Over the last couple of years, the labor market has gotten increasingly tighter. In fact, in February 2022, the Eurozone’s unemployment rate hit a record low of 7%.
The bottom line: Tons of jobs are up for grabs, but there isn't enough talent to fill the vacancies. One potential cause might be because more and more traditional employees have turned to freelancing.
According to the European Commission, the freelancer market has grown by 45% since 2000. This isn’t surprising when you consider the flexibility that comes with this way of work. For starters, you have the freedom to choose your own projects, working hours, and you can work from any location.
Even as normality amidst the labor market slowly begins to settle, the same EU survey indicates that the labor market will remain tight. Businesses will be forced to raise wages as a result of this labor shortage and spikes in inflation. As a result of this environment, some companies may struggle to compete for local talent.
One potential solution to beating this tight labor market is to hire freelancers to plug your business's skills gaps on a short-term basis.
Intrigued? Continue reading to find out how your business could benefit...
Freelancing Is on the Rise
Before we go any further, it’s worth discussing how freelancers operate in this new labor market. You don't need us to tell you that since the pandemic, remote working is increasingly common. As a result, more and more businesses now have the technology to communicate and collaborate with workers further afield - even across the globe.
In light of this trend, it's no wonder that plenty of workers have realized the potential of remote work and are now offering their services on a freelance basis. There are currently 59 million freelancers in the US alone; that's over a two million increase since 2020! Not only that, by 2027, experts predict that more than 50% of the US workforce will be freelance.
The moral of the story: Freelancing isn't going anywhere; it's here to stay. This begs the question, how can you utilize this to your business's advantage?
Working With Freelancers to Combat Labor Shortages
It goes without saying that labor shortages present tremendous challenges for businesses. For instance, operations might grind to a halt, or you can’t meet growing demand, thereby missing out on revenue. Either way, there are several reasons why you might struggle to obtain talent in your area:
The local talent pool is small, and candidates based further afield are unwilling to relocate
You can’t offer high enough salaries or benefits packages to attract full-time staff.
Potential employees are looking for increasing flexibility and a better work-life balance and don’t want to commit to extended contractual obligations.
As we've already hinted, on-demand employees are the solution to many such struggles. For the uninitiated, they're not full-time employees in the traditional sense but rather part-time contractors (or freelancers) that work with you on an as-needed basis and move around your company like an extra layer of resources to your workforce.
Freelancers still sign a contract, but because they're technically self-employed, they aren't registered on your employee payroll, and you also aren’t obliged to provide the usual employee benefits and protections. Instead, freelancers determine their own compensation rate and stipulate whether they're paid on a per-project, hourly, or retainer basis.
The Benefits of Hiring Freelancers vs. Employees
In a near-on impenetrable labor market, the need for freelancers is evident. But, generally speaking, the goal of incorporating freelancers into your business model isn't to replace traditional workers. Instead, it's to create a hybrid force better equipped to deal with labor shortages, skill gaps, and areas where your team might lack expertise.
If you can’t find a full-time employee, a more flexible contractor might be the only option for quickly filling roles. But in addition to expedience, there are plenty of benefits to shifting your employment model to more frequently working with freelancers:
1. Boost Your Business's Agility
Working with freelancers better enables businesses to change strategy more spontaneously. With a traditional workforce, you can’t quickly replace talent, demand new skills and expertise, or easily remove workers who might not contribute as much to the project at hand.
In contrast, when you work with freelancers, all this becomes possible and is commonplace. If the needs of your business fluctuate, you can easily adjust your workforce of freelancers accordingly.
2. Generally Speaking, Freelancers Are Cheaper
While freelance rates may initially look more expensive, businesses can still potentially save money. Namely, because the overheads of such collaborations are often cheaper. After all, you don’t have to pay for sick days or provide expensive benefits like health insurance. Most importantly, however, a freelancer only works with you until the project is completed. This means you’re not paying an employee's salary during downtime between projects. Instead, you just pay for the work that your business needs.
3. Widen Your Talent Pool
Working with freelancers enables you to cast a significantly larger net. You can hire freelancers from other states or even in other parts of the world. Depending on the needs of your project, freelancers could either work remotely or look for temporary accommodation in your area.
Either way, permanent relocation isn’t necessary for freelancers; as such, the commitment to your company is much less significant than hiring a full-time employee. As a result, you're more likely to attract a larger pool of freelancers.
4. Access Specialized Skills and Knowledge
Often, on-demand talent is the easiest way to access specialized skills and expert knowledge in a specific niche. While your current employees might be well-versed in handling most of the day-to-day work, freelancers specialize in particular fields, making them a better choice for efficiently managing one-off bespoke projects.
5. Streamline The Hiring Process
Instead of investing months into hiring to find the right full-time employee, freelancers are well-versed in jumping straight into projects. As a result, the hiring and onboarding processes are usually much faster. This makes contractors a great option if you need to quickly meet a deadline.
How to Make the Most of Freelancer Collaborations During the Labor Shortage
Even if working with freelancers is only a temporary solution, you can make or break a collaboration depending on how you approach your relationships with your freelance talent. Therefore, fostering good relationships with your freelance talent makes sense, especially if you think you might need to use them repeatedly.
For instance, freelancers still need to understand your office culture and feel like a part of the team so that they can share in your vision. Needless to say, this also extends to providing all the support they need to deliver an outstanding service.
On top of that, here are a few extra tips on ensuring you make the most of your freelancer collaborations:
Develop a Relationship
Building on what we've just said, it's well worth getting to know your freelancers and ensuring they're engaged with the team. If you're unsure where to begin, you could:
Invite them to office socials
Introduce them to essential team members
Take the time to learn what they hope to gain from this assignment
Schedule regular check-ins
These are just a few suggestions, but you get the gist. Like any employee, taking an interest in your freelancers goes a long way.
Outline The Job Responsibilities and Your Expectations
You should manage job expectations just as you would with traditional employees. This means establishing your freelancer's responsibilities and what you expect from their work from the get-go. In turn, there should also be a chance for them to outline what they'll need from you. For instance, will they need access to particular software or equipment? How will the approval and feedback process work?
In short, it's imperative you create a clear framework for how your collaboration will work early on.
Provide Feedback, and Seek It in Turn
When it comes to managing on-demand workers, effective communication is critical. Unlike traditional employees, freelancers don’t have the time to slowly get to know you. Instead, freelancers need straightforward and regular check-ins so that they can adapt their workflows to meet your needs. Use this allotted time to provide feedback, discuss the project's progress, and get their unique outside perspective on your business.
When you find the perfect freelancer, stay in touch. Like regular hires, finding a great fit can be challenging. So don't let top freelance talent slip between your fingers. After a successful collaboration, add the contractor to your freelancer network.
With the help of a freelancer management platform, you can track essential details pertaining to your freelance networks - for instance, the freelancer's core skills, portfolio, qualifications, personal information, etc. With this information at your fingertips, assigning qualified freelancers to the projects you need to complete is much easier. At the same time, such software allows you to easily keep in contact with your network and check freelancer availability.
Want us to help you?
Fortunately, Bubty does all this and more. Interested in how this kind of software could help your business tackle such a tight labor market? Feel free to request a demo today to get a feel for what your business could gain from first-rate freelance management software?