, and will make backroom price agreements on contact bids.
@@Incognito-jf1dr Robin typed REVOLUTION in caps, I responded with TURN in caps... Revolution and turn are synonymous That's all there was to it. I wasn't fomenting an uprising...
In Ireland we still have a semi-state company managing the electrical system countrywide. They still use a lot of contractors because the contractors pay better. I would have thought there's been a policy of only maintaining on failure rather than scheduled maintenance in most infrastructure since the 1990's.
Well said. I guess a lot can be boiled down to the continuous skimming of public resources at all costs. Like it is the solution to every single problem.
The curse of modern economics. Move costs from one spreadsheet to someone else’s and pretend that all is ok. Staff were permanent, pensionable and had a job for life if they so chose. Now layers of sub sub contracting add costs to the whole job costs! A smokescreen at best.
A LOT of subcontractors are underground economy types, drunks, druggies, poor accountants. If you want a legitimate payroll it's a struggle: the employment agencies skim 55% or MORE in Canada. I always had work immediately coming into a new city, but you gave up a lot. And bus. relying on agencies aren't paying attention: no one EVER notices your effort.
Spot-On. So many "Fawlty Towers Staircases" these days. (Fawlty Towers Staircase had extra stairs and a landing with no point, just extra effort going nowhere). So many palms upwards each requiring payment, taking profit, delivering nothing. All doing very well thank you, making money. Meanwhile, on the coalface, too few and a fading skills since training replacements is seen as a Cost, not a benefit. The system manages if everythiing is expected and as contracted, but falls flat for anything unexpected. Also reducing maintenance and firefighting supply failures generates the greatest profit, until the infrastructure fails and then needs replacing. At that point regulators are asked to approved substantial price rises. The Customers have already paid for this, but their money has been taken for profit and bonusses. Bonusses that will not be handed back, as they should be, for the failure to maintain.
The way companies are financed means that inspite of the point of the company being to deliver a service (or product) to the public there is no sense of public service. Shareholders are king and companies given free reign.
CEGB was the same that my father in law worked for. As an electrical engineer I hated Being a zero hours contract subcontractor with the "benefit" of being my own boss.
Was that not in response to people waiting years for treatment while having 1000s of free beds? At the time minor surgery like tonsil removal might have a wait of 6-7 years, it did for me!
@@foxmoongaze people also routinely stayed in hospital for far longer - no such thing as day surgery! I worked in a hospital a few years ago and we were often running at "black" which meant we were full.
@@onlyfflyff I wonder why we have so many sick people nowadays? I don't think it's just people living longer and needing more care. I don't remember so many people of all ages being so ill, or having so many mental health issues, in the 60s, 70s, or 80s.
1980 started sub contracting out: RR, Mulroney, and Thatcher. We're still paying for it. Sub contracting does NOT replace management, planning, sales, or personnel. It's a tool in the right place for growth, to plan, to expand w/o commitment until you see the future, and get corporate finances in place.
Subcontracting is rife to avoid unionised final salary pensions. Traditional staff have made themselves unaffordable. Arguments like this deliberately never include these costs.
Thanks for the straight forward explanation for the changes to work culture and contracting that have occurred b/c of 'smaller government' that morphed into higher prices.
Totally agree. The same can be said water companies, train services, road networks, in fact probably all utility companies. None should be based on profit. Any surplus cash should be put back into maintenance and improvements which won’t happen in a privately owned company.
Yep. All our Utilities companies (Water, Gas, and Electricity) should be 'not-for-profit' - EVERY SINGLE ONE. Meaning that ALL profits made go BACK into the maintenance of the system/network..... whether water, gas, or electricity. Stuff the shareholders - we need to move on from this warped 'neo-liberal' model of organising our Utilities. It does not benefit the end user or customer. It only serves to enrich the already well off: as well as city based hedge-fund companies. There is also zero efficiency in having layers and layers of subcontractors. We are haemorrhaging money, left right and centre. In fact I would say that the UK is now losing more money than any other country on the European continent. Simply through wasteful layers of bureaucracy and poor service.
@@nunyabidness3075 ....No, I disagree. Any profits made, should go back into the system to help maintain it and keep it functioning properly. I don't understand why there's a need to have so many different layers of subcontractors. And also, serving shareholders needs above those of regular customers - whether utilities, or others things such as rail travel, are why our services are so bad and poor value for money. And no, it's not as bad as this anywhere else in Europe.
Very well said. Exactly same thing happening here in the states but on steroids. Tons of middle men taking their cuts and contracting the work out to employees on zero-hours contracts who actually end up shouldering all the risk with none of the benefits.
Here’s a funny story. When the grifter Rick Scott became governor of Florida, he promised to reduce waste. He did this by using subcontractors. A friend had been working for a long time as a network security analyst in an agency of the state and was well paid, working on the antiquated systems they use. Well he was laid off and that work went to the only contracting agency in Florida that had qualified people. Now his set of skills was highly specific and there was no one else in the country willing to move to Florida that qualified. So my friend went to work for the contracting company, back to his old office for twice the pay (but with no benefits of course). That in a nutshell is the price of Republican “cost cutting”. The contract company (being buddies with cronies in government) got a piece of the pie and ended up costing the state much more…but on paper,, it looked great and was enough to promote the idea that it was a win for Republicans. This is the madhouse we live in.
We received a new dishwasher that was malfunctioning immediately. The manufacturer got a repair company via a local subcontractor to come and assess the fault, the repair guy said this was a problem that affected about 1% of the machines, related to the pressure regulator in the supply hose. I said ah great, given that’s a common enough problem you could fix that here and now, but nope, need to order the part. They purposefully don’t keep stock as the repair guy can bill the manufacturer for two visits rather than one that way. This adds to the cost base of the company and increases prices, but is completely unnecessary. Honestly these inefficiencies are everywhere, and when people say the private sector is more efficient than the public I just laugh.
I could see "just in time" production when you auto parts plant in Ohio had all their subs within half a days driving distance. But in CHINA and MEXICO and ............What?
One of the major facilities management companies was charging the government 8 times the market rate for one particular job even though they never actually did the job themselves. During an emergency my business was asked for help directly by the government. It was when we quoted that the major contractors greed was exposed. Government procurement at its finest!
Bravo! Another essay on a subject that is dear to my heart. I spent 18 years in civil engineering and watched the 'evil' of sub-contracting spread. This 'outsourcing' philosophy is a sad indictment of our short-termist outlook. And of course, guided by lawyers and accountants etc., it allows the various (sometimes greedy, sometimes desperate) parties to shed liability and corporate responsibility. I find myself sometimes thinking that the numbers of blue-overall wearing people who actually got the job done has ultimately been replaced by another army of spreadsheet and contract document wielding get-out-clause experts who don't actually make anything but instead focus on making money (or at least not losing it, unless it is advantageous for tax purposes). But ultimately, stuff NEEDS making and mending if our stuff is to work. There was an interesting speech by the head of a recent major NATO convention. It was in relation to the urgent need to catch up with and be ready for what might be coming from Putin's Russia. Bearing in mind that the consequences of stuff not working in a military situation is especially serious, I thought the words spoken were particularly noteworthy. The speaker said (more or less) that 'we need to focus less on value and more on values, and we needing to be thinking less about efficiency and more about effectiveness'. Frankly, in my view, we needed to have never forgotten that, but hey. So, this time, instead of quantitative easing, could we please have social easing, where money is printed (if it must be so) to create work for people who make the things we need rather than just for those who seek to make the money they want.
I wouldn't worry about stuff coming out of "Putin's Russia". It's plain to see that we are fast becoming a multi polar world, and that the nation's with actual resources (Russia, Saudi, Brazil etc) are joining forces and will do so at the expense of the debt laden and increasingly dystopian western hemisphere. No wonder the western governments are all peddling the "lets get rid of fossil fuels" line....give it 5-10 years and our access to low cost resources will be severely restricted. Imagine dealing with a cartel that has vast amounts of all the products we need to function, and holds all the strings regarding access and pricing. That's where we are going, along with a less skilled up western world. Welcome to the new world, where asset and commodity prices will go through the roof and where our living standards are about to take a huge step BACKWARDS.
This is spot on. There is also another angle around how companies account for things on their books. Permanent staff often get accounted as a cost projected into the future, whereas one off expenditure on contractors is shown as a one time thing. The fact that you will end up repeating that contractor cost over and over again doesn't really factor in properly. So even though it is more expensive to pay contractors and consultants year on year, from an accounting point of view it looks cheaper than having permanent staff on the books.
Spot on. I know of one family company that consisted of, Father, Mother, Son, Daughter and Son-in-law. That was the entirety of their payroll. Fortunately for them, another family member was a local councillor and awarded them local authority contracts. The company subcontracted virtually all of its work out to the lowest bidder. This went on for 20 years until the councillor retired, and the family finally lost their lucrative contract and ceased trading within a few months. The last accounts on companies house show that they had net assets of £1.2m.
