Socioeconomica – The Scientific Journal for Theory and Practice of Socio-economic Development

2015, 4(7): 23-34

Izvorni naučni članak

Original Scientific Paper
UDC: 364-7:657.412.7:1e(680)
DOI : dx.doi.org/10.12803/SJSECO.4712315
JEL: I31, I32

IMPORTANCE OF THE WELFARE FACILITIES IN

THE WORKPLACE: ISSUES IN PERSPECTIVES
Značaj socijalne pomoći na random mestu: pitanja u perspektivi§
Olufunmilayo F. Odeku
University of Limpopo South Africa

Kola O. Odeku
University of Limpopo South Africa

Prishtina

Abstract

Welfare facilities and services for employees are increasingly becoming important in
organisations. Employees are a major determinant of the success of any organisation,
therefore, a company’s success is not only measured by the margins and profits it declares,
but also by the state of well-being of the workers. This article looks at the importance of
welfare facilities and services to the workforce and the need for an organisation to ensure
they provide statutory welfare schemes and non-statutory welfare schemes for their
employees. The article accentuates the importance of implementation of welfare schemes
and the consequences for failure of implementation.

Keywords: Welfare schemes. Benefits. Workers. Implementation. Consequences for failure

1. Introduction
Employees are the main drivers that ensure the growth and sustainability of any
organisation (Benn et al., 2014). Irrespective of how the organisation is conceptualised
and contextualised, without employees taking and performing key roles and
responsibilities, the organisation would be short lived (Casey, 2013). Employees keep

℘
Kontakt autora: kooacademics@gmail.com. Autori izjavljuju da nemaju značajne materijalne ili finansijske interese
koji se odnose na istraživanje opisano u ovom radu. Takođe, autori izjavljuju da je podneti članak njihov originalan rad i
da nakon izdavanja ništa od sadržine neće predstavljati povredu autorskog prava. Rad primljen 21.04.2015. godine.
Odobren za objavljivanje 10.06.2015. godine. The authors declare that they have no relevant or material financial interests
that relate to the research described in this paper. Also, the authors declare that the submitted paper is their original work and
that, upon publication, nothing contained in it will not constitute an infringement of any copyright. Paper received 21.04.2015.
Approved 10.06.2015.
§

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 Olufunmilayo F. Odeku | Kola O. Odeku
Importance of the welfare facilities in the workplace: Issues in perspectives

organisation running by giving time and skills to the development of the organisation.
The welfare of employees is therefore essential and it is incumbent on the employers to
contribute to the employee’s benefits for optimal performance and efficiency. Some of
the notable employees’ welfare facilities include but are not limited to housing facilities,
free medical facilities, retirement benefits, children and adult educational benefits,
welfare measures for the employee's families, loan facilities and so on. The employees’
welfare should be paramount at all times in an organisation as this will be an impetus to
employees’ efficiency and dedication to the organisation (Casey, 2013). Undoubtedly, a
well-cared for employee will reciprocate by performing to the best of his or her ability.
According to Patro (2015), “the term welfare suggests the state of well-being
and implies wholesomeness of the human being. It is a desirable state of existence that
involves the mental, physical, moral and emotional factor of a person. All these four
elements constitute the structure of welfare on which its totality is based.”
Provisions of welfare facilities are governed by policies and laws; however the
welfare package is based on negotiation and agreement between the employer and
employee without any government interference (Ogini et al., 2013). Usually, welfare
packages are shaped by national and international standards. This gives workers certain
labour rights which the employers must make available to the employees (Oginni et l.,
2013). The term welfare is a relative concept the way and manner it is apply and
provided “varies from time to time, region to region and from country to country.”
Nigeria is a constitutionally democratic country. All laws and activities in the
country derive their validity from the constitution. Labour law and issues relating to
labour relations are being implemented and enforced by the Federal government of
Nigeria and in terms of section 4(ii) of the constitution of the Federal Republic of
Nigeria of 1999 which provides that “the National Assembly shall have power to make
laws for the peace, order and good government of the federation on any part thereof
with respect to any matter included in the exclusive legislative list set out in part one of
the second schedule to this constitution.” Also, the constitution, in terms of item 34th on
the exclusive list states that “labour, including trade unions, industrial relations;
conditions, safety and welfare of labour industrial disputes; prescribes a national
minimum wage for the federation on any part thereof, and industrial arbitrations.” It
must however be pointed out that labour laws and statues apply throughout the country
and the courts have jurisdictions to entertain issues pertaining to labour matter unless a
particular labour legislation provides otherwise.
The constitution and other regulatory interventions on labour matters recognise
that workers deserve recognition, better salaries, living wages and remarkable
improvements in the terms and conditions of work (Narasimhan et al., 2004). It is
against the backdrop of realising these labour rights, that workers have collectively
formed associations to achieve their objectives of protecting and safeguarding the
welfare of workers in the workplaces (Porter & Kramer, 2011). The Nigerian Labour
Laws and International Laws promote collective bargaining and “recognize the rights of
workers to bargain collectively for the protection of the legitimate interest of workers
for better conditions of service and welfare beneficiation” (Harry, 2001).
The 1947 International labour Organisation (ILO) resolution defined labour
welfare such as “services, facilities and amenities as adequate canteens, rest and
recreation facilities, arrangements for travel to and from work, and for the
accommodation of workers employed at a distance from their houses and such other
services, amenities and facilities as contribute to improve the conditions under which
workers are employed.”

