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Randstad: The rise of alternative work arrangements

The nature of work in modern economies is being transformed as a result of ongoing trends such as automation, urbanization and globalization, and workforce aging, sparking public debate and concern over the future of work. Much evidence indicates that there is an increase in new forms of work that differ from the traditionally large group of full-time workers with permanent contracts. Quite surprisingly, it does not mean, that the “standard” form of employment are declining now. They start to co-exist and have been creating a new ecosystem in which employers have to find their way to live and survive. 

These new work forms include: 

Part-time workers = employed persons whose hours of work are fewer than those of comparable full-time workers. They can have a permanent or temporary contract with a company. 

Agency workers = have a contract of employment with a temporary work agency with a view to being assigned to a company to work temporarily under its supervision and direction. 

Contract workers = staff with no guarantee of a regular work times or a set number of work hours. Contract work comes under different contractual forms. An example are on-call workers, who are expected to be available at any time, usually with short notice. Another example are zero-hours contracts for which the employer has no obligation to provide a set number of hours of work. 

Self-employed workers or freelancers = hold a self-employed job where the income is directly dependent upon the profits from the goods or services produced. They work as contractors for different companies at different times. 

The gig economy is a labor market characterized by the prevalence of contract workers. It is often referred to in the context of two-sided digital platforms that bring together supply and demand for set tasks or projects (which can take place online or offline). In this case, it is called the ‘online gig economy’. New work forms have been on the rise in much of the developed world. In the US, new work forms rose from 10.7% in 2005 to around 15% in late 2015. This documented increase is attributable to growth in contract work and in the self-employed, while agency work remained stable with a share of around 2% of the working-age population; 1,8% in the Czech Republic respectively. (World Employment Confederation 2018). 

Gig Economy

For Europe, the changes are qualitatively similar: part-time and temporary employment have increased in the European Union since 2002, and selfemployment grew significantly over the same period in some EU member states such as the Netherlands and the UK.

To illustrate this further, figure 14 shows the prevalence of 'standard' (employees working >30 hours holding a permanent contract) and new work forms ('self-employed' and the all other new forms of work captured by 'atypical') in the total population aged 15-64 for the EU as well as several individual countries. The figure illustrates the importance and pervasive rise of new work forms. At the same time, it can be seen that on average there has been no decline in the importance of the traditional employment relationship. Rather, its share is still close to 40% of the working-age population in the EU-28. As such, the increase in new work forms has not always come at the expense of traditional work, but sometimes also at the expense of non-work (i.e., unemployment and inactivity) and informal work. A particularly salient new way of work has been reflected in the rise of online work platforms, which act as a clearing place for employers and workers to meet. In the online gig economy, there is a distinction between platforms acting merely as online intermediaries and platforms where work is performed remotely and delivered digitally, such that employers and workers need not meet in person. Examples of the former are online intermediaries such as Monster.com; as well as online platforms specializing in specific in-person services, including Uber, Lyft, Deliveroo, and Helpling. Examples of types of platforms where work is performed at a distance are Upwork, TaskRabbit, Toptal, and Catalant. As yet, the importance of platform-mediated work in developed economies appears to be small: in the US, a 2017 Bureau of Labor Statistics survey suggests some 1% of jobs fall into this category and European Commission survey data estimates these jobs are the main source of income for around 2% of adults across 14 EU member states.NCCC_Graph_figure14

However, the usage of such platforms has been rising sharply in recent years, and more so than other types of new work forms. Specifically, it shows these job postings have increased by about 30% worldwide from May 2016 to January 2019, and that this growth is driven by developed countries.

Indeed, the highest demand is for software development and technology skills, with roughly one third of online platform vacancies belonging to these categories. Other jobs frequently offered on these platforms are creative and multimedia work, as well as clerical and data entry work. Not coincidentally, these are jobs that are also typically subject to (domestic and international) outsourcing: they can be relatively easily described as stand-alone tasks, and require relatively little tacit communication and knowledge of the client’s local institutional environment, which distant online service providers may not possess. As a result, professional services such as human resources, project management, consulting, and legal services are so far only rarely being contracted on online platforms (corresponding to only 2% of the total online platform market). While the term 'new work forms' is used to describe a diverse set of alternatives to full-time employee work, many of these forms have been around for some time – for example, flexible staffing arrangements were used in 90% of firms in the 1980s already. In surveys, the large majority of firms indicate such arrangements are critical for absorbing workflow fluctuations. A range of explanations have been posited for the rise of new work forms, including technological changes and globalization that have standardized work and reduced monitoring and supervisory costs; a demographic shift toward an older workforce with older workers more likely to be self-employed; and a weak labor market in the wake of the Great Recession of 2008 leaving workers with little bargaining power. As it turns out there is some truth to all of these: for example, the rise of online work platforms is a combination of advancing technologies for digitally delivering and monitoring work as well as business outsourcing practices driven in part by globalization. However, none of these factors appear able to explain a quantitatively significant portion of the rise of new work forms. Some have interpreted the secular rise in these forms as a response by companies to external market increases in skill differentials and wage inequality that raise the costs of compensation compression within a single employer. On the other hand, there is evidence that some workers prefer the flexibility and associated work-life balance (e.g., in terms of scheduling and working from home) offered by new work forms. It is likely that the demand for such flexibility has increased as women entered the labor force in growing numbers and families have increasingly relied on more than one earner, as this requires scheduling care of children and elderly parents. Further, a rising group of workers is pursuing (part-time) education or training while also working. These secular changes all inspire a need for more flexibility in the workplace, which is in part offered by new work forms. 

 

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