Spot on. For about 25 years now HR depts (who rebranded themselves from Personnel to make them appear more important) have contracted out recruitment to outside agencies who then as you say subcontract out again. Isn't it strange that employers say they can't find the right employees now. Before this brain rot of thinking that the Personnel department was THE most important part of any organisation and them receiving the most lavish office space imaginable while simultaneously removing them of any need to do real work they used to actually know what the jobs were that they were recruiting for and would organise the recruitment personally. Those days are long gone and we now have the Personnel departments being essentially redundant making up pretend work for themselves to justify their own employment. It's the modern way....I've not yet seen anyone in Personnel describe themselves as an 'engineer' but I KNOW it's coming!
I'm sorry but your prejudices are showing. You are blaming a cog in the machine instead of the bright sparks who changed it's design. HR unsurprisingly are employees who are there to protect those who are running the business. They do not get to decide how that that should be done. They are told what their priorities should be, and will lose their job if they do anything else. HR does not get to define anything operational or what priorities should be pursued. Consequently, you know get a lot of employers bending the rules to get what they want, not what is the right and fair thing to do. Rather, poop always run down hill. HR is just trying to keep their job just like any other department. Fail to do as they are told, and they too will be unemployed. So expecting anything more from them is naive. It is the people who have the power to set the priorities of that organisation who are to blame, and they are as much enculturated by a set of incentives that do not put customers as the highest priority. Rather it is profit, and shareholder primacy which together are the demons that are possessing the minds of those people running enterprises. Since the Neoliberal world view has become preeminent, we now promote the creation of inefficiency to ensure everyone one but the employees and Middle and lower management gets their cut, and in turn, nobody challenges the follies being perpetrated. Corporatism is the handmaiden of Neoliberalism, and in short, it's a scam. It's a squeeze, where customers and society at large become resources to be exploited rather than be maintained or served. Is it inevitable? No; but as long as we tolerate it this parasitical relationship between corporations and society, things will only get worse. In extracting as much profit from the process, corporations are becoming more parasites, than protectors and maintainers of society. Indeed, the UK is being run more like a extraction colony of some unseen empire everyday for the last 50 years. Consequently, living standards for the majority have stagnated or collapsed, and productivity has declined relative to our rivals. But we've got more fat cats more than ever. Go figure.
IN the Canadian west we often have UK types running the corporate show, and I found in Calgary and Vancovuer "HR" often ONLY applied to WHITE collar in the corp, not the working end. "Drunk Bob" hired off the loading dock, and hired his kids friends, dumpster divers. "Personnel" would hire the front office, including the female support staff. Then HO wonders why productivity is so bad, turnover is gross, margins and damage and theft...................?? (California was where I spent my earning life up to almost 30). So let me give you an example: I'm In/N/Out of a 100 companies: in Calif. perhaps 10 of them, I'd see myself as a good "fit'. Canada west? One in 100. that should answer the difference in culture. Calif. STILL is the 5th. largest economy in the world, AHEAD of INDIA. Perspective.
I have worked as a subcontractor for a subcontractor. I can tell you, all the ”training” is up to the person doing the work. Sometimes you hear companies complaining that they can’t find those ”old time professionals”. Those guys don’t grow in trees, they were trained by some organization.
I 100% agree they want zero investment but all the profit. They don't want to train new guys but will complain that the new guys are no good or they won't hire them at all. I've also noticed work just being passed on but will inject plenty of bureaucracy and paperwork just to show proof of there said job.
This is true in Australia also. A Prime Contractor quoted us $80k, they subcontracted to a second organisation for $40k, spoke to the actual subbie doing the work and he's getting $11,500. We are prohibited to deal direct with the actual people doing the install. Scam.
But why does this happen? Is it a regulatory issue? Does the subbie not know how to win business directly? It seems this is ripe for some technology that collapses the layers of bloat.
@@vmoses1979back handers, schmoozing, layers of bureaucracy that a sole trader couldn't possibly deal with and the fact that you can actually make more money as a sub contractor.
Why cant you do the work yourself , just hire the Sub
@@sarahann530 Not permitted, the Prime Contractor owns the system, hint it's a Telco.
I worked at Veolia as an engineer for a bit. My boss would tender for work he knew he didn’t have capacity to do, then would subcontractor the already won tenders. Scraping a margin of 20%. Anyways got the fuck out of the reliving business for several reasons lol
The incredible cost of Agency Nurses to cover NHS shortages is crippling the NHS and the bulk of the money goes to the agency...parasites.
Truth is that the regime could have sorted this out years ago, rather than relying on market forces (agencies) to bail them out. It didn't help that the regime implemented tuition fees on nurses either. But the simple fact is that nurses were qualifying, then promptly leaving the UK in search of a better life/more money. Had the regime actually done things to help make life more bearable in this country, people wouldn't vote with their feet. Currently we have a huge exodus of skilled and wealthy people leaving the UK because, let's face it, this country doesn't look after us. Why stay in a country that treats you badly?
The Agency Nurse rot started in the late 1960s and by the mid 1980s it was out of control.
@klawlor3659 terrible staff to patient numbers, crumbling buildings, long waiting lists and it's still just as (or more) expensive to run as when it was good.
The nursing agencies are the tip of the iceberg of inefficiency.
@@markysgeeklab8783 can't disagree with a word you said there. I've noticed the crumbling buildings, malfunctioning equipment and lack of staff myself. Can't see things improving sadly.
@@klawlor3659 I agree it's not getting better anytime soon, especially when people leave Nursing or leave the UK because they feel like they can't look after the patients properly due to systematic failures (debatable if it was a "failure" or happened "as intended" when the Tory party are in power in the UK).
Only circumstantial evidence, but last time I checked my wife's group of 8 nurse friends from uni only has 3 nurses still working in the UK NHS. 2 left the UK (including my family) 2 run cosmetic clinics (botox etc) and 1 on NHS waiting list due to an at work injury. We would consider a move back to the UK if it had anything to offer us that we were interested in, but I don't want high crime, low wages and an expensive & restrictive society (where I can't even legally get an ebike that assists faster than I can ride normally).
This video well explains why economies keep growing but the working class gets poorer and shafted constantly.
Thank you, Professor!
You have just described the entire UK construction industry.
Yep, fed up with being "self employed" ... at the bottom of the pile, paying for every card and cert required to lift a hand, and unpaid training days etc.
It's not just the construction industry!
And I am convinced it has a lot to do with the serious quality problems that industry has.
And Canada too.
I was a Subby Sparky for 30 years before I retired 7 years ago. I could earned twice what I would have earned being a cardy, yes I got no paid holidays, but I worked when I wanted to, paid my own taxes & claimed my legitimate expenses.
As a bloke with a screwdriver job it's so nice to hear somebody point out the issues with all the contracting out of work. The problems coming down the road for the country are huge as much of the slack in the systems needed to train newcomers in an industry has gone along often with the technical knowledge of how to do things in an effective way. Often degree qualified bods have little to no actual hands on work experience but over inflated ideas on how useful they are. Big problems in bound I promise you.
Spot on Richard. All along the line there are people taking money for doing nothing more than passing responsibility on to someone else and we end up with a worse system.
modern hot potato game , where responsibility is hot potato ;)
Changing a bulb in the NHS will cost over £200. That's why many rooms are in semi darkness. NHS cannot afford to change a bulb and other staff are not allowed to do it under the contract terms and H&S.
Subcontracting was meant to give main contractors additional capabilities, depending on the specialist subcontractors doing something only the subcon can do to complement a contractor
This has to be regulated
In indonesia 🇮🇩
A 100.000 project :
1. Bribe to get the project 50.000
2. Subcon tier 1 30.000
3. Subcon tier 2 15.000
4. Subcon tier 3 5000
5. Below standard result ? Who care
That's my experience as 3rd tier subcon 😅
Telecom engineer for fifty years, when I started had about one manger for approximately 100 workers when I retired five mangers for one worker and any redundancies it was always the worker.
Who did the work if they only laid off the one worker ?
@ They obviously had more than one worker, for the two hundred managers.
@@david-pb4bi But they only laid off workers so it does not matter how many managers they had.
Were you not management material because surely you should have been promoted in 50 years
@@sarahann530 Far too valuable to be wasted in management.
My dad worked for Telecom Australia for about 35 years. And then, after privatisation, Telstra for about 3 years before buggering off.
Here's a story I remember from childhood. The small, rural town we lived in once had its phone service go out on a Saturday for a large part of the town. Know what my dad did? Went to the exchange, fixed the fault in about two hours. He did this.
And he got paid for it - overtime, since he wasn't meant to be working. He was allowed to do this. He was able to do this, because he lived there.
After Johnny Howard's privatisation kick, the newly-private Telstra withdrew the vast, vast majority of its works from the bush, retreating back to Sydney and Melbourne. Dad asked if there was a role for him in the regions, management said no, unless he wanted to be a subcontractor.
Last year, that town's sole mobile phone tower went down. Took a week before the suits down in Sydney bothered to find out how to fix it, because it's not like that part of the country was profitable enough for 'em. Barely made the news - after all, as a private company, they're allowed to decide how to allocate their own resources.
