Gig Platforms: Inspiration Rather Than Competition for the Recruitment Industry

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May 10, 2019

While gig platforms have grown exponentially in the past five years, have attracted lots of media attention, and received heavy venture-capitalist investment, little has been written about their impact on the often-forgotten agency workers.

What if the gig economy has not had such as big an impact on the job market as it’s claimed?

Far from being dethroned by the gig economy, temporary agency recruitment has risen steadily over the past 10 years in the UK, and is expected to continue to rise in the future.

Rather than fearing or fighting against digital platforms, more traditional recruitment firms should learn from them and embrace the benefits offered by technology — from convenience to speed and efficiencies — to meet the new expectations of employers and employees.

The UK is a particularly exciting ecosystem for this (r)evolution to happen — a place where there is the highest appetite in the world for online services, a large and growing use of agency workers within a highly flexible labor market, in which the government encourages innovation while taking steps to preserve (and even maybe enhance) workers’ rights.

Will We All Gig?

If you live in London, where a quarter of the gig workers are working, gig platforms seem to be everywhere: from Tube ads, to numerous TechCrunch articles about the latest gig platform’s jaw-dropping fundraising round.

The gig economy, which “involves the exchange of labor for money between individuals or companies via digital platforms that actively facilitate matching between providers and customers, on a short-term and payment by task basis,” has exploded over the past five years in the UK.

When you think that Uber started in 2012 in the UK just before the Olympic Games, and that there’s now an estimated 2.8 million gig workers having worked in gigs in the last 12 months, around 4.4 percent of the UK population, that’s an incredibly fast progression.

In the background, numerous studies have showed that younger generations, those “millenials” or “GenX,” seek greater flexibility and independence and are dreading the idea of staying in the same job and workplace for more than a few years.

So, one might conclude that gig platforms will take over from the traditional agency temps. That everyone will gig in the future. That the old-fashioned job will disappear. That all those ‘necessary-evil’ temp recruitment agencies will be destroyed (at last!). Why would employer need recruitment agencies, when they can simply post a request on an online platform in a few clicks, and have access to hundreds of workers, more cheaply?

The reality is not that simple.

Why Gig Platforms Have Not and Will Not Dethrone Recruitment Agencies 

Gig working is not bread winning

87 percent of gig workers have earned less than £10,000 in the past 12 months, with a median annual income of £375. Gigs are in fact a top-up, a complement to workers’ income, and for a small proportion of workers (8 percent), a primary source of income.

Being your own boss is hard. An entrepreneur myself, I’m experiencing it first hand. As alluring as it can be, being self-employed without a comfortable and predictable paycheck at the end of each month, can be highly stressful. As explained by Professor Sir Cary Cooper, professor of organiaational psychology and health at the University of Manchester, (when you’re self-employed), “you’re less secure, and you feel you have to accept all the work you’re offered because you don’t know when you’ll get more.”

Using gig workers is not as cheap as it sounds

While posting a request for a gig worker online can be done in a couple of minutes online, there are additional costs and time constraints to take into account. The majority of gig platforms are pure “introducers.” They simply connect employers to candidates. They rarely provide candidates’ vetting or screening services At best, there’s a rating system. According to a YouGov survey, 26 percent of businesses fear that gig workers over-inflate their resumes. Screening candidates to ensure that they have the right to work in the UK and the correct qualifications costs money and takes time, while companies might have very immediate needs; for example, when one of their workers has called in sick to work in the morning.

Furthermore, while one of the great advantages for companies to use gig workers is to access very cheap labor, this is being challenged. Twenty-five percent of gig workers (700,000 people) are paid less than the National Minimum Wage, and as they are self-employed, they don’t have any employment rights. They’re not entitled to the National Minimum Wage and don’t benefit from holiday or sick pay. As you might have read it in light of the recent rulings from the UK Supreme Court about the employment statuses of Uber drivers and Pimlico plumbers, gig workers are demanding more rights. The UK government is working actively on closing this loophole and providing greater clarity on the employment status and protection of gig workers. While it’s committed to protecting the flexibility of the UK labor market, one of the most flexible in the world, it also announced in December 2018 that it wanted the UK to be “a world leader in workers’ rights.”

Gig working hasn’t dethroned temping

A number of commentators have predicted that gig platforms would fundamentally disrupt the labor markets around the world, and in particular destroy temporary recruitment agencies. But some are starting to question the importance that the gig economy is said to have on the job markets. As raised by the New York Times, “maybe the gig economy isn’t reshaping work after all?”

