A couple of weeks ago during our Center for the Transformation of Work (CTW) community call I had an epiphany. While so many in the first world, including the US, the UK and Western Europe, see Open Talent, especially gig work, as an existential threat to the status quo of work, other parts of the world see it as a way to help their people make economic progress.
We’re all familiar with recent laws that have been passed, from AB5 in California to IR35 in the UK, which put up barriers to new employment models, especially open talent and gig work. It’s even embedded in the collective mindset of these societies. In a recent New York Times article there was surprise that even with so many available jobs, how could there also be such a vast amount of opportunities for freelance and gig workers? The article even called out companies that took advantage of open talent as shirking their responsibilities by hiring people on a temporary, project basis off of platforms versus hiring them full time.
This mindset makes two false assumptions. First, the companies are at the center of employment, and the demand side of employment should be provided more deference than the supply side. This probably works when there is more demand than there is supply but when this formula is flipped and the supply side, the workers, have more power they can exercise choice.
The second assumption is that companies can manage the careers of workers better than workers can themselves. The paternalistic perspective might have worked when there was information non-parity and companies had more than workers, but now, with the digital tools available, there is information parity, empowering workers to have even more choice.
Now, back to our CTW call. On this call, Dr. Sakshi Khurana of NITI Aayog, a policy think tank of the Government of India, providing directional and policy inputs, brought a new perspective. She laid out the differences between India and other emerging economies with more established economies. Lohit Bhatia of Quess Corp Limited presented the astonishing fact that while first-world economies consist of roughly 68% of their economies being formal as defined by paying taxes, yet India’s economy only has 17% of its economy in the formal and taxable realm. The 83% are now screaming to take part in India’s new economy and the government is listening.
India and other countries have reacted differently to the open talent and gig economies. In 2020 the Indian tax authority changed the rules of what they consider to be part of their formal economy. They added platform work to the list of Permanent, Temporary, and Apprentice work. By doing so the Indian government mandated that platforms withhold 5% of their worker’s salaries to fund benefits through the government.
Dr. Khurana is confident that this shift will increase the ability of people, including rural women, to enter the workforce in a way that fits the demands of their lives and increase the government’s ability to increase tax revenue.
At Open Assembly and CTW we’ve seen this mindset shift from other countries as well and have had discussions with the UAE, Greece, Saudi Arabia, and Barbados. These countries look at the open talent economy as a positive. They see two pillars of this emerging segment. First, by helping their citizens work on platforms for first-world companies they can enter the workforce at a much higher level than they would be able to locally, creating a faster path to a middle class. They also view the power of remote and distributed work as a way to invite freelancers and remote workers to their country, through visas and incentives to create an instant middle class, the benefits of which will trickle down through their economies.
Many first-world governments and regulatory bodies have taken a scarcity approach to looking at the open and gig economies. They look at it as a threat to the status quo. While India and the governments we talk to take an abundant view of the emergence of this new employment model.
As Thomas Friedman said long ago, “The World is Flat.” If you’re looking for a software engineer with the exact same certifications, experience and ratings then why would you hire an engineer in Silicon Valley for $200,000 when you could hire someone in Medellin, Columbia for $50,000? In fact, $50k probably goes a lot further than $200k in the Valley.
Every company wants to work with the best talent. India is realizing that and helping to remove the friction to make the connection happen. The winners will be these emerging economies and their citizens. Unfortunately, the losers could be the first-world economies that will be rendered irrelevant as they protect an outdated, analog mindset.