Housing crisis, health crisis, cost of living crisis, debt crisis, inflation crisis, EU war crisis, middle East crisis, bank crisis, retirement crisis. How many crises can a koala bear?
bravo! I've worked in real estate for over 25 years and have neglected a major stock portfolio, but I need a different plan now... mind if I look up the professional guiding you please?
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
And you even forgot the worst one... The climate crisis, not to mention the resources crisis that also brought us a polycrisis... Farewell to us workers, we have a great deal of work to do...
All due to neo-liberal policies from the 80's. Thanks boomers.
@@richardhudson1243it’s not really meant to be profitable but I’d rather a reliable way to not loose it all
I worked in central France a couple of years ago, just after the Notre Dame fire. I discovered that a local forest had been growing there for centuries, with trees specifically set aside to replace the oak beams, should such an incident occur. The forward planning, the lack of "sell it now" mentality and the fact that there are still many nice hardwood forests at all, made such a stark contrast to how things are in 21st Century UK.
French state pension is considerably better than UK one too.
@@pw601 They do pay more in taxes for it though, or rather they have for a long long time
France has the same problems as UK, but in its own context. Grass is always greener on the other side of the fence. France has a notoriously inefficient and expensive state. People who work carry better paid non-workers on their own backs.
@@ZettaiKatsu2013 State inefficiency has always interested me as a concept. What is inefficiency? Is it the act of not turning a profit or turning an inadequate one? If that is the case then the militaries of the world must surely be the most egregious examples of inefficiency imaginable, they soak up billions and don’t return a penny! You could say the same for socialised healthcare as well. What about all those parts of civil society that serve the common good?
Just because a thing is expensive does not make it inefficient!
@@Hurc7495Military was always good business for western or eastern oligarchs and disaster for all poor people. Western oligarchs earned good money on weapons for which you paid from your taxes and on contracts to rebuild countries destroyed by those weapons not saying about money they earned on resources stolen from destroyed countries. Will still say that military is inefficient... ?
These layers of subcontracting are also referred to as "hand offs"; the more "hand offs" in a production system, the more expensive and less efficient it becomes. As an ex-Civil Servant these "hand offs" were the scourge of my working life because whenever I tried to actually produce or deliver something, my line management would totally discourage this in favour of contracting out. Is it so surprising then, that the general public get so frustrated when they both see and experience an apparent intransigence of local and central government to deliver services? This then only feeds the falsehood that outsourcing to the private sector is the solution to public sector performance, thereby reinforcing the already disfunctional service delivery.
I think it might have something to do with liability in addition to profit maximization, they didn't have the pay the subbies whilst they were learning their trade. However they also usually don't know if the subbies are trained or not, simply who has the lowest bid.
Carillion employed 30,000 people, which sounds a heck of a lot, but they were all quantity surveyors, accountants, etc. Nobody who could knock a nail in.
Yes I worked for them as an engineer. We were ignored in favour of the commercial people. I couldn’t believe how they managed jobs by having commercial people manage subcontractors with no technical or project management expertise. They treated their supply chain badly, even internal suppliers were screwed. Playing one off against the other, late payment was normal.
@@teryd5672n
It’s a pity the late payment scam didn’t apply to the Directors and shareholders.
In 2009 in Canada I finished the Squamish Hospital renovation with a company highly regarded in Canada and specialized in inst. and hospitals. Vanbots. I then heard at the 2010 Winter Olympics that they had been bought by some midland Brit outfit I'd never hearf of. Obviously, Carillioin was simply kicking the finance can down the road and covering their backside with confusion. Vanbots is still very much in business, a great company in Canada. Hope they are doing well. Const., conventions, and industries like that can be hard to oversee, especially if you dont' WANT to be audited well.
Yep
Earned a goog living in 15 year period 2000 on from them
Did a good job but often lost out on larger jobs to companies that got whole job for overpriced contracts
Then would employ me to do the specific task I did because I knew the sites
Or I would be employed after the fact to put it right at extra costs bourne by the principle ( NHS orMod)
Never the major contractor or Carillion would always covered the real fault up
Lots of management houses were very well taken care of shall we say
I was there artisan he talked about
@@teryd5672n Agreed, the horror shows at the hospitals in Smethwick and Liverpool run by Carillion were particularly bad examples. In the latter case, the roof and floors had to be redone, causing a £50 million plus overspend and a 4 to 5 year delay in opening. One plumbing company I know who worked on the project were screwed for around a quarter of a million, frequently payment was witheld for 6 months or more.
I spent 60 years of my life as a ind. maintenance tech. in a variety of Co's ,furniture/wire/packaging to name a few. I have witnessed to change from inhouse maintenance to randomly called emergency breakdown contractors most of whom arrived
not knowing what equipment they would face most of them never having seen what they would now have to repair, no knowledge of how these m/c's functioned or what they where
ment to do ,before they malfunctioned. Even after I was forced to retire at 68 I was constantly called back when these guys where there and where stumped, not knowing
how to calibrate these m/c's or even how to diagose the problems involved. Days of production will have been lost before the company finally to call me, this waste of money
had always prevented by having inhouse engr. who lived with this equipment and trained the next generation. Every time this foolishness occured there was a bean counter behind it on the basis that it would save money,I would like to know how that went for them?
This practice of subcontracting has bothered me for years. I am so glad you have brought it up. It is similar when a company employs agency staff.
A big thing here is wages. My grandad worked for Northern Electricity I guess in the 60's, 70's and into the 80's (no real idea on this) - but the point being he was paid enough to support a whole household, as Richard is kind of saying anyway. Appreciate purchasing profiles have shifted, however, now most 'workers' get little and 'mangers' seem to take all. Things like 'super-heads' disturb me, one person doing the job of 3 or so and getting paid about 5-8 times an average wage - there's so many things in these scenarios that just don't make sense. Essentially we are saying that large swathes of the population are useless at their jobs, that's the message. Amazing stuff from Richard - and yes we need these 'rent collectors' to be given a hard stare (they are suffocating our economy as they suck it dry), and we also need to look at the vast amount of people who are just left marginalized, subcontracted and/or surviving on benefits.
Well said and a classic example of that is the local government councils that have gone bust over the past two years or so. In Birminghams case the commissioners that have been brought in at enormous expense have declared that the systemic failures of the city are too complicated to solve. The Gordian knot comes to mind and how it was solved.
Especially when, as is very common in the NHS, the agency staff are exactly the same people that once worked for you. All you've done is insert an extra layer of costs.
@@lor-px8wo Alexander reputedly (because I think it's an apocryphal tale) applied a BF&I (Brute Force & Ignorance) solution to the problem. The truth is,, though, that Alexander did rule almost all of Asia, and not entirely through the application of brute force and the sword...
@@charliemoore2551 the question is why do they now work for an agency......
I've worked as a contractor for the civil service and one of the large water companies .This is 100% true from engineers to the security staff also.
They used to do preventative maintenance, now they run it into the ground and then replace it.
That policy is common in a lot of commercial areas now, maintenance contracts used to be the norm years ago now it accountants working from home controlling everything.
To be fair a lot of the time it works out cheaper to do it that way.
I am so glad you made this post - you are SO right about this. I live in a town (High Wycombe) that seems to be full of well-off businessmen whose businesses are feeding off the state in some way (classic example - supplying 'temp' personnel to the NHS, paying the staff peanuts and charging them out to the NHS for a fortune.). One suspects that the tendering processes may be a bit 'bent', and the whole system a bit corrupt.
100%, It's a farce. Mum's newly installed cooker was left inoperable for 4months because the retailer, installer and manufacturer were in conflict with one another. This country is in the gutter with no accountability.
This video speaks the truth. Contracters handing out to subcontractors sucks... As a Janitor for my local council, we have had some changes over the past couple decades. My supervisors spoke to me of the older days, before everything had to be done by contractors or subcontractors. It is bonkers how it has become.
Correct, very correct, the problem is that modern management theory suggests that risk can be removed from a project by sub-contracting and outsourcing it ( the problem is that this obscures lines of responsibility and accounyability). This video has been needed for at least 10 years.
You’ve knocked the nail on the head. Productivity is the UK’s biggest economic problem. Get people trained is useful jobs creating real value for our nation.
It is the culture of denialabilty and lack of accountability. Being responsible for something is hard work, demanding commitment and integrity and the risk of getting it wrong and criticism. So much easier to subcontract. But such systems, when they go wrong end up with the tragedy's such as Grenfell Tower fire.
Good point but it is corporate deniability until they can find an individual scapegoat.
The feminization of society...... everyone is avoiding hard work
Had an issue with a leak in the communal area in our block of flats. There were about 4 layers of contractors, all apart from the polish guy at the bottom were utterly useless.
Sounds about right.
Twenty years ago I had a team of people I could organise and direct to deliver exactly what the organisation I worked for at the time needed. Today, I ask a colleague to ask a contractor for a price, argue for weeks or even months about budget and cost, get 'procurement' involved which means I can't say what I want, I have to talk about 'requirements' which are vague, and maybe, some day, I'll get some work done which wasn't what I wanted in the first place. No wonder we're in so much trouble.
