By Dr Han Jian

Limited labour mobility along with unbalanced supply and demand for workers will give rise to cross-enterprise and possibly even cross-industry employee-sharing, as well as other flexible employment arrangements. Globally, flexible employment is not new. In developed countries and regions, such as Europe and the US, such working arrangements cover 30%-40% of all employees. In China, companies in the catering, retail, and manufacturing sectors recently turned to employee-sharing and other flexible employment options to cope with limited labour mobility challenges caused by the coronavirus epidemic. As a result the topic is now in the news headlines.

China is undergoing a demographic change - the population is aging fast and the number of young and middle-aged people are decreasing rapidly, reducing the labour force. At a time when the country is adjusting its industrial structure, and enterprises are upgrading their products and services, the demand for knowledgeable and skilled employees is increasing, making qualified workers scarcer.

Epidemic prevention and control measures have limited the flow of people, further straining the balance between labour supply and demand. In response, many enterprises have rolled out various incentives to attract workers, even to the point of chartering buses or planes to pick up workers so they can return to work.

Flexible employment arrangements, which are expected to become more popular in the future, allow employees more room to choose employers and plan how they do their jobs, and allow enterprises to reduce fixed manpower costs and meet their flexible staffing needs.

The emerging flexible employment practices will also lead to increased demand for third-party employment platforms, the central role of which helps enterprises to speed up recruitment and staff allocation to cut costs and mitigate risks. The epidemic provides more opportunities to those employment service platforms which are better prepared in terms of technical capability and customization.

Businesses need to boost their capacity and expertise in two areas as flexible employment gains traction:

First, they need to refine human capital planning. Even before the epidemic outbreak, human capital planning in many firms was rather extensive but not refined. Most planning is conducted under the assumption the situation will remain static, leaving little room for coping with business uncertainly. Enterprises should take advantage of the crisis to re-evaluate their staffing system. Sample practices include further identifying core positions and talent required at each level, and how they correspond to changing strategy and market demands. They should also analyze the flexibility of supporting positions and personnel while beefing up efforts to retain and evaluate core talent. The quarantine policies can also accelerate firms’ digital transformation, and a smaller labour force push up the level of automation. Such trends in turn have prompted increasing investment in digital infrastructure and employee skill upgrading.

Second, businesses should keep fully abreast of the laws and regulations governing flexible employment. Existing government regulations and policies on flexible employment and contingent workers are fragmented, which results in various implementation challenges at enterprise level. To solve problems in short-run, it is imperative that leading enterprises share their experiences with peers in similar industries and regions

It is also important to realize that some “popular practices” are not necessarily “best practices”. For example, the recently emerging practice of “borrowing” employees may appear to offer companies in crisis due to the epidemic a neat solution. However, it is likely to create many challenges if put into practice during normal times. For instance, enterprises “borrowing” employees should have the capability to provide on-job training to help new workers quickly adapt to their new working environment. Other important aspects that need to be clarified are labour relations issues, work-related injury liabilities, and employment insurance. Meanwhile firms need to guard against potential risks such as the leakage of commercial secrets, and incidents which may befall contingent workers which could ruin the entire corporation’s reputation.  

Even without the epidemic, factors such as imbalance in labour supply and demand, cost controls, diversified skill needs, and external uncertainty,  will all continue to drive the need for more flexibility and cross-boundary liquidity in the labour market over the long term. Therefore, Multiple stakeholders such as government at various levels, business/law schools, professional associations and media should collaborate to help enterprises update knowledge and best practices in this regard. From the employee’s perspective, governments at all levels also need to accelerate legislation that protects the rights and interests of contingent workers and generate mechanisms to ensure their voices heard. 

Han Jian is Associate Professor of Management at CEIBS.