Tapping into the gig economy

Workforce models of the future

By FENG KunCong, HLB China

Robin Chase, the founder of ZIPcar, said: “My father had one job in his life, I’ve had six in mine, my kids will have six at the same time”, which gives the most pertinent description of the gig economy.

The gig economy is a term used to describe a flexible employment model with short-time and flexible working arrangements. It aims to replace traditional employment models with long-term labour relationships and fixed working arrangements. The gig economy has gained global attention in recent years. In fact, our global survey of business leaders found that 81% of leaders is exploring more flexible working arrangements to attract and retain talent.

The World Development Report 2019 issued by World Bank suggests the future labour market will be increasingly dominated by odd jobs rather than full-time jobs, heralding new trends in the global labour market. Across the globe, a steep increase in flexible contracts and working arrangements is witnessed. There is a wide range of people and jobs within the gig economy as well, ranging from specialised professionals to lower-skilled job such as self-employed delivery drivers. For example, the UN publication Digital Economy 2.0 forecasts that in China, permanent contracts with the traditional 8-hour work day is expected to be abandoned and an 400 million people large labour force in China – accounting for 50% of total labour force in China – will seek self-employment online in the next 20 years. Expansion of the gig economy is a trend we expect to see across the globe.

Driving forces

So, what is driving this trend to transform workforce models? The speed of technological innovation is one of them. New innovations have drastically transformed all aspects of human life in the past two decades, including the way we work and our attitude towards work. Technology has somewhat blurred the lines between our professional and private lives, it has made the world smaller and enabled a greater deal flexibility. The widely adopted use of Cloud technology is a good example of this, and business leaders recognise cloud-enabled, mobile business models to be the characteristic of successful business models of the future. A trend echoed in the real estate sector, where the concept of ‘space as a service’ is increasing in popularity.

On the one hand, from the perspective of employers, tapping into the gig economy can reduce their employment costs and risks. Employers will not be bound by permanent employment contracts and all the cost and obligations that come with it for jobs that do not necessarily require a permanent member of staff. Instead, they can assemble part of their workforce to employ short-term contractors with specialist skills for specific projects and tasks. In addition, the gig economy can help improve work efficiency, for example in seasonal industries. On other hand, from the perspective of employees, the gig economy allows employees to gain more control as well. An individual working in the gig economy can decide how many contracts to enter into at one time and have more flexibility in how they manage their time. Depending on the type of work, they will also have greater flexibility in the location they work from.

An industry analysis showed that at present, 84% of the companies in Asia, 80% in Europe, the Middle East and Africa, and 53% in the Americas employ or use part-time employees. In the US for example, almost 44 million people work part-time, accounting for 33% of the total labour force in its domestic market.

New workforce models

The gig economy clearly has its benefits for businesses and individuals. It can be described as a skills-based economy, from which professionals with skills that are in high demand can benefit most. It enables them to be paid higher compensations and be given the best opportunities, while maintain great levels of flexibility and freedom. The gig economy creates a more flued labour market where supply and demand of skills are traded between professionals and businesses in a flexible and often digitally enabled way.

The gig economy can also be regarded as the sharing of workforce and is changing traditional workforce planning models, consequently changing the HR function of businesses. It is reported that in China, the number of employers adopting flexible employment increased by 2.7%, 3.3%, 4.7%, 6.6% and 9.1% annually from 2013 to 2017.

As a relatively new employment model emerging in the digital and network-based sharing economy era, the gig economy has given birth to a people-oriented organisational and employment model, with the focus shifted from “enterprise-employee” to “skilled-professional”.

While the gig economy opens up a new world of possibilities and benefits for both employers and employees, there are challenges to be overcome as well, which require the development and implementation of laws and regulations to govern and standardise the existing laws and policies on employment, training and social security. Some of the main issues raised by critics of the gig economy is that contractors are not sufficiently protected or paid unfairly where it concerns contractors for less skilled jobs, such as self-employed delivery drivers. The regulatory arena surrounding the gig economy is a space we need to watch closely and promote the development of this new contractual employment relationship focusing on self-employment and existence of multiple employers.

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