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How Entrepreneurs Should Think About Hiring In the Gig Economy

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Opinions expressed by Entrepreneur contributors are their own.


The so-called “gig economy” is here to stay. It is not a temporary, limited phenomenon, and it neither started nor ends with ride sharing. Instead, it is a universal development of the job market that will eventually affect all industries. As such, entrepreneurs should consider what this development means for their hiring and strategy decisions.

A universal development

Some 20 years ago, I worked in web systems development. At that time, a few brave souls tried spreading their wings and worked as self-employed coding consultants. Selling their expertise as hourly subcontractors, they were brought in by software development firms when a project required more hands on keyboards than were available in-house.

Today, the structure of the software development industry is quite different. Its methods are more standardized and the processes more mature. Now, rather than an oddity, self-employed architects, coders and designers are a common occurrence. In other words, while there are still opportunities for full-time employment, the profession has become much more gig-oriented.

Ride sharing was a much faster change, going from top-down taxi companies to private drivers working their own hours for Uber or Lyft. That being said, it is the same development. Industries and firms fall apart over time. This development is natural is here to stay.

Related: 3 Ways to Harness the Power of LinkedIn for Your Gig Career

Industries and firms fall apart in time

We have become used to seeing firms as core to the market, and this is for good reason. But while there are firms, they are transient phenomena. Long-lasting firms often have to reinvent themselves to stay in . IBM, for example, started out manufacturing machines, moved into calculators, then computers, and then finally went on to consulting.

This is a perfectly natural development. Economically speaking, the firm is a temporary solution. As I argue in my book The Problem of Production: A New Theory of the Firm, the firm allows for implementing new production beyond what can be created through simple contracting. In other words, firms do what markets cannot. However, markets eventually catch up with the firm, subsuming it.

The same is true for whole industries — born from a novel , competitors emerge and break down into more specialized firms, supporting the core innovation. While this process can take decades or even centuries, the pace of change seems to steadily increase. In the market there are few, if any, constants.

How to think about hiring

What this means is that entrepreneurs should expect it to get both easier and cheaper to outsource functions. This, in turn, means the relative cost of doing things in-house will increase. As an entrepreneur, it is important to recognize that this is the overall trend and incorporate this knowledge into the firm’s strategy. It should also be recognized in how the startup deals with hiring. Here are three rules of thumb to consider:

1. Delay hiring as long as you can

This is already standard practice in startups, since hiring is expensive and the cashflow situation is tenuous. But there is good reason to hold off on hiring unless necessary, even if there is enough cashflow to afford it. Consider the state of your industry: Is it in a growth phase, and are competitors and partners expected to grow or shed employees? There is a risk that hiring means biting off more than you can chew. This is especially the case in mature, standardized industries.

Related: 7 Reasons Why the Gig Economy Is A New Positive

2. Consider

Entrepreneurs tend to avoid outsourcing because it is costly. Costs should be avoided, but not at the expense of flexibility. Outsourcing means it is much easier to adjust the scale of production to changes, so the additional expense can be part of a cost-cutting strategy. It all depends on what you expect from your industry — if firms are likely to shed employees, hiring may turn out a disaster.

3. Focus on your core competency

It is common for entrepreneurs to want to keep things in-house to be able to control their operations. But you probably do not have a full-time bookkeeper or CPA on staff. Why? Because bookkeeping is now a standard service offered competitively in the market.It used to be done in-house, and businesses were reluctant to outsource this service because the information is so sensitive. The same will soon be true about I.T. departments. What else will become standard market services? The best way to avoid expanding into the wrong place is to focus on your core competency — where your startup creates value.

Considering the nature of the marketplace, the gig economy is not new. It is just a new name for a development that was always underway, but it is now augmented by modern and highly effective information . Entrepreneurs should recognize that every firm is a solution and that it’s subject to a common lifecycle. Doing so helps when formulating strategies and making decisions in the startup.

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Economy

‘Gig workers of all trades, unite!’ China’s state trade union calls for branches for gig economy workers

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China’s gig economy workers employed by online platforms, including deliverymen and ride hailing drivers, should be encouraged to form unions to boost their negotiating power with Big Tech, the country’s government-backed union said.

