Laurence Kirk | March 15 2023 |
The contingent workforce has been a critical component in organizations’ people strategies for several years. In Europe, the contingent workforce has grown significantly in recent years and now represents over 50% of the workforce for many organisations – a trend that is expected to continue in 2023 and beyond. However, expanding a contingent workforce program in Europe this year will present several challenges that companies will need to overcome. In this article, we will discuss three major challenges companies are seeking answers to as they expand their contingent workforce programs across Europe in 2023: The Great Resignation, Economic Uncertainty, and Talent Scarcity.
Close to two years on since the Great Resignation first took centre stage, and we are continuing to experience a work culture driven by lack of trust in employers and a widespread search for meaningful work. In fact, a study by Gallup found that only 15% of employees worldwide are engaged in their work and that 85% are either not engaged or actively disengaged.
But won’t the Great Resignation be over soon? The data would suggest far from it. In fact, as recently as the second quarter of 2022 the UK saw 442,000 resignations – the highest number in over a decade. And resignations have remained high in the quarters following. Meanwhile, the Dutch Central Bureau of Statistics (CBS) has been charting a significant increase in the number of people in The Netherlands that have changed jobs these past 12 months. In Germany, Gallup’s annual workplace study recently found that a record number of salaried employees are looking for a new job. Added to that, 40% of those same German employees say they would stop working entirely if they could afford it.
What does this have to do with your contingent workforce program? Contingent, contract and freelance work models have grown in Europe recently, with data from a leading freelancing platform showing that the number of new freelance accounts skyrocketed in the last year. This trend is undoubtedly driven by the Great Resignation, as millions of employees are quitting and changing jobs in search of a different kind of career.
So, where’s the challenge? Aren’t these all positive shifts for an organisation’s contingent workforce program? While the Great Resignation may have driven an increase in the supply of contingent workers, the challenge lies in organisations fully grasping the context within which they are expanding their contingent workforce programs. In 2023, given the ongoing effects of the Great Resignation, in order to be successful organisations will need to ensure they have the right work conditions in place. Addressing mental health and burnout concerns, for example, are no longer ‘nice-to-haves'. They have quickly become central to good management, and contingent workers are no exception.
Going further, it’s important not to assume you fully understand your workers’ motivations at work. Taking the time to truly understand your employees’ and contingent workers’ challenges is crucial. Exit interviews can be one excellent way to pick up on trends you can use to improve worker experience.
Tracey Pemberton, EMEA Category Lead for Human Resources and Legal at 3M, joined us on a recent Magnit webinar to share the organization’s experiences in this regard. In relation to the Great Resignation, she noted:
“We're trying to navigate through this challenge by holding exit interviews or gaining feedback from our Contingent Workforce providers. Uncovering valuable insights of the ‘real why’ - the nitty gritty details of why they're leaving to go elsewhere - then reporting these back to our HR partners, our businesses and our management.”
Economic uncertainty is another major challenge facing companies looking to expand their contingent workforce programs in Europe in 2023. With inflation rates hitting double digits in several EU countries last year, on top of an energy crisis and supply chain issues, the market is feeling the effects of high costs and uncertainty.
When it comes to the contingent workforce, it’s important for organisations to consider the financial health of their suppliers, as well as their ability to innovate. In uncertain times, companies need to be sure they have the right partner, for example a truly vendor neutral MSP that can provide the broadest access to skills and talent, flexing with them developing innovative ways to support the day-to-day business needs whilst keeping costs firmly under control.
In a recent webinar on this very topic, I talked through the importance of this:
“Your suppliers should be bringing new technologies, new initiatives. They should be challenging your conventional ways of thinking...If your model looks the same today as it did two years ago, as it did five years ago, 10 years ago, if you're using the same direct sourcing strategies, and you're not embracing things like technology to empower your decision making, then perhaps your trajectory is a little bit more, unstable and it's time to think about it.”
Turn on the news at any time of day and you will see that so many businesses are already starting to feel the pinch of an economic slowdown and its feels that everyday there is news of mass layoffs. Ensure, now more than ever, that you have the right suppliers for your business, who are not only financially stable but have the know-how and expertise to innovate through tough times.
Organizations face a third challenge to scaling their contingent workforce programs in 2023, in the form of talent scarcity in the European labor market. Despite high levels of education and training, the issue boils down to there not being enough qualified candidates to fill open positions. This issue is driven by various factors, including an aging population, low birth rates, and a lack of interest in certain fields. As a result, companies are struggling to find suitable talent to scale their contingent workforce, which can impede their ability to grow and compete in the market.
The ongoing conflict in the Ukraine has further exacerbated talent scarcity. With close to 5 million jobs lost as a result of the war, it has further impacted labor markets throughout Europe.
Historically, Ukraine has been a leading source of high-skilled IT freelancers, ranking as the fifth top country for IT freelancers globally. However, since the invasion began in February 2022, more than 5.23 million refugees have fled to neighbouring countries. Close to 23% (1.2 million) of these refugees were previously working and have lost or left their jobs. This massive displacement of workers has disrupted labor markets in Ukraine and several neighbouring countries. The International Labor Organization (ILO) has noted that disruptions are possible in Hungary, Moldova, Poland, Romania and Slovakia. Furthermore, talent platform workers operating across Ukraine and Russia have also felt the impact of the ongoing Russian invasion of the Ukraine.
However, when it comes to the availability of contingent workers, the picture is more nuanced. With Ukrainian men aged 18-60 banned from leaving the country as a result of martial law being invoked, the majority of Ukrainian refugees are women. According to the OECD, Ukrainian women are overrepresented among the highly educated, and education levels in the country exceed the EU average in general. This has led countries like Germany to adapt working legislation and policies to better integrate highly skilled Ukrainian refugees, identifying this influx of talent as a potential solution to their own skills shortage.
To turn this potential challenge into an opportunity to fill talent gaps and source highly skilled labor, companies should continue to monitor the situation in Ukraine and support displaced workers where possible. Many highly skilled Ukrainian workers now reside throughout Europe and continue to be available for projects. Understanding this context and building it in to your organization’s talent strategy or contingent workforce strategy for 2023 is one simple way to not only support people in need, but also leverage a highly skilled talent pool.
Interested in going deeper on the challenges listed above? Want to get a full picture of the major challenges in expanding your contingent workforce program in Europe in 2023? Watch our full webinar replay, co-hosted with SIA.
If you’re interested in learning more about how Magnit is helping organizations implement winning contingent workforce programs globally, please contact a Magnit representative at firstname.lastname@example.org.
Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of Magnit and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.