Gig Workers by Design: EY survey shows businesses need to catch up to the Gig Economy

New York, 15 November 2016

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Both find multiple benefits, but management challenges

The results of two EY surveys announced today about the “Gig Economy” find employers and workers both moving toward a temporary, independent workforce.

Among large organizations (100,000 employees or more) surveyed, 49% said they increased their use of gig workers in the last five years. Looking ahead, 40% of organizations expect to increase their use of contingent workers in the next five years. One quarter expect 30% or more of their workforce to be contingent workers by 2020.

At the same time, the research shows more people are choosing to do contingent work; 73% of the 1,008 short-term contingent workers surveyed had positive reasons for their independent work arrangement, with only 20% saying they were short-term workers due to a lack of suitable full-time positions. Sixty-six percent believe the benefits of contingent working outweigh the downsides always or most of the time compared to just 6% who believe the opposite.

“It is well known that the Gig Economy is growing, but ever since the recession, many people assumed that employers just wanted to cut costs by reducing the number of full-time, permanent jobs,” said Tony Steadman, Principal, People Advisory Services, Ernst & Young LLP. “However, the survey responses suggest that organizations are welcoming gig workers as a part of their growth and change management strategies. This Gig Economy looks very different than the traditional picture of seasonal workers or workers who provide common services to consumers.”

By polling both short-term contingent workers and major global employers, EY identified talent strategies and preferences that serve both sides effectively.

Employers’ Perspective

Aside from cost control and filling temporary gaps, today’s employers report using short-term contingent workers for strategic business reasons, particularly to leverage skills and capabilities that were not a part of the core workforce.

BENEFIT OF GIG WORKERS TO EMPLOYERS

Expertise is beyond the capability of the existing workforce

56%

Help to control labor costs

55%

Help to overcome resistance to change within the organization

50%

Respond to seasonal work needs

42%

“Cost management will always be a part of business management, but the dynamic use of contingent workers can help drive and accelerate change in this constantly transforming business environment,” said Steadman. “It can also support fast paced scale-ups in business models where dramatic growth can occur overnight. But many organizations still need to address the best management techniques for this non-traditional workforce.”

Drawbacks and Challenges

Organizations admit to managing the contingent workforce with less alacrity than full-time employees. Among employers:

  • 37% have fragmented governance models for managing their contingent workforce.
  • 31% are using multiple vendor management systems to manage their gig workers.
  • 29% are using basic cost and production metrics to measure contingent workforce performance.
  • 55% of contingent workers report not having gone through an onboarding process.
  • 31% of organizations are using manual off-boarding processes with their contingent workforce.

The questions examined attitudes among contingent workers as well as the management functions of businesses that use contingent workersand found a potentially causal relationship to an apparent disconnect between talent and employers.

Workers’ Perspective

Among workers, 73% choose gig work for their own reasons based on the perceived benefits, led by flexibility, working from home and control.

“Though only 15% of worker respondents disagreed that contingent workers get a fair deal, some common complaints could be handled by a new approach to talent management,” said Steadman.

Among gig workers:

  • 58% believe that full-time permanent employees are treated better;
  • 65% of contingent workers say they would work differently if they were permanent employees; among them, 25% would go the extra mile;
  • 26% of contingent workers are ambivalent or disconnected from their employers’ business objectives;
  • 40% of contingent workers feel like an outsider compared to the permanent workers of the organization (56% of the 25–34 year age group are more likely to feel this way).

“When talent feels unengaged or like they are treated poorly, that’s a management issue more than an intrinsic element of contingent work,” said Steadman. “A haphazard process toward people management may affect attitudes and impact the organization’s ability to structure its workforce effectively. It’s critical for employers to develop better methods of managing their increasingly contingent workforce and to consider some of the key HR processes and analytics that can have a negative effect on what could ideally be a mutually beneficial relationship.”

Other concerns are inherent in the structure of their work arrangement. The lack of benefits is a key concern, with 68% of contingent workers indicating that they would like more options on health care and pensions. Most gig workers worry about the lack of paid vacation, or sick or personal leave (noted by 63%). They are also concerned about job uncertainty and the lack of job security (48%).

For more information and analysis on the contingent workforce, EY developed an analytical report called The Gig Economy: An Evolving Workforce based on its surveys and other sources to provide a vision for the future of the workforce and steps for organizations to make the most of their contingent worker relationships: ey.com/gigeconomy.

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for or clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

This news release has been issued by Ernst & Young LLP, a member firm of EY serving clients in the US.

About EY’s People Advisory Services

As the world continues to be impacted by globalization, demographics, technology, innovation and regulation, organizations are under pressure to adapt quickly and build agile people cultures that respond to these disruptive forces. EY People Advisory Services believes a better working world is helping our clients harness their people agenda — the right people, with the right capabilities, in the right place, for the right cost, doing the right things.

We work globally and collaborate to bring you professional teams to address complex issues relating to organization transformation, end-to- end employee life cycles, effective talent deployment and mobility, gaining value from evolving and virtual workforces, and the changing role of HR in support of business strategy. Our EY professionals ask better questions and work with clients to create holistic, innovative answers that deliver quality results.

About the research

EY’s study was developed using online surveys, discussion panels and analysis of secondary research of other studies and economic data. The online survey of organization responses was derived from 202 supervisors or above in companies with over 1,000 employees, all sourced from a panel provider in addition to 12 respondents sourced from EY’s contact database. The worker survey was made up of 1,008 workers who are not part of an outsourced third-party, but who are currently employed on a non-permanent, contingent basis, including independent professionals, consultants and freelancers.

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