HR are the leech’s that suck the blood and the motivation out of any company. They have become an industry in themselves with out of company organisations and loyalties. It’s one of the worst things ever to happen to businesses. Why has this happened? Managers didn’t want the bother or stress of dealing with problems themselves with the bonus of increasing the numbers of people they were notionally in charge of ……. regardless of the cost to the firm and consequently to the customer.
Service is a human + machine(s). Once you have more than one human involved you get the UK style services ;)
@@swojnowski453 Then these UK types all moved to Canada and took over "procurement" and made it a mess???
This sounds very familiar. I ran a 20 man team of pipework fabricators 10 years ago. We were all separate contractors and we could go in and just get the job done. Our productivity was inversely proportional to the number of meetings I had to attend times the number of regulations I had to follow.
@@davelowe1977 Why dont you start your own company and run it efficiently ? You would make a killing
Thanks for the common sense. I was a skilled worker painting hospital rooms. I charged twenty-dollars an hour. The unskilled painter who replaced me charged fourteen dollars an hour but took three times as long to repair and repaint the room. I guess management missed the per hour part, but in addition every day the room was unavailable for patient care the hospital lost two-thousand dollars in revenue from the government. I did it in one day costing my wages plus two-thousand, the outside contractor did the same work in three days at a cost of one-and-a-half my wages plus six thousand. The management at my hospital couldn't do the math and the taxpayer made up the difference in lost money and postponed medical care.
I am told that business majors who end up in management positions have a severe IQ crisis, not sure why that particular path selects for dipshits but it does
And that is why nothing is being built in the UK due to cost, and complicated projects. HS2, crumbling schools and hospitals....and why building all the affordable social homes we need will be more challenging than it should be.
Lunacy!!!!
It is time our government managed their own projects to get value for money, and building done.
Replace the UK with England and your comment is more accurate.
@ruthguthrie1099 The whole UK runs on privatised contracted and subcontracted business. One example is the NHS, it is not delivering a better service in Wales, Scotland or Ireland. And, can you point out where infrastructure repairs or building is thriving in any of those places? Perhaps parts of Ireland under the domain of the EU?
for companies it is imperative that commissioned project never gets delivered, that costs skyrocket again and again and that responsibility for shortcomings never end up on their shoulders.
@@ruthguthrie1099?Same in Wales.
Sounds like China, every thing is falling down around them because projects are being passed thru. 10/15 subcontract levels down to a point where so much value has been drained out them the guy at the bottom is doing a rubbish job with
junk materials to get out of there as quick as possible before they stop paying the already delayed monies. "Welcome tot Maggies and Reagans global economy"
My dad (now retired) was a maintenance engineer for the NHS. He would often commented on the fact that the NHS employed a highly skilled team of engineers to carry out work and maintenance duties within the hospital, and at the same time, the NHS would pay contractors extortionate amounts of money to come into the hospital and carry out the same work and duties which their own employed engineers could do, crazy.
I work in a hospital, and we could need an emergency repair in the middle of the night. The contracted company sends their on call, usually coming from up to 100 miles away, they turn up and it's usally. "I can't repair that, I'm an electrician and that's a plumbing issue."
The PFI thing was quite a scandal until everyone forgot about it and then moved on.
@@JagdgeschwaderXspot on. It's still stealing money from NHS and Education Trusts to this day.
The scandal should be front page news
The horror stories I hear about outsourced test sample deliveries could fill a book. Are blood and organ deliveries the same?
@@JagdgeschwaderX Very little is now done by PFI in the UK, in my view it needs to be completely banned, as it rarely offered anything resembling value for money.
@@johnners911 Did the tests actually get done? The latest scandal to come from the water companies is water samples which were reported to have been tested, but actually hadn't been, the results were falsified As a former analytical chemist (now retired), I find this unforgivable, showing the water companies once again to be out and out liars.
With so many companies now owned by Private Equity, the focus is extracting as much value from a company as possible; everything else is secondary. As per the McKinsey school of management, outsource and offshore everything, take all of the reward but assume none of the risk.
Very well said Richard.
I'm sure you are going to get a lot of examples and here is mine.
I am contractually obliged to pay insurance on my flat. When it was discovered that the waste pipe was leaking, the insurers were contacted. 5 subcontractors later, someone came out and said the same they weren't responsible. I paid for a local plumber to fix it and I still don't know what I pay the insurance for.
I had a similar experience. Two guys refused the job because they didn't have a ladder.
@@johnners911 Of course the guys refused the job because they didn't have a ladder. Workers don't have ladders any more. Plus they probably didn't have the required "ladder licence" anyway. You can't just walk into any hardware store and buy a ladder y'know. They have to be imported from Egypt and you'll need a permit from the USA for it to be shipped via Canada.
Could you say which company please so we all can avoid it?
We need to educate the future generations to understand that irresponsibility ruins the world and to value pro-social values instead of grift and laziness.
My sister and I graduated from the same university. I graduated in electrical and electronic engineering and my sister graduated in law and we both worked in the engineering industry.
Guess which one of us lives the multi millionaire life style ( hint it's not me) ?
Employers complain they can't get engineers and governments set up committees and study groups to find out why - the answer to that is easy just ask an engineer who is working in engineering. Even more laughably governments have set up the same study groups to try to figure out why the policy of getting more women into engineering has been a complete failure. The answer to that is simple as well - all the smart women are in law, accountancy, medicine ,dentistry etc
Seems the women are indeed smarter haha. You're right though, seems when you provide actual value, you don't get paid, but if you're clipping the ticket, you're creaming it.
I'm a structural engineer and left the UK literally earlier this week. There are only a few profitable careers in the UK:
1) Come on an orange boat, you get everything for free straightaway
2) Lawers
3) Finance
4) Doctors
That's about it, no space for engineers in the UK unfortunately.
@@gnewgnew2011I’d add dentistry. Pharmacy is reasonable safe paye work, but extremely dull. If you want a safe job and you have a decent degree I’d go there
@@gnewgnew2011 Smart move getting out. I should have done the same. I would say to anyone if you are going to leave do it sooner rather than later before personal and family issues get in the way. Once you have family or a partner who doesn't really want to move it starts to get difficult and may never work out.
Good luck.
@@mark4lev It wasn't an exhaustive list ! If you have good maths and science A levels then pretty well any career needing them is better than engineering.
Spot on. Im a contractor and I can see how crazy outsourcing is. The quality and service are degraded for sure. I used to work directly for a bank, we were good workers providing support and working on projects. Then around 2002 we started outsourcing third line to India and then eventually we got outsourced. I could see the quality in service drop dramatically. To the greedy bankers on paper it must have saved them money plus they no longer had to pay redundancy or bother training anyone. The customer suffered. Then eventually I was made redundant and then went into contracting.
Just after the banks had bought up all the building societies, effectively eliminating the competition.
Exactly. And it's always so some manager can get a bonus at the end of the year for the money he's "saved" , after which he moves on to the next bank before the "savings" are exposed as massive drops in quality and service.
@@TheThunderdome-il3ez the high street branch became shopfronts for selling the bank's products, effectively converting to a retail operation with sales targets etc.
Fast forward 25 years, that retail operation has moved online, enabling banks to close high street branches.
I worked for a bank around 2010 when they got rid of their 90% of their tech team and outsourced to India. Only took a few months for them to completely break literally everything. Some job hadn't ran overnight and it caused a cascade failure. Took about two weeks to get most systems back to working BAU, but they were still dealing with missing transactions six months later when I burnt out and left.
Oh its a lot worse than you might think. Those workers at the bottom are usually older, experienced workers who were trained by the original electricity board. They are now retiring and not being replaced. Have you tried getting a new electricity connection for a business or a new build recently? The cost and lead times are now eye watering; especially in the North-East and South-West of the UK.
Surely not as the whole what is now fossil fuel powered transportation system and everything else is going to be in no time at all plugged in getting all that free abundant clean endless renewable energy from these new connections. The government has told us so it must be true.
Subcontracting is also extremely common here in the third world.
This way the capitalists cut the direct relation between themselves and workers, curtailing bargaining power and diluting the relation.
So much money is wasted via outsourcing and procurement at ridiculous prices.
All anyone cares about is not the delivery of a service but how many middlemen, how many layers of abstraction can you put in between the client and the service being delivered in a half assed way.
Look at HS2 and NHS, each of those subcontractors have to make a profit margin and interface with each other requiring huge webs of contracts to manage disputes. Which drives up the costs.
And don't get me started on consultants... Richard that is another video in itself.
Consultants - my experience has been senior management/directors bring in their “mates” to fill an imaginary requirement. Substantial invoices for work done. Within 12 months changes made are reverse as they do not work. 🤨🫣
It came from somewhere, shell companies are nothing new in this sick country ...
It's not the subcontractors fault. It's the thinking that has been adopted in the public service world.
Pushing KPIs on to public servants that cause harm by keeping in house staff numbers artificially low is a problem (often meaning ppl who can do work have to spend time engaging contractors to arrange work instead is an example) . A KPI being having no increase of in house Operational cost might sound good, but if it leads to a 20% overall cost then it isn't.
