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Kevin Green: HR's guide to the gig economy

The gig economy is on the rise, and offers risks and opportunities for HR professionals

Gig working is about to take off in the next few years.

Employers are already using digital work platforms such as Upwork, Freelancer.com, and PeoplePerHour. These platforms facilitate employers accessing freelance capability from around the globe.

Currently, 6% of employers are using them to recruit and 29% say these platforms will become important to their businesses in the next five years. That’s a huge increase in usage. Almost five times as many businesses could be using them in 2021 - almost a third of all UK employers.

Our latest report, Gig economy – the Uberisation of work, shows that gig working is here and growing. According to data from the The McKinsey Global Institute, digital work platforms could add £45 billion to our economy and create extra work for 766,000 people. The study estimates that up to 200 million people around the world could personally benefit from using digital work platforms in the coming years.

The UK’s dynamic labour market is a major reason why our economy has outperformed the vast majority of international competitors since the financial crisis in 2008/9. The UK is currently close to full employment with a record number of people in work, at 74.4%, and rapidly falling unemployment. However, a major constraint on economic growth is the skills and talent shortages which employers tell us are close to becoming a full-blown crisis.

Overall there’s a lot of confusion about what the gig economy means. Employers are split as to whether they think the use of digital work platforms as part of their hiring strategies brings more benefits than risks. One in five decision-makers (20%) perceive the use of online talent marketplaces as being more risky than beneficial for their businesses, against 17% who say the benefits are greater than the risks. The rest remain neutral or undecided.

Here are the key opportunities and challenges we've identified for the HR community, to help them decide if it’s for them:.

The opportunities:

  • The ability to use gig workers to carry out project-based tasks.
  • The ability to access high-calibre professionals very quickly and easily.
  • The ability to seek capability from around the world to undertake specific work projects which may be in short supply in the UK.
  • The creation of an open, transparent marketplace to find the skills required for short-term assignments.
  • Reducing costs by getting work undertaken on the freelancer’s premises.
  • Getting work undertaken 24/7 by freelancers operating in different time zones.

The challenges for the HR community in using digital platforms:

  • Defining work opportunities that can be fulfilled on a freelance basis.
  • Defining measurable work outcomes so that freelance performance can be judged.
  • Providing effective coaching and feedback by line managers so gig workers can provide the value intended.
  • Ensuring that the contractual process is robust and your organisation is not increasing risk from non-compliance.
  • Not having an independent recruiter to ensure third-party verification of qualifications, experience and capability.

While employers are wary of risks, it’s clear that significant benefits are available to employers who get this right.

Our research into the gig economy is part of the REC’s Good Recruitment Campaign, which enables businesses to adapt to emerging trends in hiring. We are leading a national debate on what good recruitment looks like, and we encourage employers to commit to the Good Recruitment Campaign. To find out more, visit www.rec.uk.com/Goodrecruitment

Kevin Green is chief executive of the Recruitment and Employment Confederation