HR Report 1
HR Report 1
HR Report 1
management
Thesis
By
Lolita Onayeva
2017
I would like to express my special thanks of gratitude to my professor David Starr-Glass for the
Besides my advisor, I would like to thank such intelligent and enthusiastic professionals
Angelica Gamidova and Jeff Medeiros for the opportunity to interview them. That was an honor
to me to spend some hours talking with such interesting, smart people who are fully dedicated
to their jobs.
Last, but not the least, I would like to express my gratitude to my family and friends for
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Table of Contents
Abstract……………………………………………………………………………..5
Chapter 1:
Introduction………………………………………………………………………...7
5.1Introduction…………………………………………………………………......41
5.2 Challenges for employers: the “psychological contract”…………..…………..43
5.3 Online talent platforms: types and aims…………………………..……………44
5.4 Better and more qualified matching between companies and employees…...…47
5.5 Reduction in the cost of employment/recruitment………..……………………50
5.6 Determining future skills and employee training…………………………..…..53
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Chapter 6: Practical part
6.Interviews……………………………………………………………...…..……56
Chapter 7: Conclusion
7.1Conclusion…………………………………………………………………….67
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Abstract
Doubtless, the nature of the work environment is changing dramatically and rapidly.
widespread use of the Internet are crucial factors that are causing these shifts. The
digitalization of the twenty-first century will have a significant impact on “the big
Firstly, the development of innovations and automatization has led to cuts in the
employment sector. Robots and machines that use Artificial Intelligence (AI) may
will fill many positions that are now occupied by humans. Hence, there is the threat that
Secondly, digitalization changes the traditional approach work. Innovations lead to new
etc. Such a trend is seen as both positive (at first glance) and a negative (after deeper
research). It is assumed that employees get more flexible conditions and a wider range
of choice; however, this is controversial due to the fact that workers do not have a stable
job with guaranteed benefits (a fixed salary or wage, or social protection and insurance).
Another change that has appeared from new types of employment involves legislative
and unstable payment from employers. These issues create an unhealthy environment
Also, digitalization seems more beneficial for employers rather than employees because
it puts aside companies’ responsibilities towards their workers. Also, online talent
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platforms allow employers to view a wider selection of potential employees. However,
more employees are steadily becoming self-employed individuals who switch jobs at
least once every few years. Hence, they are not interested in the success of the entity
they are working for because they realize that they will not be a part of it for the long
term. This fact results in a situation in which many employees escape their
The aim of this work is to analyze how digitalization impacts shifts in the employment
environment. To obtain a clearer picture, the paper observes these changes from both
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Chapter 1
Introduction
environment, having especially strong effects on the human resource (HR) sector. There
are a lot of opinions on, and predictions about, significant shifts in the labor market in
the near future. It is expected that machines will replace a huge number of jobs; hence,
the level of unemployment will dramatically increase. Machines have already occupied
a lot of finance-related jobs, and it is expected that the whole banking sector will
become automated. Also, new types of employment arrangements (freelancers, the self-
employed, contractors), which have appeared due to the development of the Internet and
other innovations, cause both threats and opportunities to arise for employers and
workers. From one side, the new types of employment are seen to offer a more flexible
schedule, but, from another side, the absence of standards in terms of office hours, sick-
leave, etc., may negatively impact the mental and physical health of such employees.
The aim of this work is to analyze the impact of digitalization on the shifts and changes
The first chapter provides the general picture of shifts in the employment environment
that are caused by the development of innovations, robotization and AI. It also focuses
on predictions made by authorities such as Frey and Osborne about possible changes to
and cuts in jobs in the future. It then provides data on the jobs that are at higher risk
The next chapter’s aim is to explain how digitalization changes traditional jobs into new
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freelancers, self-employment, crowdsourcing, contractors, etc., explaining the potential
benefits and challenges for employees. Also, it describes new skills that are needed by
Later the paper provides a discussion about the legislative challenges that occur with
new types of employment arrangements, and its influence on the confidence and
employees enough protection and lack legislative policies; hence, the question about the
Then the paper shifts from the employees’ perspectives and discusses the impact of
potential challenges that an employer may encounter, such as a lack of loyalty from its
employees, who do not feel part of the company (due to the frequently changing nature
of employment).
The paper also provides some views on the current labor market from HR managers in
the form of interviews. This part aims to obtain more opinions on the changes in the
nature of employment.
