As the cost-of-living crisis continues to reduce the living standards of large swathes of the UK population, many people have been taking on second jobs to make ends meet. According to research published by TotalJobs in March 2022, 17% of the nation’s workforce had started a so-called side hustle since the crisis began in Q4 2021.
An analysis by StandOut CV in March 2023 estimated that the “UK gig economy workforce” had grown to 7.25 million – and it’s clear that many people are still seeking fast and flexible ways to supplement their incomes today.
An urgent need to prioritise attraction and retention
Despite the strong supply of labour in the gig economy, managing this workforce is no easy task. There’s been a proliferation of firms whose services rely on and compete for gig and shift workers. Any company that keeps having to spend large sums on engaging new workers will struggle to turn a profit.
You need to stand out and do more than offer run-of-the-mill benefits
Phil Limmer is the financial product lead at Onsi, an on-demand pay (ODP) and benefits platform for firms engaging gig and shift workers. He stresses that these businesses must act fast if they’re to future-proof their workforces sustainably.
“Almost every industry in the gig economy has many competitors. And, because workers can choose how many shifts they do and for whom, it’s important to incentivise them,” Limmer argues. “You need to stand out and do more than offer run-of-the-mill benefits.”
There is a clear link between the right incentives and staff behaviour, with 85% of gig workers in the US saying they would work more often if they were paid faster. Yet many businesses are overlooking the vital role of accessing pay in building loyalty, according to Onsi’s head of marketing, Megan Crossley.
“It’s crucial to engage workers and keep them loyal,” she says, warning against the kinds of short-term inducements “we see a lot in busy seasons. For example, at Christmas, when a sudden influx of staff is needed, businesses might offer them more money as an incentive. That’s simply not sustainable, which is why they’re now seeking more innovative ways to stand out from the crowd.”
How offering on-demand pay can set businesses apart
Other names for on-demand pay
As a relatively new concept, ODP goes by a few different names. It might also be referred to as:
So how can a firm stand out in this labour market and maintain a sustainable business model in doing so? ODP is emerging as one solution. This service enables workers to access their accrued wages before their standard payday, giving them more control over their finances.
Given that so many workers in this sector value flexible work, it stands to reason that they would also be receptive to a benefit offering them flexibility as to when they get paid for it. Limmer suggests that this feature, combined with extra incentives for taking on longer or less desirable shifts, could also motivate gig and shift workers to stay with a preferred business.
One of the strongest business cases for using ODP is that it is a relatively new service in Europe, meaning that early adopters could gain a competitive edge in the battle for talent.
ODP has been particularly successful in North America. Its uptake there offers some indication of how it will be received on this side of the Atlantic. Indeed, Onsi’s work with gig and shift employers in Europe has shown promising results. Limmer reports that workers at these firms are opting into ODP at higher rates than at companies with salaried employees.
Big rewards without big headaches
Launching ODP doesn’t have to be a heavy lift, according to Crossley, who adds that it should end up saving companies both time and money. For starters, staff churn is costly, as is having to constantly raise pay rates to tempt workers away from the competition.
A 2022 survey of UK gig and shift workers by Onsi found that 90% would have considered taking lower-paid work if that had offered benefits or protections. This suggests that businesses don’t need to outbid each other on wages when competing for labour.
To ensure a smooth ODP implementation, new adopters should consider how the scheme will fit into their existing processes. Some firms build their own functionality, but this can be costly and operationally complex.
Partnering with a third-party provider often alleviates these pressures and can give a good return on investment.
“We’re always trying to think of the needs of the business,” Crossley says. “So we’re focused on slashing admin times, providing insights and analytics that matter and ensuring we’re meeting their workers’ needs. All of which contribute to lower costs across the business.”
It makes hiring easier, it makes retention easier and it makes marketing easier. It also takes admin away from the ops team
One of Onsi’s clients reported that adopting ODP had saved it six hours of administrative work each week – that’s the equivalent of over 40 working days per year.
One misconception that firms sometimes have is that implementing ODP will require a completely new payroll and impact cash flow. However, smart businesses are using it to simplify their operations, notes Limmer, who points out that Onsi offers full integrations whereby firms don’t have to alter their payroll arrangements in any way.
Crossley argues that “ODP makes sense. It makes hiring easier, it makes retention easier and it makes marketing easier. It also takes admin away from the ops team.”
But she stresses the importance of effective communication with the workforce to ensure good uptake. “If your workers don’t know this scheme exists, they won’t use it,” she warns. “That way, both parties would lose the value.”
Good for businesses and workers alike
Offering workers a more convenient pay cycle can even support their fiscal wellbeing. Onsi’s research has found that many gig and shift workers are financially insecure. More than a fifth (22%) of those surveyed had less than £2,000 in savings, for instance, while 39% had no money left to save each month once they had covered their essential living costs.
Limmer explains that ODP offers a return to a traditional arrangement covering many of the jobs that gig and shift workers have done over the centuries.
He adds that employers can also support workers by giving them relevant financial benefits, such as discounts on essential items and insurance protections. “These are the type of benefits salaried employees would simply take for granted,” he notes.
Stint, a hospitality staffing solution that connects venues to flexible workers, primarily students, has started to use Onsi Pay and Onsi Reward for its workers. Students often take on shifts lasting two to three hours at a venue’s peak period, which can fit into the gaps in their study schedules. This also enables the business to break up longer shifts into tailored periods of work to match demand.
“We’re very excited to launch ODP, enabling our Stinters to be rewarded instantly for their hard work,” says Hugo Murphy, the platform’s operations director. “With the cost-of-living crisis continuing to squeeze people’s incomes, it’s never been more important for us to ensure that our Stinters can access their funds when they need them.”
Gig and shift employers have a great opportunity to attract loyal workers without incurring huge costs or engaging in a complex and lengthy operational overhaul. Any firm that seizes the ODP opportunity soon could gain a significant advantage over its rivals.
Limmer observes that many gig and shift workers are deciding which firms they want to work for “on a daily basis. Access to earnings should be viewed as a key benefit. If you aren’t offering this, you will soon fall behind.”
Key lessons for gig and shift employers
What do businesses need to understand about their workforce and ODP in 2024?
