Opinion: The Flex Economy – New Zealand’s flexible workforce in 2015

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Increasingly, Kiwi workers are seeing how a flexible or portfolio career helps to build a career as they want it, by design. The growing popularity of flexible or portfolio careers centres on the fact that business and HR teams want to keep headcounts down, and employees want greater variety and flexibility in their careers.

Whereas previous generations may have worked in one role or even for one company their whole life that is extremely rare or even desirable to see in 2015. The younger generation of talent is actively seeking more variety than the older generations in their career and work employment portfolio.

In fact, recent research by Ardent predicted that by the end of 2017, nearly 45% of the world’s total workforce will be comprised of contingent workers, including independent contractors and freelancers.

Businesses will be left out in the cold if they wait until 2017 to embrace this fundamental shift in employment and staffing. So, what is driving these employment changes, and how can HR professionals seize the opportunities presented by the flex economy.

Fiscal prudence of the GFC still evident in companies 

Rice says that increasingly, companies are seeing contracts and project-based work as a wise solution to ensuring there’s sufficient resource to meet demands, without increasing their headcount. He says this gives people the scope to have a much more flexible work career.

Despite the relatively robust Kiwi economy, many New Zealand-based companies are still reluctant to increase their permanent headcount for a number of reasons: 
  • There’s still a hangover from the global recession, and Kiwi companies are doing what they can to keep permanent staff headcount the same
  • In many cases and out of necessity to get projects done, companies need to employ flexible or part-time employees
Rice say that the desire to keep staff numbers down is a constant driver of the emerging flex economy. He says in 2015 it is commonplace to have a contractor working in-house or see a team pulled together to resource a specific project which is dismantled upon completion or delivery.

Simple actions HR professionals can take to make use of the flex economy
  • Determine what percentage of your workforce is contingent or working on a contract basis
  • Identify any projects that have a fixed start and end date and consider whether a part-time or fixed-term contractor could be a better fit for the role than diverting the time and resource of your existing permanent staff
  • Familiarise yourself with contingent recruiters and contractors so that you don’t get left in the lurch should an important project or contract requiring urgent resource arise
  • Treat contractors or contingent staff as well as you treat your permanent team. You might want to use them again in the future for another project, and also they may be so good that you decide to offer them a permanent role within your business.
About the author: Jon Rice is co-founder and director of alternative and on-demand staffing solution virtualRPO. 
  • Kirsty Hunt on 23/07/2015 1:20:10 p.m.

    Great article Jon.
    Agreed Diane, the current tax and labour legislation considers the modern 'career contractor' as tax law limits the income to 80% from single source in 12 mths etc. Blurring the lines between self-employed and employed, placing the client at risk of tax payment claims from the contractor, if they’ve not being correctly paying their tax.
    The labour law does a similar job with the 5 tests, again not considering the emergence of contractor consultants who work in house on a corporate project for 12mths plus giving rise to labour claims e.g. back pay of holidays, bonuses, benefits
    However the contract is the most important back stop. By always making certain you are engaging a worker with the correct type of contract that mirrors your arrangement you should be ok.
    By contractors working through a Contractor Management Company like The Detail you are minimising risk for the contractor by ensuring they are tax compliant and the client by ensuring they are a step removed from the worker.
    This said I personally have not seen case law where these are unreasonably applied.

  • Diane Edwards on 22/07/2015 12:23:07 p.m.

    Our tax laws do not encourage the use of contractors for anything other than short time projects. I think the issue doesn't with Employers reluctance to engage contractors but our outdated legal definition of contractors under both employment law and tax legislation.

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