I think the adoption of and requirements for the "KPI" has caused way way more inefficiency than people realise. Because determining a KPI that is actually useful takes a very high level of logic and competence that ordinary humans do not possess.
@@swojnowski453 Just to give everyone a heads up, 50% of companies on US stock market are ghost companies. No actual trading.
@@markysgeeklab8783 It's not that the right metrics aren't being emphasized, it's that any metric that is chosen is then optimized at the expense of everything else. Goodhart’s law in action.
I totally agree with you Sir as an economist. The problem is that in a world full of uncertainty as a result of the financial role taking the control of the economy, nowadays it is easier for companies to subcontract, and if the bad time comes they simply break their contracts instead of having to pay layoffs and such. I wish in the future we can focus back on the real economy and get back our functioning enterprises.
Spot on. If everyone takes a slice, there’s soon nothing left to actually achieve anything.
It's all privatised. Public money is used for development and maintenance and the public still have to pay the bills. This must change.
It's managerialism. If your skills are in managing contractors (shopping for services) then you can move freely from organisation to organisation whilst knowing little about what they actually do. We have a whole managerial class taking the cream off the top of the economy. You know when you meet one because they are not interested in the details. They are never "technical".
last week I had to sit through an Engineering meeting with 3 fucking project managers working on the project. All of them earning much more than the Engineers and sucking the life out of them for explanations on technical terms.
And sadly, that middle management clipboard class and that life sucking management ladder is the aspiration of many leaving school. Not being constructive in making things, fixing things, but in arguing over contracts and moving things around in a spreadsheet. It's pathetic.
As someone who has worked as a contractor for many years, you are so correct we have been exploited so much. The hourly rates look good but after paying double NI and all the taxes you are screwed, no sick.pay no pension no holiday. No job security. It's a rip off. The system is designed to fatten the middle men but the actual customer or person doing the job benifit the least
Everything stated in this video is wholly correct, since privatisation the quality of services has headed downhill very fast. I worked in the telecommunications industry, a 3 year apprenticeship covering all aspects of the telecoms industry and once qualified, ongoing courses to keep you up to date with technical changes. This all changed with privatisation, now maybe a 3 month course in one area of the job expertise required (if you're lucky) and your whole work schedule is profit driven, so you never try to improve employment environments you simply attempt to reach your monthly targets. Hence no real maintenance is carried out within the industry because you nor your company may never visit the same work site twice. A dreadful way to manage a nation's essential services.
1980 contracting out KILLED the Unions and their apprenticeship programs, fast forward two decades or three, and Red Seal guys now want to retire. RR, Mulroney, and Thatcher all got RID of the "enemy" but didn't come up with a REPLACEMENT. in Canada Ontario and Quebec got some programs going by 1995 (those areas have been around for 500 years or more) but in the west it was easier to pay lip service, do NADA, then poach the training back East while complaining they "can't find anyone" or temporary foreign workers, whose "qualifications" in electrical or eng. is a five month course. NO, youi're NOT "qualified" to do anything other than some house install work.
Why would your company never visit the same work site twice? Why would they not go for a repeat contract for familiarity's sake?
@@napoleon6928 I have no idea other than it could be that if your company is in the profit driven area of supply it appears that maintenance of infrastructure, both interior and exterior, of the systems is deemed a "loss". When I worked at B.T. if you drove down a road and noticed cables sticking out of on-street distribution cabinets you'd either stop and sort them out or report it. This is simply one example, continual maintenance is being ignored and the advent of mobile telephones is increasing the lack of maintenance or future investment in infrastructure/maintenance.
I’m an engineer in the UK and I think this is a huge issue. Thank you for your explaining it so well. I fear every sector is victim to this, and why everything is so expensive in this country
I ran a small printing company for many years, and we would try and do as much is possible in house even if it meant we got lower margins compared to if we sent the job to one of the big commercial printers.
Doing things in-house meant that we could guarantee the final product, and if there were issues or delays we had far more option on how to solve them than we if it was the sub contractor having the issue.
I'm a small printing company too. This comment is a sample of my work. Should you find it inadequate, you know where to find me ...
Most of manufacturing has been outsourced to Red China.
Who care about Human Rights when they can make it cheaper
Not to mention the child sweat shops producing tons of other products for us
What happens if an employee is sick or machine breaks?
Ideally we need a system that clearly shows pricing/completion rate/delays. Otherwise companies will underbid and deadlines will be pushed back.
You have far more control over your own employees and equipment than you would ever would for an outsourced product. If theres an in house delay, you would have a good idea how long it would take to fix. If an outsourcer has a delay, you have no idea how long the delay would take.
Very good arguments!
The same problem of subcontracting also occurs in Sweden. The idea was to reduce government cost by having companies to compete for contracts, thus reducing price. Subcontracting seems to take the benefits out of that equation. When building something now, there is generally cost overruns, and faults that needs to be corrected.
Spot on. Some of the supply chains in the NHS, Railways, Water industries are tens of levels deep.Profit is taken at each level.
and that's why no matter what the gov put in the NHS will never be enough. Some corporate practices should be outright banned.
And why people literally cannot access prescription medication right now
Exactly the same thing has happened in South Africa. One difference is that often the invoice is paid before the shoddy work and sometimes no work is done.
I remember working in Big 6 accountants when our excellent IT department was closed down and the whole operation taken over by Cap Gemini. They, in turn, contracted out the various bits of it to other companies and individuals. So you end up depending on people who know nothing about your business and aren't answerable to anyone in it. It's ideological engineering. The ideological fulcrum of Neoliberalism is that wealth is created by transactions and transactions are guided by the efficiency of market forces. Therefore, the more transactions you have, the more efficient and wealth generating you become! It's madness. But it's where we are.
Why is that madness? If it is so bad why would a company that didn't contact out win instead?
@@Volkan-z2v I don't understand your question.
@@charliemoore2551 I don't understand why it is bad, the company decided to go for low cost and got what it paid for.
Or are you saying that the company decided to pay more for less? If so seems like a huge chance for a new player?
@@Volkan-z2v Your argument appears to assume that the people who are at the head of the "company" (as you call it) know what the people in the organisation do and how they use the technology. I've never worked in a large organisation where that was the case - and I've worked in several.
You nailed it. I’m not from the UK. As an observer in industry it took me a few months to figure out.
I live in S Africa and over the past 30 years the tenderpreneur middlemen are stock in trade in State Owned Companies, Provincial Government and Metros and Municipalities. Added to this is the fact that in the large Metros, formed from amalgamation of former town councils, all "council" departments were hived off into separate companies, each with Boards, fat executives and very few workers, most work being sub contracted. These companies operate in silos, if the water company digs the road up it can take months before the tarmac is reinstated because that is the work of the roads company.
I was in England, specifically Lincolnshire and East Sufolk in August. I was amazed at the deterioration of your roads, potholed just like we have had here for at least the last 20 odd years, scruffy roadside verges too, and road signs obstructed by vegetation.
And no sooner will the tarmac be down but another service contractor will need to dig it up again. Instead of a centrally managed system where everything is done at once. The idea that this is more efficient and provides a better outcome for the public can only be defended by the few who profit from it, or those who aspire to profit from it.
Suffolk County council appear to have an obsession with installing traffic lights on roundabouts despite having prooved for themselves that they create congestion.
Any money obtained from central government is hosed up the wall, while infrastructure is not maintained and desperately needed new road schemes are blocked......
A road near me had a quick fix several times (by subs) before a proper job was done. Imagine the cost savings if they’d fixed it originally.
Why are our industries falling apart ? Your examples from "old days" compared to "the new reality" was spot on. Your description is excellent. I will remember your video for ever.
I our area we have a district heating project running. With 3 layers of subcontracting. Result: The working people are low salary people from low salary countries. They have had no training, -> they have no skills with this job -> they work inefficient and slow. Nobody is supporting them. 3 month ago they were all fired. A new subcontractor has been found and assigned. With better skills and much higher salaries. The project is more than 6 month behind schedule. The cost is increased by 60 %. The cost for all the users have sky-rocketed. I really miss the good "old days". When a contractor had experience with the job he was doing and was able to finish the job according to plan.
I was a Works Planner for a sub-contractor. I got paid £21 800 per year. Work Planners employed directly by the utility company were on £32 000 per year. I suspect the sub-contractor I worked for was charging the utilities company £32 000 for my services and putting £10 200 profit in their pocket.
they would be charging a lot more than the going rate so much more than 32000 as the sub contractor takes the liability away, sick pay , holidays, training, PPE,
If you were any good you could have got a job paying 32K .
@@sarahann530 Have a nice day and bless your heart.
@@sarahann530 Have a nice day
@@sarahann530 I do have a job that pays £32K
Problem with head heavy management, endemic throughout the political and management class, where none of them have any clue how things are done on the ground. Glorified paper pushers, all hidden from any trace of responsibility behind the shield of committees.