While gig economy platforms have grown, temp agency recruitment has too, in parallel. Over the past 10 years, agency workers have risen by 40 percent in the UK economy, across all sectors of the economy. Eighty-percent of the UK companies surveyed by ComRes in 2018 are expecting to maintain or increase their level of agency workers in the next five years, particularly in the construction and business-support sectors.

From a worker’s perspective, with three fourths of the temp agency workers employed full-time, agency temping provides a much more predictable source of income than gig working. Only six percent of temp agency workers say they would like to work more hours. Also, temp agency workers benefit from numerous employment rights. They have access to the National Minimum Wage, holiday, and sick pay.

From an employer’s perspective, while agencies might, on the face of it, be seen as expensive, they offer a number of very valuable services: from candidates’ compliance checks, interviews and unparalleled access to talent and expertise. Under our laws here, under the Conduct of Employment Agencies and Employment Business Regulations 2003, recruitment agencies are responsible for screening and vetting the candidates, checking that they are who they say they are, and that they have real qualifications and appropriate levels of training, in line with the job’s requirements.

As they place their temporary candidates on a number of different temporary assignments, they know their candidates well, which makes it easier for them to successfully match a company with a suitable candidate.

Finally, they’re great at “selling” the opportunity to potential candidates. While some might see it as a dirty word, it’s a really important skill. At a time when the war for skills is rife, it can be particularly hard for employers, even more so for little-heard-of SMEs, to attract talent. Agencies are there to bridge the gap.

That’s why I strongly believe that gig workers and temp agency workers will continue to co-exist. They meet different needs and aspirations.

The Recruitment Industry Should Learn From, Rather Than Fight Against Digital Platforms

Use technology

What employers tell us when they’re using digital platforms is that they value convenience and speed.

When they need to recruit staff temporarily, they’re generally in a hurry. Quite stressed. Their favorite assistant is about to go off on holidays. They have a peak in production. A brand new project to staff. They don’t have time to waste searching for, and calling, recruitment agencies one by one, hoping they’ll reply and have available and suitable candidates.

In fact, fewer people like to pick up the phone to make calls or receive phone calls. Sixty-one percent  of people prefer email communication, vs. four percent over the phone. Ever met that person opposite you in an open space who sends you an email rather than move to your desk to have a chat?

The UK is a particularly highly digital country, with the highest rate of e-commerce in proportion of retail sales in the world, which represents a tremendous opportunity for recruitment agencies. We’re managing our lives from our finger tips on our mobile phones — from our grocery shopping, to our flight bookings or home searches. So why not our temporary-agency recruitment too? 

Value transactions vs. relations

While speaking with a number of recruitment agencies, many resent digital platforms because they believe that their work is based on building long-term, face-to-face relationships with clients.

But what if employers were more transactional than what agencies think? As raised by Kevin Green, the former CEO of the Recruitment and Employment Confederation (the UK recruitment agencies’ trade body) in his TED talk, “let’s not pretend the client/recruitment agencies relationship is working.”

There’s huge staff turnover in the recruitment agency industry (around 41-45 percent). Hiring managers might have built a “relationship” with one recruitment consultant and nine months later, they’re gone, and with it, the “relationship” too.

As shown by Rick Wartzman, a Pulitzer Prize-winning journalist, in his book “The End of Loyalty,” companies and their employees are more and more tactical and transactional, less loyal than they used to be. They have no issues switching from one supplier to the other, looking for cost savings.

This is why technology and digital platforms have an important role to play for recruitment agencies. They enable productivity gains and real efficiencies.

Spend (human) time and efforts where it brings real value

Saying that recruitment agencies should embrace technology does not mean that all recruitment agencies’ activities can or should be completely digitiaed.

On the contrary. Embracing technology means that recruiters can spend less time on low-value, admin-heavy activities, and more time on (human) activities where they can truly make a difference to companies looking to hire, which are really hard to automate.

This is what I mean.

Recruiters should use technology to let clients come to them rather than rely on out-dated cold calls. Cold calling is very time consuming and costly. Companies don’t like (shall I say — hate?) being pestered by incessant business development calls from agencies, asking them if they have recruitment needs, when they don’t.

Recruiters should use technology to help them deal with the heavy administrative side of temporary recruitment — sending candidates’ CVs, managing booking, timesheets, payroll, and invoices electronically (rather than by fax!).

This will help them free-up time to do what has real value. Attracting great candidates. Matching them to suitable positions. Fast. So that they can really help companies grow, flexibly.

Rather than being fearful of gig platforms, I believe that temp recruitment agencies should embrace the possibilities offered by technology and learn from digital platforms.

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