The All-China Federation of Trade Unions (ACFTU), which answers to the Chinese Communist Party and is the only legal labour union in China, issued “opinions” this week calling for better protection of labour rights in China’s gig economy, which is estimated to provide around 200 million jobs in the country.

The state labour union made the call at a time when Beijing is turning up the heat on the country’s big technology platforms, including criticising them for exploiting workers. One recent opinion piece in an official newspaper affiliated with the Chinese People’s Political Consultative Conference, the country’s top political advisory body, even used concepts direct from Karl Marx to take a jab at China’s internet platforms.

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On-demand services providers such as Meituan and Ele.me, and ride-hailing companies like Didi Chuxing, have employed millions of employees on a temporary basis. However, labour protections for those “employed in a flexible manner”, are often limited compared with full-time employees and the negotiating power of these workers is usually weak.

Grievances have been rising among these new types of workers, and Beijing has not hesitated to raise its concerns about the potential for social unrest with Big Tech. The Hong Kong-based NGO China Labour Bulletin (CLB) recorded 131 cases of food delivery worker protests between 2016 and 2021.

High profile cases of gig workers seeking better rights have hit the headlines recently, including the dramatic self-immolation of a delivery worker at Alibaba Group Holding-backed food delivery platform Ele.me in January. Alibaba owns the South China Morning Post.

As Big Tech pushes for profit, labour conditions show little sign of improvement

“The state has praised the achievements of these big platform companies in the past, about how they have pushed the economy into a more hi-tech direction,” said Aidan Chau, researcher at CLB. “But in the meantime, the platforms have come to control a large amount of data generated by workers and consumers, often neglecting the lives of their workers as they conquer new industries.”

More than 95 per cent of food delivery workers work more than 8 hours a day, with 28 per cent clocking up more than 12 hours a day, according to a 2020 survey conducted by Beijing Yilian Labor Law Centre, a non-government organisation.

Beijing has recently upped the ante on tech firms, with eight government departments lecturing representatives of online ride-hailing providers over payment practices in May. The government has also been pushing tech platforms to provide basic welfare benefits to part-time employees.

At the same time though the Chinese government has maintained a strict ban on any kind of spontaneous labour union formation or strikes by gig economy workers. The Chinese authorities also arrested one of the most prominent gig worker activists, delivery worker Chen Guojiang, who had repeatedly called on fellow food deliverymen to take group action. He is currently awaiting trial on several charges, including credit card fraud and “provoking trouble”.

Why this flexible work platform is seeing a boom in sourcing riders for delivery giants

The state labour union submitted proposals on strengthening the protection of gig workers in March 2021 during the Two Sessions, the country’s most important political event. Despite the political pressure, not all analysts are convinced that the latest “opinions” will radically change the situation for gig workers.

“The union will not challenge the informal or flexible labour arrangement of these workers,” said CLB’s Chau. “Worker competition with each other will continue to be intense and their sense of insecurity will likely persist.”

This article ‘Gig workers of all trades, unite!’ China’s state trade union calls for branches for gig economy workers first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2021.

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Economy

From the gig economy to working from home — these trends are changing the future of our jobs

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Working from home has become increasingly popular, necessary and in many cases compulsory due to the pandemic.

A recent study of corporate executives around the world found 19% said they expected employees to work three or more days remotely post-pandemic.

These results showing a shift towards working from home is mirrored in other studies from the US to Europe.

The tech that makes working from home possible

Adam McHale is the European Vice President of Cisco, a company that builds the technology that enables people to work from home. He told Euronews’ The Exchange that due to the pandemic, “broadband infrastructure became critical national infrastructure”. He added that internet traffic grew at a rate we would normally see in the space of 18 months in the space of a few days.

Cisco did a survey of 13,000 people across six different countries and 78% of them told the company that broadband connectivity “was absolutely critical to them”.

‘We can’t put everybody in the same box’

Estonia is a nation pushing the boundaries of remote and home working, often hailed as the most digitally advanced country. It is the nation that gave us Skype and made internet access a basic human right.