That golden word I hear do often… LEAN…. Particularly in distribution and manufacturing… simply about cutting costs at the expenses of good consistent service to increase profits for shareholders. Consultants charging hideous daily rates to implement this practice in short term contracts with no long term accountability when shit hits the fan after they’ve left!!!
Well said.
The shareholder value mantra has been such a detriment to international society. It ultimately only serves the handful of billionaires out there.
Reminds me of the cartoon which has been circulating for years. 😂 Man digging a hole surrounded by managers & supervisors of all sorts.
The cartoon we had on the wall showed a sled overloaded with hard faced managers & pulled by a struggling dog team with half the harnesses empty
Absolutely right , not only is it a massive waste but you have little or no control of the standards of the people who do the work .No wonder our public services are in a mess .
Sub-contractors sign up and say that they will fullfil standards (they would not win the contract from the provider, otherwise). But, in order to squeeze some profit out of the job, the sub-contractor 'cuts corners' and does not operate to those standards because rarely are the standards policed.
I would not be worried about those who do the work, rather about those who commission it ...
@@swojnowski453Sub-contracting rather than hiring permanent staff has been the bane of my work place.
The higher ups think more can be done if we have the staff we do have manage projects outsourced to industry.
The problem is the software tool being worked on is complex and the subcontractors inevitably wind up spending nearly all their budget just trying to get up to speed.
As a result the work we get back is sub par, if it gets finished, and my team and I have to find time to refactor and finish off what's been delivered.
Meanwhile the higher ups are still pushing the "outsource the work" agenda and asking why we're doing so much of the work ourselves.
It would be so much better if the money being spent on industry was instead spent on hiring more staff to do it all in house
Loomis Canada hired as subs (allowed 30% under a newly neg. union contract that hadn't matured) and they were almost ALL hired by the same guy. He hadn't graduated HS, had "gigged" in a band, sold drugs, and need to say his attitude towards women or co-workers that DIDN"T do drugs. Destroyed the company and gave away it's money. he was finally caught stealing/doing crack at work. Most stories don't cover the impact this idiocy has on OTHER employees who carry the day for the company. HOW he was allowed to do this for so long just "gobsmacked" me. I saw him immediately for what he was.
@@DwightStJohn-t7y Why didn't you go after the contract instead of the HS dropout
You have literally summed up my number 1 pet peeve about the modern world. If I was in charge it is the first thing I would fix, I have no idea how I would fix it but I would. I don’t really care about the properly private sector but for the public sector and private companies providing public services (e.g. utilities, transport etc) it should be largely abolished. The anecdote about getting someone to fix a broken power line summed it up perfectly. The country suffers from chronic short termism. Everything is about how much it costs now or how much money we can save now and not how much it actually costs over a longer term. At the root of it is the 5 year political cycle and terms that large company CEOs seem to take. All anyone cares about is their 5 years and that’s it, if it ruins the company long term they don’t care.
To put it to a scenario, a favourite of local councils is outsourcing refuse collection. The council would rather pay £2M a year to a contractor to empty the bins than £1M to do it themselves but every say 10 years you need to spend £5M on new bin lorries. Over the 10 year period they would have saved £5M but someone would have to find the money for the new bin lorries. In private companies it’s worse as forking out the £5M for new lorries would have affected their profit for the year and “growth” figures. The problem is, all these companies and local authorities used to do these things themselves but sold it all off so it would require a massive investment to get it back. The Royal Mail used to run its own vans for example and employed a lot of mechanics and had garages to keep them running, not now, they got rid of the vans, sacked the mechanics and now rent the vans from another company. Ironically the mechanics probably work from them now doing the same job. Whoever was responsible for that would no doubt of collected healthy bonus and promotion for “saving” a load of money and cutting expenses, no one cares that long term it will cost more.
I don’t think banning all this would go down well, those with a vested interest would declare it as forcing companies and people out of work but if you think about it, the jobs still need doing, the bins still need emptying, vans still need maintained, so the people actually doing the work will still have a job. The people that will go are the layers of wasteful bureaucracy that are the reason everything so damned expensive and shit. Now just imagine you applied that philosophy to the behemoth of wasteful practice that is the NHS, we would save a fortune.
@@shazmeister2005 Thanks
Totally agree, the across the board adoption of JIT and Lean Systems (promoted by external "consultants") have achieved a culture that has taken away any sense of ownership and lost irretrievable amounts of historic knowledge of our systems and infrastructure.
Lean is not a cost cutting approach. Cost leadership is from Michael Porter (i.e. Strategic Management Theory). Lean says the exact opposite, for example Theory of Constraints opposes the concept of cost entirely and advocates for management of throughput.
Key point.
Lean advocates for deep knowledge in order to maintain quality; which conflicts with outsourcing, subcontracting and hiring externally (e.g. The Toyota Way principles 8, 9, 10, 11). The idea of managers as a separate class of people goes all the way back to slavery and colonialism (e.g. Scientific Management, which is based on Fred Winslow Taylor's slave owning family).
I think that in the UK, lean systems were sold as a shortcut to cost savings. This was attractive to cash strapped authorities and service providers. The problem is that going down that route fundamentally changes the original guiding principles. I'm afraid those who initially advocated the introduction of market forces did not really grasp the consequences of letting the genie out of the bottle.
You make a very good point about historic knowledge being lost, which in my view is because JIT and 'lean' systems mean that you always get someone new and inexperienced for every different job, so you end up wasting time explaining all the stuff that they should know, had they done the last job.
Totally agree.
I work in Semi now but worked in Aero my entire career. So many pointless firms adding ZERO value but all taking their 10% and often dragging things out.
The concept of the false economy is central to understanding neo liberalism.
it is falsifying the scam ...
WTF is neo liberalism?
@@nunyabidness3075 "the ultimate merger of corporate and government power" to quote someone on it. It's a school of economic thought that arose in Germany around 1920-30 that proposed that the government shouldn't compete on any service or if so allowed, compete with both hands tied behind their backs, and that the governments job was to specifically not regulate anything that could be exploited and instead prop up private venture when required.
Private venture would then provide all the services citizens would need without restrictions and would do it well because of "competition".
In practice oligopolies and monopolies form within a year and the capitalists set about extracting all possible wealth from the citizens whilst a neutered government sits by and absorbs taxes whilst providing no benefits.
It's the story of most of the world right now, as neoliberalism is intrinsically tied to facism.
@@ThePlayerOfGames It’s funny you have a definition for a political idea that you think has taken over, but hasn’t. I can’t think of a single country where this is the norm. Air traffic control has been set up sort of like that in many western countries, but they were made to be monopolies and the people running them are not fairly described as capitalists. Privatization schemes seem to mostly get approved when the Left and Right conspire against the people.
People who do not believe in competitive markets are no more capitalists than some of these dictators are communists.
@nunyabidnesomething he has just made a lable to make him feel good ss3075
You can now understand why infrastructure is falling apart in the whole country. Management does not hear about major maintenance problems because everyone is paid if the system keeps failing repeatedly
I'm constantly astonished by Richard's productivity. He posts new videos almost every day, and just about every one of them provides a new and valuable insight in to the way our economy works - or doesn't. It's amazing - but imagine what a total mess this channel would be if Richard acted like a modern corporation - and subcontracted all his hard work to whatever freelance "content creators" he can find, who bid the lowest rates.
Except he's not an economist, he's an accountant and alas for some reson you appear to believe everything he says without question.
@@flakieflake9616I am an economist and I can assure you, he’s pretty well on the nail with every single piece he posts.
@@flakieflake9616 You're not even a person. Why should we listen to you?
@@flakieflake9616 The fact that Richard is a former chartered accountant doesn't prevent him from being an economist too. The two fields are closely related and its quite possible to be expert in both! However, I don't "believe everything he says without question" - you have no grounds for this insult! On the contrary, I question everything - especially on RUclips. What I find is that most of what he says is readily verifiable from other sources and consistent with what I already know, based on my extensive reading of economics and especially political economy, over several decades. That's a perfectly reasonable basis for taking someone seriously - it's certainly not blind faith!
@@valeriebrown6079 Marx or Keynes? Can you find any fault in what I posted?
I am an electrical engineer, and in my country, we still maintain a standby workforce model, similar to the old practices in the UK-reflecting the systems we historically adopted from the British. However, we are now transitioning toward outsourcing maintenance tasks to contractors. While this approach can be effective in the short term, especially when skilled professionals are readily available in the market, it poses significant long-term challenges. Over time, the absence of structured training environments depletes the pool of skilled labor, leading to increased costs and inefficiencies for all stakeholders.
An excellent analyse of modern life, if not intended. 90% bureaucracy 10% labour . And ofcourse the bureaucrats get 99% of the rewards and the labour live on benifits.
The whole world basically has the same problems, the question is, would it be because we are all doing the same thing wrong? Here In New Zealand we used to wait until a policy had failed in Britain before implementing it here, things have changed we now wait for a policy to fail in America before implementing it here...what could possibly go wrong? just ask the "man in the street"...
Five layers of outsourcing, means five lots of 15% project management charges. Five layers of outsourcing means five companies trying to minimise costs (and output) whilst maximising profits.