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2015, 4(7): 23-34

Pursuant to the above resolution and other national and international instruments
on labour welfare, it is incumbent on employers to ensure that they provide adequate
welfare facilities and services to their employees. Although there are polices and laws in
place for the welfare of employees, there are challenges and problems of
implementation, adherence and sanctions for non-compliance, Adewunmi and
Adenugba (2010) wrote that “employers in Nigeria are just taking advantage of the
weak institutional and regulatory framework to the detriment of their employees. As
long as this situation persists, workers’ right to collective bargaining would continue to
be abridged.” The employers are always in control of everything in the workplace and
it is against this backdrop that Tsui et al., (1997) points out that “the reality is that
employers do not want to share the control of employment relations with their
employees” (Tsui et al., 1997). Employer(s) are therefore always advancing argument to
justify their stand by alluding to the fact that management has the right to control
activities in the workplace and even sometimes without putting into consideration the
views of the workers. An official of one of the organised trade unions, the Nigerian
Employers Consultative Association (NECA) have also wade in and expressed the
opinion that “most employers adopt the modern model of industrial relations which
discouraged the formation of workers’ union and the use of collective bargaining to fix
terms and conditions of work. The new trend in industrial relations which emphasizes
individualism instead of collectivism, hence, the use of Joint Consultative Council
instead of collective bargaining to settle industrial conflict” (Ikeanyibe, 2012). To some
extent, this is an extension of neo-liberalism which has hampered legitimate
expectations of workers and curtailed the rights and benefits they are entitled to (Terry,
2003).
Workers are entitled to good and sustainable conditions of employment in the
workplaces (Patro, 2012). Welfare facilities and services are to be provided in addition
to the mandatory wages or salaries paid for services rendered (Collins & Mayer, 2010).
Patro (2015) mentioned such facilities to be provided in addition with salaries and
wages as including but not limited to “monitoring of working conditions, creation of
organizational harmony through infrastructure for health, general insurance, retirement
benefits, housing facilities, and education benefits for employees and their children, and
so on. Labour welfare implies the setting up of minimum desirable standards and the
provision of facilities like health, food, clothing, housing, medical assistance, education,
insurance, job security, recreation etc. Such facilities will enable a worker and his
family to lead a good work life, family life and social life.”
Against the backdrop of overarching importance of welfare facilities and
services to the employees in the workplaces, this article highlights the significance of
providing welfare facilities and services to workers in the workplaces. It examines
ample benefits and opportunities to be gained by the employers and employees if
welfare facilities are promoted and provided in the workplaces. It also looks at the
consequences for failure to provide welfare facilities and services in the workplaces. It
is important to point out that the terms labour welfare, employee welfare and
workers welfare are used interchangeably to denote various services provided by the
employers to the employees in addition to wages” (Johnson and Corcoran, 2003).