Lastly, the paper provides a conclusion about and discussion on the effects of
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Chapter 2
The impact of digitalization on future cuts in the employment sector and resulting
increased unemployment
This chapter focuses on the impact of digitalization on future shifts in the employment
sector. It mainly describes negative predictions of cuts in the existing labor market,
implementing new technologies. This section identifies the change from a traditional
approach to employment to a new one that mostly depends on such machines and
technologies. The term 'Gig Economy' and its effect on the future of employees and
employers are also analyzed. The chapter also uses the analysis and critique of Frey and
report that provides more accurate data on future shifts in the labor market, applying the
unemployment
Digitalization includes such aspects as automatization, robotization and the effect of the
is the polarization of the labor market. Studies presented in the ‘Employment and Skills
Aspects of the Digital Single Market Strategy' (Valsamis, Coen, Vanoeteren & Beken,
2015, p.36-37), show that there is a high demand for high-skilled workers, because they
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can manage new technologies and data processing, whilst the need for medium-skilled
decreasing, because they can be replaced by new technologies. The number of low-
services that need cheap labor to accomplish simple tasks. Therefore, the medium-
Automation is seen as a destructive tool due to its ability to replace human beings in
more than 50% of occupations. Machines and robots today may perform many tasks in
computers to manage different operations that were previously done only by humans.
Hence, there is the possibility that as machines evolution, they will entirely replace
positions. As a result, many employees will lose their jobs, and the unemployment rate
will increase. By way of illustration, the most up-to-date studies in the field of
employment have predicted potential job losses of approximately 35% in the UK due to
digitalization, with the sectors most at risk being office and administrative support,
2015, p. 20). The authors of the Citi GPS report have also argued that the future of jobs
in the service sector that involve repetitive actions, such as data or journal entries, are at
highest risk of being replaced by automatization. Michael Osborne and Carl Benedikt
Frey (2015) expect 58% of office and administrative work to be at risk from automation
(p. 30). High rates of unemployment may cause unpredictable issues for governments
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due to the need for pensions and a dramatic increase in benefits for such groups of
people. Hence, a demand for higher taxation and budget cuts may occur
However, from the side of companies, automatization is key to success, because it will
allow them to cut costs associated with employment, recruitment and training.
Corporations will not be liable to provide machines with pensions, health insurance,
sick leave or vacations; therefore, productivity will increase while responsibilities will
benefiting from the progress of the innovations sector. Being able to replace humans in
manufacturing, for instance, a company may increase total output, the quality of
products and the cost of it for the consumer. The cost of HR and other departments will
manufacturing process.
production process. It allows a huge range of different things to be created much faster
Many would perceive automatization and robotization as a destructive wave of the 21st
century, causing job losses and increasing overall unemployment, making the poor
poorer and the rich richer. Many would argue against such a stand point, however,
because of the numerous benefits from new technological breakthroughs. The health
sector is a great case in point and has many new technological aids that allow people to
medical care, many complicated surgical operations and procedures have become
possible. Another example is how some robots today are adapted to help disabled
people who are paralyzed, or have lost part of their bodily functions, to live a normal
life. However, the authors of the Citi GPS report have proposed that overall
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employment in the health care sector will decrease due to innovations such as ‘remote
health monitoring' that will allow the tracking of patients at home, and that as a result
will reduce both the number of care workers needed and of hospitals (Osborne & Frey,
2015, p.32).
Another area where robots have started replacing humans is in the military. Albeit
terrorists, in war zones. While on the one hand the aim is to protect conventional pilots,
on the other hand drone pilots may be many thousands of kilometers away and may not
consider certain facts and kill innocent people by mistake. That said, there is still at
least some element of the human factor now, but if future innovations allow drones to
make decisions autonomously, there is a huge potential for ethical and security issues
for the military sector to have to consider. Even such low-skilled occupations as
cleaning services are slowly being replaced by robots; there will potentially be no need
for maids, gardeners, or cooks. Machines could do such jobs faster and at a lower cost.
training, and talent acquisition is the development of Internet connections. The Internet
now enables people from different geographic locations, nations, and genders to meet in
cyberspace. Hence, it allows employers and employees to widen their searches. Online
talent platforms such as LinkedIn, Freelancer.com, and others are generating enormous
amounts of data, making a perfect match possible between employees and employers;
hence, the company may find an appropriate candidate outside of the city it is in. Also,
such platforms enable businesses to attract workers that are already hired by another
entity. In the past, such information was closed and confidential, but now everyone can
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Another aspect of the Internet's contribution is the possibility found in new occupations
and the self-employed. All these job types have occurred relatively recently. However,
they have already attracted a wide range of people who do not want to depend on a
are not able to work in the traditional full-time way, such as mothers, disabled people,
borders online opens up opportunities for many people from the third world to earn
Besides the attraction of flexible work schedules, continuing innovations have provided
many the possibility to engage people using C2C business platforms. Such platforms
include Uber, Airbnb, Etsy, TaskRabbit, etc. These websites and mobile applications
allow people to display their products or services that are attractive to others. It enables
people to start earning money in a non-traditional way, using their own resources such
as a car, a flat or some handmade products. However, access to a cheaper labor force in
a decrease in wages and social protection. So, the Internet and its abilities to match
people and provide flexibility may also negatively impact the domestic labor market
Gig economy
hours and days of vacation, as well as standard social security benefits, is gradually
economic sector as well. The term that describes this shift in the economy is the ‘gig
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that is based on people having temporary jobs or doing separate pieces of work, each
approach that does not require permanent employees, so the need for contractors and
destroying the traditional view of employment and the obligations of the employer. The
responsibilities it has for workers such as social and health protection. Arun
Sundararajan (2015), in the article ‘The ‘gig economy' is coming. What will it mean for
work?', has also emphasized the importance of the workers' protection, citing Hillary
Clinton's speech in which she mentioned: "This on-demand, or so-called gig economy,
is creating new economies and unleashing innovation. But it is also raising hard
questions about workplace protections and what a good job will look like in the future."
