Gig Economy – The new challenge for HR

In the life-changing and novel situation that the COVID-19 crisis has thrown the world into, the employment market is seeing a paradigm shift in the traditional way in which employers employed and employees approached work. With social distancing, danger of infection, travel, and economies in turmoil, a new way of working is emerging slowly but steadily. It is called the Gig economy.

The gig economy is a system where work is contracted on a freelance short-term basis, often using technology to connect workers and hirers. According to PwC forecast, 2020, this kind of economy would be worth nearly $63 billion globally, and £2 billion in the UK alone.

Traditionally, employees were hired on a permanent basis by an organization and the HR department facilitated their employment and their tenure in the organization. Employees also looked at permanent positions as safe and secure careers. This was seen as the best and safest arrangement for employment by both parties.

However, the present situation has forced a huge shift in this kind of employment. Today, with the downturn in the economy, slow business, the danger of infection, and uncertainty in the physical presence of the employee at the workplace, the leadership and HR are forced to rethink the way in which they manage employees. Permanent employment is made difficult in a situation where the business itself is limited. This situation has given rise to the idea of hiring services for a limited time period, when and where and required.

For the employees also, the challenge has become huge. With their inability to be physically present at their workplace and lack of enough work to engage them full time, they are staring at an uncertain and concerning the future. We have seen large scale retrenchments from the biggest organizations around the world, huge pay cuts and delays in salaries are also not uncommon. This has forced the employees into rethinking how to approach employment too.

According to Alex Swarbrick, senior consultant at leadership institute Roffey Park, the workforce in the rising Gig economy are basically of two kinds. He proposes to define it as an hourglass model, where the top comprises highly-skilled, sought-after talent that is relatively well paid and expects to work flexibly and the bottom are likely to be on temporary, fixed-term, zero-hour contracts and have a number of jobs that could be characterized as insecure low-paid work. In other words, at the top of the hourglass, it is and will remain an employee’s market, and at the bottom, an employer’s market.
My life connected report suggests that, while technology is definitely contributing to the trend, it is also being driven by growing numbers of millennial workers keen to take more control over their careers. There is also mounting interest among older employees, who are moving towards the end of their career and, in many instances, are looking more flexible ways of working.

Mark Beatson, chief economist at the CIPD, on the other hand, cautions against getting too optimistic, as this change may take some time to sink in. The types of jobs likely to be affected most are those that are either quite specialized or subject to volatility in demand. So, at the top of the hourglass, this might include IT services like software testing or web design, or auditing activities in an accountancy context. At the bottom, it could include cleaning services or hotel roles such as chambermaids or bar staff.