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Importance of the welfare facilities in the workplace: Issues in perspectives

2. Statement of the problem

Modern and civilised societies consider workers as human beings who are
entitled to protection of the law and government (Alston & Goodman, 2008). They
deserve to be treated with dignity and respect irrespective of their status in the
workplace (Sayer, 2007). Workers are not slaves but free born who are using their
skills to contribute to the development and profit margin of an organisation (Drescher,
2004). Pursuant to this, they deserve ample welfare facilities and services which
should be provided by the employers in addition to wages and salaries. Part of the
reasons why workers’ rights and welfare is very significant is that, workers need to
work in places where the environment is devoid of tension and rancour in order to be
productive. It should also be provided based on the feeling of care and compassion to
the workers considering that some of them will spend the whole of their life time
working for the organisation (Hartman et al., 2004). Conducive, safe and heathy work
environment will enable workers to give their best and perform effective and
efficiently (Jaskiewicz & Tulenko, 2012). This standard is recognised all over the
world and is codified in national and international laws for purposes of application,
implementation and enforcement (Servais, 2009).
While some organisations are taking the responsibility to provide welfare
facilities and services, others are avoiding them. The perception of those companies not
providing welfare facilities for their employees is that it is an unnecessary burden to
them. The provision of welfare facilities is however mandatory under most company’s
law and must be statutorily provided for.

3. Methodology

This article adopts a non-empirical research approach by relying substantially on

reviews of literature relevant to the topic and focus of the article. Literature was used to
identify, resolve and offer solutions to most of the problems. Issues and perspectives of
the importance of welfare facilities and services in the workplace to both the employees
and employers were also identified and discussed based on extensive literature reviews.
This approach was adopted because literature has been used in other studies to address
the issues concerning employees’ welfare in the workplace. Against this backdrop, there
is ample opportunity to see the gaps in the literature and proffer robust arguments to fill
and close the gaps thereby producing new knowledge in the field.

4. Literature review

It is imperative for employers to provide welfare facilities and services within

the precincts of the organisation as they form parts of the working environment and
conditions (Shinn & Toohey, 2003). Nowadays, many welfare amenities are a part of
the employer's statutory obligations (Jones, 1983). Statutory welfare measures are
mandatory and must be provided regardless of the capacity and size of the or the
number of the people working in the organisation thus the following must be provided
“first aid, drinking water, latrines and urinals, and those measures which are to be
provided subject to employment of specified number of people, such as provision
of canteen, rest shelters, crèches’ and ambulance rooms” (David & Sills, 1968).

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2015, 4(7): 23-34

Welfare facilities provided outside the work place are known as non-statutory welfare
facilities. They include provision of housing, recreation, medical, transport
facilities and so on (Venugopal et al., 2011).
John (1998) writes that “the term labour welfare in its broad connotation refers
to a state of living of an individual or a group in a desirable relationship with the total
environment - ecological, economic, and social.” In explaining the benefits of welfare
amenities in the workplace, John (1998) indicates that “welfare helps in keeping the
morale and motivation of the employees high so as to retain the employees for longer
duration. The welfare measures need not be in monetary terms only but in any
kind/forms. Employee welfare is the key to smooth employer-employee relations. A
proper organization and administration of welfare facilities can play a vital role in
promoting better working conditions and living standards for industrial workers, and
also increase their productivity, especially in developing countries.”
For effective and efficient management of the organisation, which translates to
growth and success, the cooperation of the working force is required (Pfeffer, 1995).
To this end, optimal cooperation of the employees can be achieved if the employees
have a conducive working condition (Tella, 2007). Tela et al., (2007) points out that “a
well-managed organization sees employees as the source of quality and productivity.”
In the past, employers of labour believed that their only duty towards their employees
was to pay satisfactory wages and salaries (Kaufman, 1997). However, “with the
introduction of the concept of human resource management, psychological
researches convinced them that workers require something more important. In
addition to providing monetary benefits, humane treatment given to employees plays
a very important role in seeking their cooperation.” According to Gupta & Joshi,
(2004), “employee welfare activities benefit not only the workers, but also the
management in the form of greater industrial efficiency." Gupta & Joshi, (2004),
further indicates that “the human resource managers realise that welfare activities pay
good dividends in the long run as they contribute greatly towards the health and
efficiency of workers.”

