Is The Gig Economy Working?

The current state of the gig economy in the UK does not place it in a positive light.. A new report from the CIPD found that only 4% of working people between 18-70 are employed in the gig economy, primarily as a way to top-up their current earnings. But despite the recent negative headlines, the gig economy can offer a viable talent source for companies rather than be perceived as a way to avoid employment costs. 

As my main source of income comes from the gig economy this report was of personal interest to me. Where did it all go ‘wrong’?   

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Described by Deloitte as the ‘open talent’ economy, ideally the gig economy enables employers to source scarce skills or meet a short-term skills requirement. Broadly, these are seen as two distinct areas:-

• The typical ‘temp’, or more recently the zero hours contract worker These are often low skilled and low paid jobs and favour employers.  It is this sector of the market that has recently attracted negative press following the recent Uber ruling. In 2015, Citizens Advice estimated that 460,000 people could be working on a ‘bogus self-employment basis’
• Highly skilled professionals hired to meet demand for scarce skills. 

Further areas of concern from the CIPD's report ‘To gig or not to gig; Stories from the modern economy’[1] include the fact that over half (57%) of gig economy workers feel that the companies they work for are exploiting the current lack of regulation.

Furthermore, the median income for gig economy workers reported by the CIPD is £6.00-£7.70/hour – scraping the minimum wage. The report also noted that only four in ten workers feel that they are truly their own boss.

Can the gig economy help to source scarce skills?

When used effectively, yes. The gig economy offers employers an additional talent source for scarce skills.. A survey carried out by the PageGroup in 2016, found that three quarters of gig economy workers are qualified to at least degree level and 70% have over 10 years’ experience within their sector.

Tech and engineering are two examples of where the gig economy works effectively. The median daily rate for contract IT workers in the three months to March 2017 was £475[2]. In the engineering sector, which faces a critical skills shortage, oil and gas contractors can reportedly earn £1,000 per day..The gig economy also offers advantages for SMEs who can move quickly to attract skilled professionals. The allure of fintech start-ups in preference to banking and finance is a good example of this but it requires an agile and flexible recruitment policy.

In the meantime, employers tapping into the gig economy to source skilled professionals should adapt the following strategies:-

Understand your workforce : Separating your professional freelancers from your core workforce will lead to problems with engagement and workforce management. Deloitte’s 2017 Human Capital Trends Report urges employers to expand their definition of employees from the people ‘on the balance sheet’ to include what it refers to as ‘freelancers, ‘gig economy’ workers and crowds’. This also requires employers to distinguish zero hours contract workers from open talent professionals. The future of work is changing and employers must change their response to talent management. 

Introduce formal training : 58% of companies surveyed by the CIPD believed that gig economy workers should receive training in the workplace. Training can be incorporated as part of onboarding. A PageGroup survey in 2016 found that 58% of companies extended onboarding processes to include temporary and gig economy workers. Successful onboarding can also boost employee engagement, participation and retention.

Manage your open talent effectively : The focus must be on performance management according to Jon Younger of the Agile Talent Collaborative who suggests six strategies to improve performance management of your gig economy workers[4].:-

• Provide context.
• Look beyond cost, quality and schedule.
• Encourage communication.
• Ensure two way feedback.
• Focus on a ‘performance and developmental mind-set’ with appropriate coaching and feedback.
• Recognise excellence among all workers.

Keep in mind too that your existing employees may feel disrupted by contingent workers brought in to meet a unique skills requirement. Integration with your existing team also requires careful management. 

Look to the public sector : The changes to the tax system regarding IR35[5] combined with a declining pay gap between private and public sector workers are predicted to lead to a ‘brain drain’ from the public sector. This expected shift also offers an additional talent source for scare skills. 

Support with technology : Without analytics or technology, it is impossible to effectively  manage your workforce. To quote Josh Bersin of Deloitte 'companies which do not prioritise analytics are doing so at their own risk'. Technology enables HR to identify issues within hiring, manage the process effectively and identify the source of their most successful employees, whether permanent or contract. 
 
Be aware of the Brexit effect : In January[6] the European Parliament voted to back calls for better worker protection in the gig economy, One observer emphasised the need for a guarantee of ‘certain core working hours’ for all workers. The imminent commencement of Brexit negotiations means those rights are unlikely to extend to the UK. 63% people surveyed by the CIPD also believe the UK government should guarantee basic employment rights. The results of a government review into employment rights for professionals in the gig economy is expected in June.  
 
The CIPD has previously referred to issues with self-employment as potentially the ‘biggest workplace legal issue of the next decade’ and it is certainly shaping up to become just that. If employers approach the gig economy as an additional talent source for short term needs rather than an option to cut costs it will help to eradicate these issues and the negative perceptions of the gig economy.  

Kate Smedley offers a range of talent solutions including advice on your hiring process and content to boost your employer brand.

Contact me to find out more.

Further reading:-

​8 Reasons The Perfect Candidate Rejected Your Job Offer

HR Analytics : Starting The Conversation

Image Credit : 123rf.com/profile_iqoncept

[1] Source : https://www.cipd.co.uk/knowledge/work/trends/gig-economy-report
[2] Source : https://www.itjobswatch.co.uk/contracts/uk/consultant.do
[3]Source :  : http://www.sjdaccountancy.com/about/ourservices/rates_pay_oil_gas_engineers.html
[4]Source::https://hbr.org/product/agile-talent-how-to-source-and-manage-outside-experts/14149-HBK-ENG
[5]Source:https://www.gov.uk/guidance/off-payroll-working-in-the-public-sector-reform-of-intermediaries-legislation
[6] Source: https://www.bloomberg.com/view/articles/2017-01-19/europe-stands-up-for-gig-economy-workers