Economy and Flexi-staffing - Contradictory or complementary?

“Hundreds of thousands of Californians are choosing to work as independent contractors in the modern economy using app-based rideshare and delivery platforms to transport passengers and deliver food, groceries, and other goods as a means of earning income while maintaining the flexibility to decide when, where, and how they work,” is what the Californian Prop. 22 states.

The gig workforce has got its recognition into the mainstream gradually over the last ten years. However, the significance of the flexibility came to light after the worldwide lockdown pertaining to the pandemic. Since the very first days of lockdown, companies started operating remotely and the suddenness of the situation took the workforce by a topsy-turvy across industries. However, with the passage of time, the new modes of hybrid and remote working were imbibed into the bloodstream of employees. While work-life balance remained a question during the first few months of remote working, employees got accustomed to the new integrated work-life model. With this, talent gained more fluidity and the demand for contractual workers started gaining momentum at a higher pace.

Prop. 22 was supported by 58% of the voters of California in November 2020, which was scrapped on August 20, by a judge who claimed it to be unlawful. In a statement, California Superior Court Judge Frank Roesch said that the proposition “limits the power of a future legislature to define app-based drivers as workers subject to workers’ compensation law,” and that it is unenforceable. This decision by the judge had reportedly caused a hike in the ride fares of app cabs and food delivery charges in the state. In fact, the effects extended to the share market. The shares of Uber immediately went down by about 5%, while those of Lyft and Doordash were down by 4.6% and 3% respectively.

The aftermath definitely reflects that not the employers but also the employees have started prioritizing flexible employment. One of the major factors driving the craze for gig engagement is deemed to be independence. The majority of the gig workers engage with multiple firms as per their convenience, which is restricted in a permanent employment structure. In a conversation with People Matters, Anshuman Das, CEO & Co-founder, CareerNet said, “The gig workforce is set to gain a substantial boost and add to the regional economy in the days to come. The gig economy puts more disposable income in the hands of the workforce and provides them the opportunity to earn more by putting in additional work hours. It allows them to reap the benefits of multiple employment opportunities simultaneously, which in turn improve the cash flow of the economy.”

Permanent employment-vs-Contractual employment

However, the debate over the importance of permanent staff within an organization co-exists with the perks of flexible working. While the flexi-staff are entitled to choose and work independently, only a handful of functions can undergo this transformation. Whether remote or not, the replacement of permanent staff within an organization is not likely to happen in the near future. 

“In organizations that recruit contractual staff, the average split between permanent employees and contractual employees is 70:30. In the case of professional staffing in developed countries, about 4 to 5 per cent of their workforce constitutes contractual employees,” Anshuman Das.

Security and Benefits

Though the demand for flexi-staffing is on the rise globally, not all countries have laws mandating the basic security and benefits for the flexi-staff, to be offered by the employers. While the developed countries are already taking the security and benefits of the gig worker into account, the fate of gig workers in the developing zones is gaining certainty at a slower rate.  Das says, “The gig workforce, which is a fringe phenomenon at present, is expected to become mainstream in the next 5-10 years. Developed countries such as the USA, where the gig workforce includes knowledge workers, have enacted laws to protect the flexi workers and it might follow in India as well.” Further elaborating the scenario of the APAC region he said that the present global average of contractual staff is about 2% of the total workforce out of which the Indian proportion is 0.4% to 0.5% which is expected to rise ten times in the next ten years. 

Effect over APAC region

Ravi Mittal, Cofounder and Chief Executive Officer Gigforce in his blog ‘The next 10 years of Indian Flexi-Staffing’  writes that India has gradually started accepting the gig and platform workers and is working towards enacting laws to ensure the basic security and benefits for them. This is going to give a nudge to the gig economy which will boost multiple industries such as logistics, customer service, sales and after-sales. Referring to the new labor codes of India Mittal adds, “The new labor codes have various aspects which will increase the flexi-staffing multi-fold. For example, the new codes allow a company to hire workers on an hourly and daily basis. It allows the employers to have contract staff on a weekly, fortnightly and fixed-term basis as well.” According to the Flexi Staffing Employment Research Report Annual Flexi Staffing Employment Trends: 2021, the flexi-work growth rate in India as of yet in 2021 is 31%. Interestingly, the flexi to permanent opportunity conversion for flexi-workers which was 8% in 2020 rose to 14% in 2021. 

Conclusion

Referring to the Californian example again, the biggest challenge at the face of the gig employers is the multiple engagement format often followed by the gig workers. In order to offer fair benefits and securities to the flexi-workforce, a common complex databank needs to be formed that will integrate individual company data. 

The functions under contractual employment are rapidly expanding beyond conventional skills. It has gained the interest of employers due to its efficiency for time-bound functions. While the pace of hiring during the pandemic was slow, the gig-workforce came to the rescue of the employers. However, it is beyond denial that for an uninterrupted running of the business, a permanent workforce has a major role to play that the flexible staff can never replace.