5. Conceptual framework

Employees welfare “is a dynamic concept and as such new welfare measures
are being added to the existing ones along with social changes depending on the
essential welfare needs and care at every point in time” ( Arlow & Gannon, 1982). The
modern concept of employee welfare “entails all activities of the employers, which are
directed towards providing the employees with certain facilities and services in
addition to wages and salaries” ( Budd, 2004). Welfare facilities are essential for
the success of the organisation since they bear a close connection with the
productivities of the labour force ( Sauter et al., 2002).
To some extent, the concept of welfare in the workplace has been generally
accepted by the employers (Lewis, 2011). Instances of government interventions are
always seen in the areas of statutory welfare implementation and enforcement such as
health, safety, occupational hazards and so on (Lingard & Rowlinson, 2005).
Nowadays, welfare amenities are accepted as social rights (Jordan 2008). As
Venugopal et al., (2011) points out that “labour welfare includes both social and
economic content of welfare. Social welfare is primarily concerned with the solution of
various problems of the weaker section of society like prevention of destitution and

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Importance of the welfare facilities in the workplace: Issues in perspectives

poverty. It aims at social development by such means as social legislation, social reform
social service, social work, social action. The object of economics welfare is to promote
economic production and productivity and through development by increasing equitable
distribution. Labour welfare is an area of social welfare conceptually and operationally.
It covers a broad field and connotes a state of well-being, happiness, satisfaction,
conservation and development of human resources.”
The Labour Investigation committee defined labour welfare work as, "anything
done for the intellectual, physical, moral and economic betterment of the workers,
whether by employers, by Government or by other agencies, over and above what is
laid down by law or what is normally expected as a part of the contractual benefits for
which the workers may have bargained.” The ILO report defines labour welfare as
"such services, facilitates and amenities as may be established in or in the vicinity
of undertakings to enable the persons employed in them to perform their work in
healthy and congenial surroundings and provided with amenities conducive to good
health arid high morale.” The Encyclopaedia of Social Sciences defined labour work
as "the voluntary efforts of the employers to establish within the existing
industrial system, working and sometimes, living and cultural conditions of the
employees beyond what is required by law, the custom of the country and the
conditions of the market.”
Thus labour or employee welfare is a comprehensive term, which may
include any activity, which is connected with the social, moral and economic
betterment of workers provided by the employer (Lantos, 2001). Such activities
may differ from country to country and from region to region or from
organisation to organisation. The dynamic nature of the concept of welfare
amenities and services is aptly articulated by Venugopal et al, (2011) thus, “it is a
dynamic and flexible concept and hence its meaning and concept differ from time to
time, region to region, industry to industry, and country to country depending upon
the value system, level degree of education, social customs, and political system,
degree of industrialization and general standard of the socio economic development
of the people.” Against the backdrop of this, each jurisdiction has a way of
implementing the schemes to the needs of their workforce for purposes of
alleviating poverty, improved working conditions and standard of living of the
workers. If the welfare facilities and services are adequate and appropriately
provided, this in itself will mean that the employer is meeting the labour needs and
welfare of the workers (Tripathi, 1998).

6. Background and importance of labour welfare

The theories of labour welfare have evolved over the years. Before, the
government had to compel the industrial organisations to provide basic amenities to
their employees (Erasmus, 2008). Such compulsion was necessary because the
employers used to exploit employees and treated them unfairly (Obeng, 2011). With the
passage of time, “the concept of welfare has undergone changes. Progressive
managements today provide welfare facilities voluntarily and with enlightened
willingness and enthusiasm” (Halal, 1996).
The basic objective of labour welfare is “to enable workers to live a richer and
more satisfactory life” (Monappa, 2008). Labour welfare is in the interest of the labour,
the employer and the society as a whole (Streeck, 2005). Ramana et al., (2015) noted
that employees’ welfare refers to “the efforts made to provide good life worth for

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2015, 4(7): 23-34

employees.” It is against the backdrop of this that Patro (2015) points out that “in order
to increase employee welfare facilities, employers need to offer extra incentives in the
form of employee welfare schemes, and to make it possible to pursue employees to be
more committed to their work. The very logic behind providing welfare schemes is to
create efficient, effective and healthy organisation, (with) aims or should aim, at
improving the working and living conditions of employees and their families.”
Ramana et al (2015) indicates that “employee’s welfare means anything done for the
comfort and improvement, intellectual or social, of the employees over and above the
wages paid which is not a necessity of the industry.” Ramana et al (2015) also explains
that the reason “why organizations provide welfare facilities to their employees is to
keep their motivation levels high so that they can perform effectively, efficiently to the
utmost best of their abilities.”
Zenith (2015) points out that “the common welfare package and schemes that
employers provide are categorized as intra-mural and extra-Mural.” The former is
compulsory and an organisation must comply with the laws governing employees’
health and safety. Typical examples of intra mural schemes are protective clothing,
crèches, restrooms and drinking facilities. However, with regard to extra-mural
schemes, it is the prerogative of the organisation and it differs from one organization to
another. In the words of Ramana et al., (2015) “the basic purpose of employees’
welfare is to enrich the quality of life of employees and keep them happy and
contended. Extra-mural benefits are the result of employer's generosity, enlightenment
and philanthropic feelings. It is one of many ways for people to feel heard, cared for, to
be informed and to be involved. It is equally important to ensure that leaders and
employees at all levels of the organization are aligned to the culture of the organization
and living it.” Some examples of extra mural schemes are sports, library, reading,
Leaves on travel, welfare Cooperatives, vocational, welfare facilities to children and
women and so on.