Its Minister for Health and Labour, Tanel Kiik, gave us his thoughts on how we should approach this new way of working.

He said that he thinks the changes to the way we work and the new forms of work are “only a positive thing”. “We can’t put everybody in the same box and say that this is your work contract and these are your working hours and this is your salary and be happy with that,” he added.

The Gig Economy

For a long time, this sector has been popping up on the news and not always for positive reasons, including cases of employment disputes and claims of infringement of workers’ rights.

But what exactly is the gig economy?

Dictionaries describe it as “a job market which consists of short-term or part-time work done by people who are self-employed or on temporary contracts”. However, this definition leaves out online platforms that many have started associating with it. In its simplest form, the gig economy can be described as flexible, temporary, or freelance jobs that often involve connecting clients or customers via apps and websites.

Its advocates say the new mode of work allows employees, businesses and consumers to adapt quickly to the needs of the moment. They also say it can also give workers more flexible hours to fit their lifestyles.

Kiik believes that the gig economy is something that is here to stay and is likely to grow in popularity. For that reason, he doesn’t see any point in fighting against it. “The world is changing constantly, the economy is changing and of course the work market and the jobs market are also changing”, he adds.

Online platforms and changing employment

Brands like Amazon and Alibaba have created profound changes to the way people live and work. Despite these billion-dollar success stories, people are still divided about the gig economy.

Qatari startup Snoonu, which offers a one-stop application that facilitates online shopping and deliveries, relies on the gig economy but is trying to remedy flaws in the mode of work’s fabric.

It has some 600 drivers poised to react to the ping of an order for thousands of locations around the country who are fully trained by the company. It also has over 250 young employees from 35 different countries whose jobs are constantly evolving thanks to digital innovation.

Entering the job market

The world of recruitment is also transforming to match new employee and employer needs. Juliet Eccleston is an employment expert and she told The Exchange that when people are straight out of college, it’s often “difficult to see the difference” on their CVs.

To her, and new employers like Snoonu, what makes people stand out are their vocational experience. “A lot of younger people have gone onto platforms and they’re actually micro-entrepreneurs behind the scenes, sharing things, renting things out and selling goods,” she explained. “Those kinds of skills are actually incredibly interesting for businesses”.

Whether employees are working from home, on a temporary contract, or on flexible hours, one thing is for sure; the future of work is changing.

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Economy

‘Gig economy can boost jobs for women’

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New Delhi: Alternative work arrangements in the gig economy can lead to the absorption of more women and increase their participation in the workforce with some re-skilling, according to a new study by the United Nations Development Programme in India (UNDP India) and industry federation Federation of Indian Chambers of Commerce and Industry (Ficci).

The rise of the gig economy following the coronavirus outbreak has the potential to boost women’s employment in formal jobs, said the study that collected data from 150 firms, of which one-third were from the manufacturing sector and the remaining were service firms.

“The adoption of new technologies could create better opportunities for women. However, re-skilling will be crucial to expand opportunities for women in the formal sector,” said the study that received support from the government of Japan.

The survey claimed that sectors such as health and pharmaceuticals, electrical and electronics, and fast-moving consumer goods are likely to see more female employment. At the same time, women’s employment in the finance and accounting divisions may moderately change because of the adoption of new technology.

“At least 57% of the heads of surveyed firms felt that the advent of the gig economy would boost women’s employment, while just 4% said that it would not. The remaining 39% of the heads of firms surveyed remained inconclusive,” according to the study titled Future of Work for Women in the Formal Sector in India.

Around 57% of the surveyed firms agree that the gig economy will itself expand and boost women’s job prospects because it is based on flexible, temporary or freelance jobs, often involving connecting with clients or customers through an online platform.

“This underscores that alternative work arrangements in the gig economy have the potential to absorb more women and increase their participation in the workforce,” the study said. However, it did not address the question that gig work is often not a primary assignment and there is no job security. A boost in the use of technology and increased acceptance of virtual working for sales and distribution jobs could open up opportunities for women in fields where interactions are managed via apps and phone calls, it said.

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