The gig economy has been making the headlines for the wrong reasons in the past week as two high profile cases were launched at the Central London Employment Tribunal against taxi firm Uber. The case brings into sharp focus the downside of the gig economy, with suggestions that unscrupulous employers take advantage of the sector in order to avoid employment costs.
Referred to as the ‘open talent’ economy by Deloitte and the ‘flexible workforce’ by the CIPD, the gig economy is changing the way in which businesses source, manage and engage with talent. In this article, we examine the positive and negative aspects of the gig economy and the position of HR in the current unpredictable jobs market.
Uber’s taxi drivers will argue that their employment status should be that of workers, rather than self-employed professionals, entitling them to holiday pay and the national minimum wage. Nor is the company alone in facing controversy over the rights of its flexible workforce.
Courier firm Hermes has also been the target of negative publicity when it was claimed that its self-employed couriers were earning below the national minimum wage, an accusation it disputes. Amazon has also announced its intention to recruit freelance drivers in the UK to staff its ‘Prime Now’ service. Claims of payments of £12.00-£15.00 per hour to its workforce have already been called into question, leaving a ‘grey cloud’ hanging over the whole concept of the flexible workforce.
Is the gig economy and its position as the future of work in doubt? Not necessarily.
The rise in self-employment
Flexible working is on the rise in the UK. In the three months to May 2016, the Office of National Statistics (ONS) showed that the number of people registered as self-employed rose by 300,000 to 4.79 million. The figure represents 15% of the UK workforce, or 1 in 6 people.
Across the EU as a whole, gross revenues from the sector reached £21.6bn in 2015, twice the previous year. In the UK, the gig economy was worth £0.5bn in 2014. The ONS predicts it will be worth £9bn by 2020.
These figures show a need for employer guidance around the use of freelance workers. According to the CIPD, however, the issue of employment status has been placed in the ‘too difficult to solve’ pile by the EU. The CIPD also noted that the EU’s guidelines recommend:-
- Growth in the sector should be ‘encouraged and developed in a responsible manner’.
- Fair taxation and employment conditions.
- The gig economy should not be regarded as a way to ‘abuse labour’.
Brexit will of course allow the UK to determine and set its own guidelines.
A further point to note on taxation which may impact the sector was noted by the Financial Times. The HMRC has proposed that sub-contractors working in the public sector should have their tax deducted by employers before paying their fees, with effect from April 2017. This is aimed at professionals working under this status for the same public company in identical or similar roles for some time, but could be expanded to include private sector workers. Away from the headlines, flexible working is one of the most sought after benefits among global workers.
Focusing on the positive
At its most effective, the gig economy helps businesses to address skills shortages by accessing elusive talent pools and boosting productivity. In some sectors, temporary positions are being advertised at an average rate of £430 per day, with tech roles attracting £460 per day. Cybersecurity specialists, for example, can charge thousands of pounds each day for their services.
PwC’s Talent Exchange is a further example of the ‘good’ aspect of the gig economy. Launched in February 2016 to specifically tap into the open talent market, this online platform enables freelance professionals interested in working with the company to upload CVs, providing ‘direct access to PwC teams seeking experienced independent talent for their projects’. The majority of the projects require highly sought after skills.
Approached strategically, the gig economy also offers significant benefits for small businesses unhindered by corporate policies who are able to offer contract workers the opportunity to work flexible hours or remotely. The success of the fintech sector in attracting talent away from the banking and finance proves this point.
The need for an agile response in a post Brexit economy
Tapping into the gig economy enables HR to transition through a post-Brexit economy, the effects of which are already apparent. Job search site Jobrapido’s latest report revealed a 14% rise in temporary roles compared to July 2015. In the week before Brexit 1.8m jobs were posted, followed by an additional 50,000 during the week after Brexit. The jobs market is still nervous and subject to change on an almost daily basis which is the strength of the gig economy.
To succeed, the gig economy requires a fundamental change in talent management processes which for the most part are still focused on permanent, full-time employees. Sourcing open talent workers, requires an agile response to talent management and employee engagement for HR.
The following three strategies will enable HR to address roadblocks when it comes to hiring flexible workers:-
Incorporate the gig economy into standard recruitment procedures : Define the type of skills and person your business needs. A candidate persona will help to develop an employment proposition to attract contingent workers.
Work quickly : The open talent workforce must be processed through onboarding and integrated quickly. This is vital for freelancers who need to adapt to your company’s culture and in the fastest possible time.
Treat contingent workers like all employees : Performance management is the weakest link in the gig economy chain. HR must adopt similar principles for contractors as full-time employees, with regular reviews and engagement to boost productivity and meet business goals.
The role of technology
Successful talent acquisition requires a technology platform that supports changing hiring processes. As well as identifying the most effective tools to reach your talent pool and their job search habits, it fast tracks professionals with scarce skills through your pipeline. HR analytics identify common hiring patterns and identify future skills gaps. Automated systems help HR and businesses to improving planning, forecasts and budget for future talent needs.
As the outcome of the Uber trial is awaited with interest, the gig economy remains a vital resource for UK employers. The most successful businesses will be those with an agile and flexible response to an equally agile and flexible workforce.
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