7. Implementation of welfare measures and amenities

Implementation of welfare facilities depend on the employer. It is based on the

approach of the organisation on how best it has organised the schemes to suit and
benefit the workers (Cotton et al., 2005). While statutory welfare facilities are
compulsory, non-statutory welfare schemes need to be shaped and driven by a very
sound company policy which allows employees to have substantial input into what and
how the facilities should be provided without conflicting or undermining the
organisation stance and focus. The employer and employee need to work together to
make sure that the facilities are provided based on mutual respects and understanding.
Welfare facilities are desirable; however, they cannot be substituted for wages. Workers
have the inherent rights to living wages as a result of the labour they put into economic
and productive aspects of an organisation. However, it is pertinent to mention that living
wages are not enough and cannot create healthy work environment (Verdon, 2002).
Wages are earned and usually used for social economics activities outside the workplace
but welfare are provided for by the organisation for healthy and sustainable environment
in the workplace (Portney, 2005). A combination of adequate wages with ample welfare
facilities will profoundly yield and achieve good results for the organisation. It is
against the backdrop of this that welfare facilities are an important aspect of an
organisation social responsibility to the workers. Therefore, organisations have
obligations to provide them for the workers.

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Importance of the welfare facilities in the workplace: Issues in perspectives

8. Consequences for failure to provide welfare facilities and services in

the workplace

Statutory welfare facilities are products of the laws regulating provision and
implementation of welfare facilities in the workplace (Ridley & Channing, 2008). They
are compulsory and important. Therefore, there are consequences for failure to provide
welfare facilities as stipulated in the statutes. For instance, in an industry that requires
protective apparatus for certain harmful and dangerous jobs, for example chemical
industry. The health and safety of the workers are paramount and the necessary safety
gadgets must be provided for the workers in addition to other important facilities and
services. If not provided and there is a mishap or accident in the workplace, the victim
may institute legal action against the erring organisation in courts and punitive damages
awarded against the organisation if found wanting.
Nowadays, an organisation is not only considered successful as a result of the
profits it has declared but also based on the welfare benefits given to employees that
were used to make the profits (Schaltegger & Lüdeke-Freund., 2013). Organisational
policy now contains numerous welfare facilities and how they are to be provided for the
benefits of the employees (Ichniowski, et al. 1996). The company’s annual reports and
financial statement now reflect the amount of money being spent on various welfare
schemes to the employees. Welfare schemes are now statutorily enforceable and the
company has corporate social responsibility to provide for them (Injodey, 2013).

9. Conclusion

The importance of welfare schemes, facilities and services are increasingly being
agitated for by workers and organised labour. Welfare schemes are recognised by
international labour organisations and they all enjoin each member state to the
organisation to ensure implementation. Employees deserve more than only salaries or
wages, hence the argument for provision and improvement of existing welfare facilities
in the workplaces. The benefits of welfare facilities are two fold; the employees benefit
and at the same time it serves as an impetus for efficiency and effectiveness in the chain
of productive activities in the workplaces. It is a win-win situation. The employers will
however benefit more because efficiency and effective production will lead to huge
output which would invariable impact on the profit and margins of the organisation and
make it a perpetually sustainable venture.

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Apstrakt

Socijalna pomoć zaposlenima sve više postaje značajna u organizacijama. Zaposleni su

glavna determinanta uspeha svake organizacije tako da se uspeh kompanije ne meri samo
marginama profita koje ostvaruje već i blagostanjem svojih radnika. Ovaj članak se bavi
značajem socijalne zaštite radne snage i potrebom organizacije za obezbeđivanje zakonskih
i ne zakonskih programa zaštite svojih zaposlenih. Članak naglašava značaj realizacije
planova zaštite i posledice neuspeha implementacije.

Ključne reči: šeme zaštite, beneficije, radnici, implementacija, posledice neuspeha

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