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The UK's reliance on contingent shift-based workforce is rising.
Research suggests that the temporary worker count had already reached 1.43 million in the region as of April 2024. A sizable section of UK-based businesses confirm that they depend on flexible workers, who make up one-fifth of their workforce. This tectonic shift is the result of several macroeconomic factors.
This blog examines those forces and explores their impact and the way ahead for organisations.
What Macro Trends are Fuelling a Growing Contingent Workforce?
Economic Uncertainty
The Organisation for Economic Co-operation and Development (OECD) cut its growth forecast for the UK in 2024, from 1.1% to 0.9%. Accompanying this is widespread economic uncertainty, further accentuated by Brexit, the COVID-19 pandemic, and geopolitical tensions. Such changes are propelling businesses to adopt flexible workforce models to better prepare for uncertainties.
Regulatory Changes
Different regulatory changes, such as the recent Employment Rights Bill 2024, which increases worker rights, the 2024 Autumn Budget, which increases employers' expenses by raising national living wages and employer insurance contributions; and renewed taxation rules under the IR35 reforms, are compelling businesses to look for alternate routes to optimise labour costs and minimise operational burden. This is prompting the rise of contingent shift-based workers.
Demographic Shifts
UK’s population has been aging. Post-pandemic, there’s been an exodus of workers aged over 50. Together, these are amplifying labour shortages and skill deficits, which are expected to continue. PWC expects skills shortages to cost companies trillions in unrealised annual revenues by 2030. The immediate fix is turning toward contingent workers to keep the boat afloat.
Evolving Workforce Preferences
Millennials and Gen Z are reshaping employment norms, prioritising flexibility and work-life balance. The resulting growing gig economy is contributing £20 billion, and consolidating temporary employment among the top four employment industries in the UK.
What’s the Impact of Leveraging Contingent Workers?
Reliance on contingent workers opens doors to specialised talent with specific skill sets while cutting lengthy permanent hiring workflows. In addition, the ability to adapt to fluctuating business demands and quickly scale the workforce up or down (especially in sectors such as retail and logistics) enables effective talent cost optimisation.
Yet, there are also challenges. Due to their temporary nature, contingent workers can feel less connected to the organisation, which can affect teamwork and collaboration. On the management side, there are practical difficulties. For instance, classifying workers and managing contracts at scale to ensure legal compliance, navigating operational aspects like attendance, pay rates, invoicing, etc.
The Sustainable Way Ahead
Relying on contingent workers is a dependable route to resilience in the current macroeconomic landscape. To make the most of what it offers, the answer lies in using robust, AI-powered technology to manage contingent labour management programs. Using specialised tools built for contingent worker management can help improve speed and access to talent, support compliance, and mitigate risks while providing visibility and insights for better decisions and cost management.
To explore this topic further, download our eBook ‘6 Steps to Mastering Contingent Shift Worker Management’.
