Here’s a thought: can contingent labour help our economy as we hope to crawl out of this pandemic downturn?
Too far-fetched? We think not.
The nature of employment has been shifting for some time. Prior to the COVID-19 pandemic, organisations across the globe were increasingly moving towards a total workforce strategy, encompassing contingent and permanent labour. And this shift has been evident in most industries. Take a look at the data below…
Contingent workforce on the rise. Percentage of 2,715 executives surveyed worldwide who said they were increasingly using contingent, seasonal, intermittent, or consultant employees. Source: Oxford Economics, Workforce 2020
What perhaps hasn’t been so evident, is the potential for this workforce category to stimulate economic activity and, especially in today’s environment, economic recovery.
Today, we’ve taken a lateral stand on the value and impact of contingent workers as we ask: can contingent labour help our economy?
How contingent labour programs can help our economic recovery
The inclusion of contingent labour in an organisation’s workforce program has been on the rise for some time. But as we continue to experience the worst of the global COVID pandemic, there’s much to be learned about how these workers, and the organisation’s that engage them, can help boost local economies.
Let’s take a look at four potential impacts contingent labour may have on pandemic-weary economies:
1. Increased business agility
If demand for resources in business starts to change – for example, from diversification, a shift in revenue (up or down), or broader economic impacts – the skills required to drive successful change must also modify.
Crucially, when an organisation needs additional talent or different skills, the ability to respond swiftly isn’t easy using traditional means; such as hiring more permanent talent.
Instead, by engaging contingent labour, the organisation can meet shifting resource demands quickly and effectively. And, it can embrace the ability to grow, at-scale.
The economic multiplier effect here is interesting: the investment in contingent labour efficiently stimulates business growth; it produces an income for the contingent workers; and this, of itself, stimulates individual consumption and spending (not to mention tax revenue from this engagement).
2. Boost industry engagement of contingent labour
Contract workers, by their very nature, are a flexible talent solution for organisations. And frequently, their value lies in their specialist, hard-to-find skills, or deep industry or technical experience.
These skills and expertise can’t be quickly absorbed into an existing role or workforce. Rather, they take time, investment and accommodating market conditions.
So instead, what about engaging highly skilled talent on a short-term basis? Makes sense, right?
Hiring a specific skillset on a tenure-limited basis means your business doesn’t have to wait for permanent workers to be up-skilled or retrained. Rather, by introducing specialist skilled, contingent labour into the organisation, the possible benefits to the economy, as we see them, are threefold:
- The specialist worker is deployed: they’re back in the market, earning money, spending money, paying taxes, contributing to the economy (see point 1, above)
- The specialist worker shares their knowledge and expertise: managed strategically, and as an integrated part of the existing team, contingent workers can hugely impact the knowledge, insight and engagement of permanent employees. The knock-on effect here includes better employee engagement which leads to a better performing business
- The specialist worker offers a fresh perspective: by taking on short-term talent, the fresh eyes can inspire big ideas, new solutions to existing problems, and greater business momentum. All these effects have the potential to stimulate business growth and industry activity
3. Business investment
By engaging contingent workers, organisations are able to save significant talent costs. Here are three examples of the cost-savings that can be achieved:
- Statutory obligations including leave entitlements, payroll tax and other legal requirements
- With no obligation to retain contingent talent, the organisation again saves money. Contingent workers are typically a solution designated to achieve specific outcomes, often within specific timeframes. So when the project is complete, the talent costs associated with that project come to an end
- Finally, let’s say your business operations were expanding globally, and you needed new talent in an offshore city. Rather than relocating people from your home base, engaging short-term, specialist, local talent is a great solution for building your business in a new region.
These talent cost savings offer a great opportunity for organisations to undertake further investment in the business. The opportunity for businesses to invest in themselves is far-reaching. Here are some examples:
- Product/service R&D
- Talent training and up-skilling
- Acquisition of fixed assets: property, equipment, technology
- Market intelligence from complementary industries or sectors
- Upgrade existing workplace facilities
“…when companies focus on investing in themselves to generate organic growth rather than influencing shareholder value (through dividends or buybacks), they tend to perform better.” FACTSET.COM
Organisations that are taking the time and resources to invest in themselves are key to a healthy economy. And to that end, contingent workers offer a great opportunity.
4. Profitable companies hire more workers
As profits grow in an organisation, so too does the opportunity to scale.
But, hiring permanent workers during a growth phase, can be time-consuming and slow-moving. Instead, the opportunity for quick wins (and more of them) can be found by engaging contingent workers.
Your profit position need not take a hit as your business scales.
By hiring specialist contingent workers, with a (typically) faster time-to-productivity than permanent employees, your business can enjoy increased revenue, as you manage growth.
And with the right growth strategy in place, you’re then in a position to gradually engage more permanent workers (as the needs arise), as you adjust to your newly scaled operation.
Successful companies are pivotal to a thriving economy. And successful, profitable companies hire more people. Consider making those hires contingent labour as you carefully manage the growth of your organisation.
A final word
The increasing usage of contingent labour across most global economies offers a host of benefits to both the organisation and the workers they engage. From improved agility, lower talent costs and the opportunity to scale with efficiency, the value here is clear and tangible. What’s perhaps not so evident, is the potential for contingent labour to assist flailing economies across the globe, as the impact of the COVID pandemic is realised. By taking a more lateral approach to workforce strategy and management, the widespread deployment of contingent labour has the potential to assist our economy here in Australia, and those across the globe.
So in answer to our initial question… yes, contingent labour can help our economy.
As one of the world’s leading providers of contingent worker management solutions, CXC is well positioned to optimise all elements of your contingent workforce strategy. With operations in more than 50 countries across five continents and decades of experience, we can assist with every aspect of your program.
If you would like to find out more about how we can help please contact us here.