The madness seen in the NHS, utility companies, the MOD, banks, builders, etc. The UK is a country of bureaucrats keeping everyone else's wages down, their bonuses up, productivity down, and customer sevices down.
A little lesson: Railtrack was the predecessor of Network Rail. They were finally would up after a string of rail accidents and several fatalities. They had lost control of subcontracting arrangements.
Also the Civil Service are there to keep themselves in business. It's a hotchpotch of inefficiency.
I was baffled by that also, thank you for explaining. I am always surprised how many tiers there are, and it explains why so many organisations balloon at mid level and create so many cushy BS jobs just to appear busy (mostly admin and HR), but hardly anybody can actually deliver any service any more. Smart guys with real skills who know how to do start their own companies and pitch their services directly to the sources rather than end up at the bottom of the food chain. You really need to be cunning and well-connected to elevate your social position in the UK - if you just bend your head down and just do the work you will inevitably be taken advantage of.
Evidence no better seen than on our roads. Traffic lights and roads closed off for weeks and no one working. Paying how much for blokes to sit in vans and baby sit traffic lights
Those blokes in vans on £12 an hour aren’t the problem though, the managers, directors and lawyers behind the scenes are making much more
@@tortozza The £14 managers and £30k laywers with 60k+ student debt are the issue.
Also the directors that have to hire an army of accountants to make sure they're not overpaying tax.
Missing the forest from the trees. Over regulation, unclear processes and no accountability.
It's the same in most countries, in all government con tracts , job's for the boy's
When the 💩 hits the fan there are so many tiers of contractors it makes it impossible to hold any one entity entirely responsible. Grenfell is a tragic example of this.
The person at the top should always be held responsible. "It's the contractor's fault," is never a good excuse., You appointed the contractor; you are responsible for their failure.
Hitting the nail on the head is an understatement M Thatcher said privatising our public utilities was a good deal if it was so good why is our electric one of the most expensive in the wold
Because of "renewables". It is the most expensive form of electricity on earth.
I believe this is what happened with HS2 and why the cost went through the roof until the public ended up paying more and more for less and less and we ended up with a train from a London suburb to Birmingham.
And not the reports on reports on reports? From my understanding China/South Korea also do contracting but a lot less paper work.
A prime example of this is in security. Certain company's have major contracts but never had the man power to cover it when they signed that contract. They always planned to subcontract the work, creaming of profit from the top. Hence lower wages for security guards
In addition to the wastefulness and potential ‘Chinese whisper’ chaos of layers of inbetweeners there is the compounding delay in payment that the top layer (the last to be paid) has to factor into their finances. Every firm has insurance to pay for so maybe three insurance payments (one for each subcontractor) for the same function. Great for insurers!
All of that is subject too to the fact that we are the laziest and least motivated of all workers in Europe - our productivity is appalling. As someone who has worked all around the world from Japan, Korea, throughout Europe and the USA I’ve witnessed first hand how bad we are.
Sorry, but we're not the laziest or unproductive workers in Europe. We're the least invested in workers in Europe. From the cuts in education where we are turning out the wrong types of workers for the jobs needed, from corporations expecting never to train their employees, and Government expecting the magic private sector to take care of manpower planning in the economy, and you get the omnishambles of UK plc, where we are ever more dependent on importing talent ratther than growing it. You get the buzzwords like "lifelong learning" but no funding to provide it. And we do not pay apprentices a living wage, even though they are learning in the job. They don't even get enough to pay their bus fare to go into their apprenticeship. We have unpaid internships, which are exploitative, and there is no guarantee, any longer of security for workers. Indeed if those at the top are only doing the bare minimum, why do you thing anyone else will do more than that? When I hear people say British workers are lazy, I just say "it's monkey see, monkey do." It's time certain corporate leaders led by example, and stopped bitching about how lazy everyone else is but they are. They are many who are lazy, short-sighted, and irresponsible with the power society gives them. I know, I worked for many of them. To the extent, I wish I hadn't. The jobs I loved gave me control over how I did my job, and helped me to do it well. And I turned out results to the best of my ability. That is not the norm. We have to be honest with ourselves as a country, and admit that our problems reflect our priorities, and if we don't like dealing with those problems, we need to look hard at our priorities. Blaming and scapegoating does nothing useful. If you cannot motivate your workers, then that is your problem. Not there's. Even if what you said was true about British workers being lazy - which it isn't; British workers work longer hours than anyone else in Europe - they weren't born that way. They were made that way because their leaders are that way. Look at what Prime Ministers we are creating, and that should give you pause, because if they are the best this country has to offer as leadership, you shouldn't be surprised that others just might be either following their examples, or being apathetic.
Another thing that is often overlooked is that this system is also very susceptible to fraud. Often first and second tier subcontractors know each other, and will make backroom price agreements on contact bids.
We really do need a REVOLUTION
Yes, it must be our TURN...
It'll never happen when all dissent begins and ends on the RUclips comments section.
@@Incognito-jf1dr Robin typed REVOLUTION in caps, I responded with TURN in caps... Revolution and turn are synonymous That's all there was to it. I wasn't fomenting an uprising...
Okay, the contracted revolutionaries will be with you in 4 months.
You got one - you elected a socialist government in July, mate. They are the problem.
In Ireland we still have a semi-state company managing the electrical system countrywide. They still use a lot of contractors because the contractors pay better. I would have thought there's been a policy of only maintaining on failure rather than scheduled maintenance in most infrastructure since the 1990's.
this is everywhere not just publicly owned entities. and its a big part of the reason blue collar, working class people get crumbs!.
Well said. I guess a lot can be boiled down to the continuous skimming of public resources at all costs. Like it is the solution to every single problem.
The curse of modern economics. Move costs from one spreadsheet to someone else’s and pretend that all is ok.
Staff were permanent, pensionable and had a job for life if they so chose.
Now layers of sub sub contracting add costs to the whole job costs!
A smokescreen at best.
A LOT of subcontractors are underground economy types, drunks, druggies, poor accountants. If you want a legitimate payroll it's a struggle: the employment agencies skim 55% or MORE in Canada. I always had work immediately coming into a new city, but you gave up a lot. And bus. relying on agencies aren't paying attention: no one EVER notices your effort.
Spot-On. So many "Fawlty Towers Staircases" these days. (Fawlty Towers Staircase had extra stairs and a landing with no point, just extra effort going nowhere). So many palms upwards each requiring payment, taking profit, delivering nothing. All doing very well thank you, making money. Meanwhile, on the coalface, too few and a fading skills since training replacements is seen as a Cost, not a benefit. The system manages if everythiing is expected and as contracted, but falls flat for anything unexpected. Also reducing maintenance and firefighting supply failures generates the greatest profit, until the infrastructure fails and then needs replacing. At that point regulators are asked to approved substantial price rises. The Customers have already paid for this, but their money has been taken for profit and bonusses. Bonusses that will not be handed back, as they should be, for the failure to maintain.
The way companies are financed means that inspite of the point of the company being to deliver a service (or product) to the public there is no sense of public service. Shareholders are king and companies given free reign.
CEGB was the same that my father in law worked for. As an electrical engineer I hated Being a zero hours contract subcontractor with the "benefit" of being my own boss.
Thatcher removed the 15% spare bed capacity in the NHS I seem to recall, and look where that got us!
And Johnson removed 8 thousands more just before Covid struck.
Was that not in response to people waiting years for treatment while having 1000s of free beds? At the time minor surgery like tonsil removal might have a wait of 6-7 years, it did for me!
@@foxmoongaze people also routinely stayed in hospital for far longer - no such thing as day surgery! I worked in a hospital a few years ago and we were often running at "black" which meant we were full.
@@onlyfflyff I wonder why we have so many sick people nowadays? I don't think it's just people living longer and needing more care. I don't remember so many people of all ages being so ill, or having so many mental health issues, in the 60s, 70s, or 80s.
1980 started sub contracting out: RR, Mulroney, and Thatcher. We're still paying for it. Sub contracting does NOT replace management, planning, sales, or personnel. It's a tool in the right place for growth, to plan, to expand w/o commitment until you see the future, and get corporate finances in place.
Subcontracting is rife to avoid unionised final salary pensions. Traditional staff have made themselves unaffordable. Arguments like this deliberately never include these costs.
I think that was the spur that started all this in the 80s but unions had their teeth drawn before the end of the last century
Thanks for the straight forward explanation for the changes to work culture and contracting that have occurred b/c of 'smaller government' that morphed into higher prices.
Totally agree. The same can be said water companies, train services, road networks, in fact probably all utility companies. None should be based on profit. Any surplus cash should be put back into maintenance and improvements which won’t happen in a privately owned company.
I worked for a Water Company for 27 years. I saw the same happen
Yep. All our Utilities companies (Water, Gas, and Electricity) should be 'not-for-profit' - EVERY SINGLE ONE. Meaning that ALL profits made go BACK into the maintenance of the system/network..... whether water, gas, or electricity.
