The COVID-19 pandemic came at most of us out of left field like an express train. Pandemics mau have been predicted for some time, but various governments had already ditched plans made for managing such a crisis. So when it occurred there were predictions of total collapse and disaster.
One of the key predictions was of course wholesale ruin for the economy and given the general disarray in 2020 that would not have been too surprising. But instead it can be argued that while it has suffered, it might be less than expected. Yes, business sectors geared to working with people en-mass - bars, restaurants, entertainment, non-essential retail - have been hit hard, but elsewhere?
The Organisation for Economic Cooperation and Development (OECD) now predicts, for example, a decline of 4.5% for the UK in 2020 which, considering all the circumstances, suggests that 95.5% of the economy stood up pretty well under particularly gruelling circumstances. This does beg the question as why this might have happened.
Working from home has obviously been brought to reality by cloud services providing universal access at point of use to the vast majority of the population, which then opened the doors to its immediate complement, the availability of video conferencing and collaboration tools, such as Skype, Teams, Hangouts and, of course, Zoom. All of that was predicted five or more years ago, though it took the pandemic to demonstrate it is now a global essential, not a ‘nice-to-have’.
Because many epidemiologists predict that there will be more pandemics, with some certainly far more serious, the ability to keep economic activity ticking over will be vital. Rule 1 of that will be keeping people apart as far as possible while providing an environment geared to their work needs.
Part 2 of this article will look at the potential for home working for those working in manufacturing, but in Part 1 I want to consider how businesses, and business culture and practice, will need to change not just to allow, but fully accommodate people working at home…and not just working at home because it is a short term necessity, but permanently, because it is the best option.
Go on - be a gig-ster
This is the gig economy and right now I don’t see either business nor government really tuned in to the possibilities. To date it has been just a snappy title attached to anyone self-employed, many of whom are in that state purely because they have become unemployed. In practice, however, there is now a real chance that gig-sters (for want of a better title) and the economy they drive will be a central plank of future employment, although ‘employees' will be much more like business partners.
A chat with John Whelan, CEO of My Digital, highlighted some of the changes that can be expected as the shift towards the gig economy gathers pace. Whelan used to be an accountant, in which role he realised that calculating tax deductions for temporary workers was more difficult than it should be. So, with friends in India, he set about designing some appropriate software to use in his accountancy practice:
I saw the way the world was going, because I think what's happening now is what would have happened anyway. I think COVID is an accelerator. The reason it's grown since the turn of the century is because individuals now are more confident in their employability.
He then stepped aside from the accountancy practice to concentrate on My Digital, which specialises in software to look after the calculation of tax for temporary workers and sold directly to the recruitment agencies. The growth of the gig economy is opening up new and bigger opportunities for these businesses and that will include helping gig-sters exploit their specialisms across multiple businesses at the same time, creating a more valuable role for the agencies. But even where the gig-sters are paid directly by a company they are working for, those companies will need specialist software to manage their payment, especially if they make up a reasonable proportion of total staff.
The fundamental challenge for businesses and agencies is to deal with what Whelan calls ‘quantum employment’, which he defines as the smallest element of employability available, such as a minute on a timesheet, plus managing the calculation of the appropriate tax. He sees agencies becoming umbrella companies to which businesses will increasingly turn to source the skills they require for the time they are needed. And that requirement can be contracted in the most appropriate quantum, most commonly an hour.
This will require agencies to build schedules of when those hours are required, from a simple 10-hours/week to specific day and time starts and finishes, for as many clients as the gig-ster wants to take on, spreading their skill to where it is needed. This will map well on to smaller businesses that can't afford to employ specialist skills full-time, but have a strong need for part-time availability. Also, if the gig-sters can carry the specialist certifications needed by regulatory compliance and the like, they could bestow those certifications on the goods and services that they work on/develop for those smaller businesses, greatly increasing the value to both sides.
Whelan sees this as a perfect storm for the gig economy, particularly as employers are currently averse to handing out permanent contracts. That could then have an interesting effect on the relationship between the parties. Traditionally, people on long term contracts develop an emotional response – hopefully loyalty – to their employer’s brand. But in the future, part of a wider cultural change in the relationship is that gig-sters will need to become cogniscent of their own brand values, while the umbrella agencies will become the deliverer of their brand to potential customers.
Gig-sters makes economic sense
Another pressure point in the cultural change will come from companies making decisions that drive value for them. Whelan sees no question that home working will save operational overheads in terms of office space and infrastructure:
“So we'll see companies drawn to that, particularly as leases come up for renewal. Who's going to be renewing a lease in Central London, for example? And the other side of that is employment contracts. I think the economic compulsion will be they will prefer more temporary contracts, because something like what we've experienced over the last six months is going to happen again, and companies are going to have to brace themselves for it. And you don't want to be burdened with a large permanent workforce.”
As things currently stand, gig-sters may look at these developments with some relish, for their tax situation can, as Whelan put it, become a bit ‘voluntary’ in the way it is assessed and collected, and he sees this as one area where tax authorities is likely to sharpen up its act considerably. His expectation is that the authorities becoming much more directly intrusive into gig-sters’ – and possibly everyones’ – financial affairs. This is likely to include some form of access to data on individuals’ financial positions, such as from the UK's Her Majesty's Revenue and Customs (HMRC):
HMRC will have no choice but to become more intrusive. And what we will see is a greater obligation of a tax payer to explain the amount of money they receive, rather than to declare income. With an increased liability in respect of repaying the debt, I think that HMRC will probably get intrusive legislation through easier than they would have done in the past.
He also sees the umbrella agencies, because they will be able to handle both placement and payment/taxation and even accounting services, having visibility on most of the gig economy supply chain. This will have several possible outcomes, including the requirement to ‘assist HMRC with their inquiries’ with regard to current and historical gig-ster earnings and the requirement to inform individuals of the agency margins that are charged to customers for their services. This could help overcome the danger of becoming involved with an unscrupulous gangmaster-style operation.
But the advantage then is that the individual does get the opportunity to actually choose what jobs they want to do. So, if they've got the capacity and the time to do five jobs, they can. Indeed it will become quite likely as there will always be those periodic jobs that only occur once a year and take a week each time. And the beauty of that for the agencies is that they don't have to give packets of work 40 hours long in a week. They can just be shorter to fit what the client wants.