The rise of the globally mobile contingent workforce
November 25, 2019
Technology, social and environmental pressures, longer working lives and automation - these are just a few of the many forces driving demand for more flexible working arrangements.
PwC's recent global survey of more than 1,200 business and HR leaders from 79 countries (Preparing For Tomorrow's Workforce Today), highlighted that the ways of working and people’s relationships with organisations are becoming more fluid. People are moving away from traditional career paths, seeking more flexible and meaningful work, and moving informally in and out of organisations.
People's desire for greater choice, variety and flexibility, as well as an alternative option to secure work through tougher economic times, has resulted in the rise of the ‘gig’ workforce. Nearly five million UK workers are now part of the gig economy - up 45% since 2000 - and this trend is likely to continue. In a recent study, more than 68% of HR leaders believed that by 2025, over half of the global workforce will be ‘gig workers’ on short contracts.
Identifying where and how to engage with this flexible talent pool will be key for organisations if they are to attract the right talent and fill a growing skills and capabilities gap.
But what does this mean for the globally mobile workforce?
Iain McCluskey published a great article over the summer highlighting some of the considerations for these global gig workers. As someone that specialises in the construction sector, it echoed an increasing number of conversations I've been having with my clients over the last 12-18 months as they face this workforce challenge.
Using both direct contractors and indirect subcontractors to deliver on international projects can pose tax and labour law risks. It is important that organisations understand and comply (where applicable) with any local requirements in the host country - such as having the right social security documentation in place; corporate registration requirements; meeting local working hours and minimum wage regulations; operating payroll and remitting wage taxes, to name but a few.
The financial penalty for non-compliance in these areas can often be significant - and in many European locations, businesses can be held sequentially liable for non-compliance that occurs all the way down their supply chain. Crucially, infringements will often carry a reputational consequence, and if material, could even impact business continuity.
This poses a dilemma - how can you manage a workforce that you have less visibility and control over?
If we look more broadly at the changing tax landscape, there is a growing expectation from tax authorities for companies to address this challenge. The IR35 changes to the UK private sector are a prime example of this, with the obligation to review and assess employment status being placed onto the contracting organisation from April 2020. The Corporate Criminal Offence rules in the UK are another example, as they put pressure on companies to have a robust structure and governance in place to ensure that their entire supply chain is compliant globally.
Marry this with increasing compliance reporting pressures for globally mobile workers, such as the EU Posted Worker Enforcement Directive, and more than ever, organisations need to understand who their whole workforce is, where they are and what they are doing.
In PwC's 22nd Annual Global CEO survey, the majority of business leaders listed the availability of key skills as their top business concern. Tapping into the gig workforce to attract the right people is therefore likely to be key for many organisations. As such - addressing the dilemma of how to manage a globally mobile contingent workforce will be too.
There is not a one size fits all approach to managing global gig workers, but as a starting point we’ve noted three key areas of focus
- Identify who your population is and where they will be working;
- Assess the local tax and legal obligations for that population, as well as the risks for non-compliance with those requirements; and
- Address these risks, by putting a framework and processes in place to mitigate against non-compliance.
If you would like to talk to someone about your globally mobile contingent workforce, please contact us.