Stuff the shareholders - we need to move on from this warped 'neo-liberal' model of organising our Utilities. It does not benefit the end user or customer. It only serves to enrich the already well off: as well as city based hedge-fund companies.
There is also zero efficiency in having layers and layers of subcontractors. We are haemorrhaging money, left right and centre.
In fact I would say that the UK is now losing more money than any other country on the European continent. Simply through wasteful layers of bureaucracy and poor service.
profit seeking is the common denominator of falling societies
lol, take out the profit, and the price increases ad infinitum. You’ve just created a bureaucracy.
@@nunyabidness3075 ....No, I disagree. Any profits made, should go back into the system to help maintain it and keep it functioning properly. I don't understand why there's a need to have so many different layers of subcontractors.
And also, serving shareholders needs above those of regular customers - whether utilities, or others things such as rail travel, are why our services are so bad and poor value for money. And no, it's not as bad as this anywhere else in Europe.
Very well said. Exactly same thing happening here in the states but on steroids. Tons of middle men taking their cuts and contracting the work out to employees on zero-hours contracts who actually end up shouldering all the risk with none of the benefits.
Somebody Else's Problem Tomorrow all the way down!
Here’s a funny story. When the grifter Rick Scott became governor of Florida, he promised to reduce waste. He did this by using subcontractors. A friend had been working for a long time as a network security analyst in an agency of the state and was well paid, working on the antiquated systems they use. Well he was laid off and that work went to the only contracting agency in Florida that had qualified people. Now his set of skills was highly specific and there was no one else in the country willing to move to Florida that qualified. So my friend went to work for the contracting company, back to his old office for twice the pay (but with no benefits of course).
That in a nutshell is the price of Republican “cost cutting”. The contract company (being buddies with cronies in government) got a piece of the pie and ended up costing the state much more…but on paper,, it looked great and was enough to promote the idea that it was a win for Republicans. This is the madhouse we live in.
Short cuts and scams and as always it’s the public that pays the price.
If you haven't noticed yet, the whole economy is a scam, the lightest of demerits in it is overcharging people ...
We received a new dishwasher that was malfunctioning immediately. The manufacturer got a repair company via a local subcontractor to come and assess the fault, the repair guy said this was a problem that affected about 1% of the machines, related to the pressure regulator in the supply hose. I said ah great, given that’s a common enough problem you could fix that here and now, but nope, need to order the part. They purposefully don’t keep stock as the repair guy can bill the manufacturer for two visits rather than one that way. This adds to the cost base of the company and increases prices, but is completely unnecessary. Honestly these inefficiencies are everywhere, and when people say the private sector is more efficient than the public I just laugh.
...and they have simply included the price for the second visit of repairman into the price that you paid for the washing machine in the first place.
An element from the philosophy of ‘Just in Time’ production.
I could see "just in time" production when you auto parts plant in Ohio had all their subs within half a days driving distance. But in CHINA and MEXICO and ............What?
@@DwightStJohn-t7y it was never a good idea. If for no other reason it makes a company dependent on a single supplier and that’s a high risk strategy
Wasn't it originally designed for use within a single car plant in japan?
One of the major facilities management companies was charging the government 8 times the market rate for one particular job even though they never actually did the job themselves. During an emergency my business was asked for help directly by the government. It was when we quoted that the major contractors greed was exposed. Government procurement at its finest!
Bravo! Another essay on a subject that is dear to my heart. I spent 18 years in civil engineering and watched the 'evil' of sub-contracting spread. This 'outsourcing' philosophy is a sad indictment of our short-termist outlook. And of course, guided by lawyers and accountants etc., it allows the various (sometimes greedy, sometimes desperate) parties to shed liability and corporate responsibility. I find myself sometimes thinking that the numbers of blue-overall wearing people who actually got the job done has ultimately been replaced by another army of spreadsheet and contract document wielding get-out-clause experts who don't actually make anything but instead focus on making money (or at least not losing it, unless it is advantageous for tax purposes). But ultimately, stuff NEEDS making and mending if our stuff is to work. There was an interesting speech by the head of a recent major NATO convention. It was in relation to the urgent need to catch up with and be ready for what might be coming from Putin's Russia. Bearing in mind that the consequences of stuff not working in a military situation is especially serious, I thought the words spoken were particularly noteworthy. The speaker said (more or less) that 'we need to focus less on value and more on values, and we needing to be thinking less about efficiency and more about effectiveness'. Frankly, in my view, we needed to have never forgotten that, but hey. So, this time, instead of quantitative easing, could we please have social easing, where money is printed (if it must be so) to create work for people who make the things we need rather than just for those who seek to make the money they want.
I wouldn't worry about stuff coming out of "Putin's Russia". It's plain to see that we are fast becoming a multi polar world, and that the nation's with actual resources (Russia, Saudi, Brazil etc) are joining forces and will do so at the expense of the debt laden and increasingly dystopian western hemisphere. No wonder the western governments are all peddling the "lets get rid of fossil fuels" line....give it 5-10 years and our access to low cost resources will be severely restricted. Imagine dealing with a cartel that has vast amounts of all the products we need to function, and holds all the strings regarding access and pricing. That's where we are going, along with a less skilled up western world.
Welcome to the new world, where asset and commodity prices will go through the roof and where our living standards are about to take a huge step BACKWARDS.
This is spot on. There is also another angle around how companies account for things on their books. Permanent staff often get accounted as a cost projected into the future, whereas one off expenditure on contractors is shown as a one time thing. The fact that you will end up repeating that contractor cost over and over again doesn't really factor in properly. So even though it is more expensive to pay contractors and consultants year on year, from an accounting point of view it looks cheaper than having permanent staff on the books.
Spot on
Spot on. I know of one family company that consisted of, Father, Mother, Son, Daughter and Son-in-law. That was the entirety of their payroll. Fortunately for them, another family member was a local councillor and awarded them local authority contracts. The company subcontracted virtually all of its work out to the lowest bidder. This went on for 20 years until the councillor retired, and the family finally lost their lucrative contract and ceased trading within a few months. The last accounts on companies house show that they had net assets of £1.2m.
Spot on. For about 25 years now HR depts (who rebranded themselves from Personnel to make them appear more important) have contracted out recruitment to outside agencies who then as you say subcontract out again. Isn't it strange that employers say they can't find the right employees now. Before this brain rot of thinking that the Personnel department was THE most important part of any organisation and them receiving the most lavish office space imaginable while simultaneously removing them of any need to do real work they used to actually know what the jobs were that they were recruiting for and would organise the recruitment personally. Those days are long gone and we now have the Personnel departments being essentially redundant making up pretend work for themselves to justify their own employment. It's the modern way....I've not yet seen anyone in Personnel describe themselves as an 'engineer' but I KNOW it's coming!
I'm sorry but your prejudices are showing. You are blaming a cog in the machine instead of the bright sparks who changed it's design. HR unsurprisingly are employees who are there to protect those who are running the business. They do not get to decide how that that should be done. They are told what their priorities should be, and will lose their job if they do anything else. HR does not get to define anything operational or what priorities should be pursued. Consequently, you know get a lot of employers bending the rules to get what they want, not what is the right and fair thing to do. Rather, poop always run down hill. HR is just trying to keep their job just like any other department. Fail to do as they are told, and they too will be unemployed. So expecting anything more from them is naive. It is the people who have the power to set the priorities of that organisation who are to blame, and they are as much enculturated by a set of incentives that do not put customers as the highest priority. Rather it is profit, and shareholder primacy which together are the demons that are possessing the minds of those people running enterprises. Since the Neoliberal world view has become preeminent, we now promote the creation of inefficiency to ensure everyone one but the employees and Middle and lower management gets their cut, and in turn, nobody challenges the follies being perpetrated. Corporatism is the handmaiden of Neoliberalism, and in short, it's a scam. It's a squeeze, where customers and society at large become resources to be exploited rather than be maintained or served. Is it inevitable? No; but as long as we tolerate it this parasitical relationship between corporations and society, things will only get worse. In extracting as much profit from the process, corporations are becoming more parasites, than protectors and maintainers of society. Indeed, the UK is being run more like a extraction colony of some unseen empire everyday for the last 50 years. Consequently, living standards for the majority have stagnated or collapsed, and productivity has declined relative to our rivals. But we've got more fat cats more than ever. Go figure.
HR are employees. Just a thought.
@@CuriousCrow-mp4cx Ok then...
lol
IN the Canadian west we often have UK types running the corporate show, and I found in Calgary and Vancovuer "HR" often ONLY applied to WHITE collar in the corp, not the working end. "Drunk Bob" hired off the loading dock, and hired his kids friends, dumpster divers. "Personnel" would hire the front office, including the female support staff. Then HO wonders why productivity is so bad, turnover is gross, margins and damage and theft...................?? (California was where I spent my earning life up to almost 30). So let me give you an example: I'm In/N/Out of a 100 companies: in Calif. perhaps 10 of them, I'd see myself as a good "fit'. Canada west? One in 100. that should answer the difference in culture. Calif. STILL is the 5th. largest economy in the world, AHEAD of INDIA. Perspective.