Since the economic downturn of 2008, employers have been increasingly relying on temporary and contract workers, and this is expected to continue, which can be attributed to today’s talent supply and demand, says Ravin Jesuthasan, global head of talent management for Towers Watson.
According to the Towers research, a dramatic labor shortage is expected to hit the United States and the rest of the developed world in the next 10 years. As talent becomes scarcer and wages are more competitive, employers should anticipate seeing highly skilled talent turn to temporary positions.
“Initially, people thought this was just a phenomenon of the recession and uncertainty at that particular point,” Jesuthasan says. “With the labor shortage, talent is hard to find, and then what happens is as employees become hot commodities, we’re going to see a return to the movement in the ‘90s with the free agent employee.”
The labor market may be projected to tighten, but reliance on temporary workers isn’t necessarily bad for employers, Jesuthasan says. Temporary workers give employers greater flexibility in terms of managing the employment relationship, and an employer can access talent that typically would not be available. More employers are turning to project-based work, which often requires specialized talent. That highly skilled talent may not be available to most employers on a full-time basis, but those workers are more likely to be interested in a specific project that requires their expert knowledge.
“If I’m a financial services company that’s building a new platform, the likelihood of me hiring full-time talent who might otherwise go to a Google, Yahoo or Microsoft is very small,” Jesuthasan says. “But with contractors, I could access world-class talent like that – not for a life time – but for six to nine months to finish a particular project.”
Temporary employees are also less costly than full-time employees, Jesuthasan adds. Of course, employers generally do not pay for temporary workers’ benefits, but they often save on training, as well. Training can be a major expense, especially as companies are investing more in their employees. Thus, it makes more sense to bring in temporary employees who are ready to go without training.
From the employee’s perspective, it is easier than ever to gain traction in the temporary labor market, which has its advantages, Jesuthasan says. Assuming the health care exchanges are set up, temporary workers will have better access to some form of health care, and new online platforms are growing in number, providing more outlets to find contract work. As a temporary worker, an employee has the flexibility to work on projects he or she finds exciting and then move on to the next project. This arrangement allows for the employer to gain highly engaged and skilled talent while the temporary worker can pursue specific projects of interest.
Temporary workers are not necessary for every position, but they can help employers fill the skills gaps where highly skilled talent is needed.