Freelancers: The life of a poet with the pay of a banker?

Freelancers: The life of a poet with the pay of a banker?

That’s the freelancers dream – but how often does reality match the vision?

Two companies in the global talent world are enjoying their moment of sunshine despite the pandemic. No, they have not pivoted to manufacture PPEs. They are in the right place, right time as freelancer platforms. On NYSE, Fiverr, and Upwork both have seen their stock prices rise by 400% and 66 %, respectively. That’s not all - they returned the faith of their investors by reporting stellar results last quarter.

Back home, we know the gig train has left the station, propelled by the pandemic. However, multiple frictions in the ecosystem inhibit freelancing from becoming mainstream for talent and enterprises.

Enterprises Utopia

60% employees, 20% contingent workers, 10%t freelancers, 5% interns, and 5 % projects to IIT students - that would be my ideal workforce distribution of tomorrow,” declares a CHRO of a large IT MNC.

In a crisis like this pandemic, such a flexible talent map would have been ideal. But, it’s easier said than done. Organisations do not have the technology, process, or structural support to execute such a plan. Already, there is a struggle to hire full-time employees on time. Culturally integrating full time and contract workers is a continuing challenge for HR. Throw freelancers to that mix, and it becomes more complicated. Even if enterprises are keen to get freelancers, sourcing them in time is going to be their Achilles heel.

The Talent Dilemma

In a recent survey of freelancers, when asked why they opted for gig work, a respondent said, “To be the master of my own destiny.” However, does the reality match? Of 1,000 freelancers surveyed recently, 46% admitted that they had lost their work/clients during the current pandemic. A study by Dinghy, an insurance provider to freelancers and self-employed, says more than 50% freelancers felt they over-served their clients, and 30% said they don’t get paid by their customers at all.

38% of the freelancers said getting new work and customers were the most significant challenges. Unlike full-time employment, income continuity is not guaranteed as a freelancer. Moreover, as a single point of responsibility, 98% of freelancers admitted they were working even during time off as they are in charge of everything.

Freelancing also means coming to the open world and being rated by customers constantly, Many of us sulk when our boss privately rates us poorly and quit our jobs. Are we ready for public reviews on our gig work?

The Ecosystem Development

A 2017 Deloitte global study said 65 % of millennials prefer full-time employment over freelancing. Freelance flexibility with full-time stability is what the millennials were seeking. The reasons are easy to comprehend. Besides the income security, most employers provide for insurance, Mediclaim & retirement benefits. Getting EMI-based loans for housing, vehicle, and related borrowings is seamless if you have a full-time job. As a freelancer, many of these benefits aren’t easy to obtain when you show erratic income in your bank statements. Also, paying a premium to a freelance job is yet to become a norm. A wage premium acts as a security for a potential income discontinuity. If gig jobs aren’t financially lucrative, then aspiration for them will reduce, and it would only remain the bastion of unskilled workers for whom it’s not a matter of choice but survival.

Frictionless Employment

For gig to become a way of work, freelance platforms need to provide multiple benefits. The most significant are steady income, insurance benefits, and continual up-skilling opportunities. The friction of skills, salary, location, and timing needs to be eased. For enterprises too, the same four factors need to be addressed to embrace gig workers as a strategy. The 2010 Nobel prize-winning DMP model (a framework for analyzing unemployment, the formation of wages, and job vacancies) can be an excellent base to understand the job search friction and then address the structural challenges facing the freelancing ecosystem.

The Paradox

Employers want flexibility in their workforce to manage the peaks and troughs of business. Talent wants income security for their career planning. The irony is that full-time employees want their current income but desire the lifestyle of a freelancer and the freelancers wish to have the benefits of a full-time employee.

As one of the respondents in the freelancer survey said, ‘the life of a poet and the income of a banker’ would be an arrangement most of us would be happy about.

First published by The Hindu Business Line on September 10, 2020

You may also like