Flexible Workforce Can Help Employers Thrive During The Economic Slowdown
Posted 10-Oct -2019
The International Monetary Fund (IMF) warned of a major economic slowdown in 2019 on Tuesday (8, Oct 2019). “In 2019, we expect slower growth in nearly 90 per cent of the world. The global economy is now in a synchronized slowdown,” Kristalina Georgieva, Managing Director of the IMF said at the headquarters on Tuesday, Efe news reported. Growth is set to fall to its lowest rate while in the emerging markets like Brazil and India, the slowdown is even more pronounced this year.
Even the latest annual report of the RBI for the fiscal year 2018-19 (or FY19) confirmed that the Indian economy has hit a rough patch. The GDP growth rate of the economy has slipped to 5 per cent in the first quarter of FY20, the lowest in over six years. This is an indication of tougher times ahead. Be it the recent collapse of the automobile industry or the rising number of non-performing assets (NPAs), slow consumer demand or failing manufacturing sector; all have a contribution in this economic slowdown.
As a result, many small and medium-scale companies have been forced to lay off employees over the past few months to reduce production and labour costs. The impact is not only seen in the auto industry but in the ITES and Real Estate industries as well. And, if immediate measures are not taken, there could be a ripple effect across all industries. Hence, employers are being challenged to thrive through this economic slowdown by reducing labour costs yet attract and retain the top talent.
Every cloud has a silver lining and flexible workforce could be an answer here. According to a study by Regus, flexible working could contribute USD 367bn annually to the Indian economy.” The survey conducted by independent economists across 16 developed and developing economies stated “flexible working could save more than 3.5 billion hours of commuting time across these 16 economies by 2030.” Adoption of greater levels of flexible working will save businesses money, reduce operating costs and boost productivity, ultimately causing a ripple effect across the economy from core businesses through to supply chains.
Moreover, learning from the past downturn – “As per another case study conducted in the UK by the Recruitment and Employment Confederation (REC), after the Great Recession of 2007, it was found that organisations that adopted less traditional business structures were better able to compete and regain the commercial ground in the tough economic conditions.”
The report said: “The ability to respond quickly to fluctuations in demand is paramount to business survival. Employment rigidity is a significant barrier to such responsiveness and was a very real factor in the collapse of many organisations, and with them the loss of tens of thousands of jobs. Those companies that weathered the downturn best and are returning to growth the quickest are the ones where management and workers come together to develop new ways of operating.”
The report highlighted the adoption of the gig economy with increased use of freelancers, interims and temporary workers, together with a growing “projectisation” of work – where organisations hire expertise in on a project-by-project basis rather than sticking to rigid employment contracts.
Hence a greater openness towards flexible workforce has been a positive outcome of the previous recession. In fact, with the major shift in technology, the gig economy has become a key emerging segment in today’s generation of professionals striving to strike a perfect work-life balance. Therefore, this is the right time when employers and employees can have a symbiotic relationship and manoeuvre swiftly through the slowdown period. The early signs of a rapid adoption of the flexible workforce in India can be seen with 44% of employers offering flexible working hours to their employees and 81% of businesses have hired gig workers in the past 1 year already, according to a recent Corporate Gig Readiness report by Noble House.
While the gov’t bodies and think tanks come up with a solution to fight the downturn, employers too need to be innovative in order to be ready to sustain and sail through the tough times ahead.