Why payments are key to achieving a competitive edge when hiring from the modern workforce

The pandemic has driven an unprecedented shift in working cultures around the world. Formerly office-based workers have largely been able to continue business as usual from home, with many taking advantage of the greater flexibility by moving away from big cities and in some cases opting to work from another country altogether. Enabled by the latest technology, opportunities for gig economy workers also expanded during this challenging time. In 2019, Mastercard projected the gross volume of the global gig economy would grow at a compound annual growth rate of 17.4 percent until the end of 2023, a trend that has been accelerated and expanded by the events of the last two years.

What does the modern business look like as a result? The majority of firms will be faced with a more fragmented workforce, with COVID-19 also introducing recruitment challenges for many. Indeed, many businesses have reported difficulties filling vacancies at various levels whether on a permanent or more flexible basis. Yet alongside these challenges, many have been able to think more globally, either when hiring individuals from further afield, or by taking the opportunity to expand operations into new territories without the need to incur costly overheads for office space. This potential global workforce is also a boon to companies looking to hire as competitively as possible across worldwide markets.

On the employee side, the expectation to be able work from anywhere is unlikely to disappear anytime soon. And the pandemic-induced economic shock has increased incentives for workers to supplement their incomes by taking gig or flexible work. This creates several practical challenges for organisations looking to support an agile and evolving workforce, while reaping the benefits of hiring from a global talent marketplace, and meeting the expectations of gig-workers, not least when it comes to payments. 

Working across borders, currencies and cultures introduces many complications, as well as huge opportunities. And competition for workers is taking place against a backdrop of shifting trends and legislation that never stands still. An agile and global workforce offers vast depth of talent, but earning its loyalty with seamless, intuitive payments is anything but straightforward. Unpredictable payments are one of the most common reasons for independent workers to switch employers. For instance, gig workers on average earn about 58 percent less than full-time employees, and often struggle with cashflow problems. Every employer of remote workers expanding into new territories, or any platform connecting remote employers and employees, is in a continual arms race for talent acquisition. Since the first concern of any gig or flexible worker is to be paid promptly and with no hidden fees, seamless transactions offer the biggest possible competitive advantage. But arranging prompt, flexible and efficient payment to anywhere in the world is far from straightforward.  

The modern workforce is rapidly growing and changing. National regulators are rushing to catch up with the pace of change, and flexible workers’ own requirements are constantly evolving. Here are some of the main considerations that every employer and payroll provider must keep front-of mind in this market.

On-demand payments

Faster payments attract more workers and retain them for longer with a better experience. Because of the financial pressures that many workers are under, on-demand payments, arriving in or near real-time, are increasingly a need rather than an expectation, especially with the added economic uncertainties due to the pandemic. The age of many gig or flexible workers also plays into this trend. A significant proportion hail from younger, millennial and generation Z demographics. These new generations have grown up as digital natives and have brought these expectations with them into the workplace. Any employer who wants to avoid losing young talent to rival platforms needs to find a way to keep up with the standards they expect. In practice, this means faster payment cycles, as well as conveniences like self-service payroll.

New rights for gig workers

The modern workforce is developing rapidly, and so are the employment regulations that cover this new kind of flexible work. That complicates payment terms from one territory to another, and it is vital to keep on top of the latest changes. Some nations, especially in developed economies, are seeking to treat gig workers more like traditional employees, granting them more rights and putting greater onus on the platform through which they find work. For instance, in early 2021 the Supreme Court in the UK ruled that Uber drivers in the country were not independent contractors but workers for the ride-hailing giant, entitling them to additional worker rights, including paid annual leave and a minimum wage. As the definition of gig workers (and their employment rights) change, platforms will increasingly need to transfer money and benefits in real-time to align with the preferences of their workers.

Direct-to-bank payments

To serve the needs of workers in different countries, including those who are unbanked, access to a range of payment options is still key – from wallets to virtual debit cards. However, increasingly the one solution that gig and freelance workers prefer above all others is to have their money transferred directly into a bank account. Direct-to-bank payments may be increasingly popular, but they come with significant challenges. Banking regulations are strict and complex, and it is vital to work with a partner who is a licensed electronic money issuer or the local equivalent, who can hold client funds securely and ensure the necessary anti-money-laundering standards are met for international transfers, with Know Your Customer (KYC) and Know Your Business (KYB) information in place.

A considered payments strategy is therefore essential for businesses supporting workers across different countries, including those who are unbanked, with access to a range of on-demand payment options. Only then can employers gain a competitive edge and reap the benefits of all that the modern workforce has to offer.