From the one side, the ‘gig' approach is building up the modern, 21st century economy;
from the other, it is totally destroying the original, long-established concept of the
workplace and its environment. There will be high liquidity of workers in companies
due to the project-based approach. Tom Vander Ark, CEO of Getting Smart, has
claimed: "Over 70 percent of Americans have used some sort of shared or on-demand
service, whether it's Uber for rides or TaskRabbit for tasks. One-third of American
workers are now engaged in some kind of freelancing, project-based work. By 2020,
about four in 10, or about 91 million, Americans will be engaged in quick "gigs" and
project-based work. We also think an equal number will work on or manage projects for
organizations. Many people will go back and forth between contractor and employee for
periods of time in the project-based and idea economy" (Horne, 2016). The gig
economy will cause significant shifts in the future of education and training. Companies
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will not allocate resources into training due to high employee turnover. Hence, workers
should already have the required essential skills and obtain missing knowledge by
themselves.
The gig economy, however, can create new job positions and positively affect the labor
market due to its task-based approach. It changes the traditional timeline of employees
making it more unstable and risky while at the same time providing more freedom and
flexibility. Arntz, Gregory, and Zierahn (2016) in their comparative analysis for the
OECD have analyzed the study by Frey and Osborne on the risk of computerization and
have provided their view on the issue. Their claim is that even if many jobs are at the
risk from computerization, the task-based approach will create a significant number of
new jobs that will not be attached to one particular occupation. According to Frey and
Osborne, computers and algorithms will replace approximately 47% of the total number
of employed people in U.S during the next few decades (p.7). However, this calculation
is based on the occupation-based approach, while the prediction that the authors
conclude from the task-based theory is more positive. According to the OECD's studies
that also refer to the PIACC database (Programme for the International Assessment of
Adult Competencies), the average percent of jobs that are at risk of automatization is 9
(Arntz et al.,2016, p. 8). People will switch between different projects and tasks;
however, they will still be in the labor force. The main issue in the prediction of the
future of the job sector is the occupation-oriented view; automatization and new
the amount of work will not decrease. Computers cannot replace real people when it
comes to face-to-face communication jobs or some tasks that aim to adjust robots.
Machines do not have imaginations and are not capable of spontaneous ideas; hence,
they cannot substitute humans in many areas. The administrative sector, in which all
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occupations focus on repetitive tasks that could be done by computer algorithms, is at
the highest risk. The structure of employment will shift to the more flexible task-
oriented approach. However, high-quality specialists that will manage and engineer
innovations, and therefore highly educated people, will be in increasingly high demand.
Arntz, Gregory, and Zierahn (2016) in their report have considered the relationship
between a worker’s level of education and the risk of automatization, concluding that
education and its structure is of huge importance, and as a result the higher the quality
of the worker the lower the risk of automatization (p.19) So, there are a lot of
employees may perform more creatively and demonstrate their knowledge. People will
be able to combine several projects and not be limited to one specific occupation.
Digitalization and the task-based approach is not an issue - it is the new form of the
employment. To fit in, workers and students will have to increase their knowledge and
develop the level of their education. Training and updated information are both essential
for future employment because things are changing so fast on the labor market.
however, digitalization and the gig economy lead to the development of an economy
and, in fact, provide a boost. Therefore, companies have to change their cultures to
in his article "Digital Transformation Doesn't Have to Leave Employees Behind", refers
to the study conducted by Roland Berger with the Bundesverband der Deutschen
Industrie (Federation of German Industries, or BDI) that deduced: "If Europe harnessed
digitization, by 2025, the continent could see its manufacturing industry add a gross
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value of 1.25 trillion Euros. The risks of failing to digitize are equally dramatic: by
missing out on digital transformation, European industries could suffer potential losses
of up to 605 billion Euros in the same period." Hence, people should reject biases
new jobs and lets many groups of people (mothers, the disabled, etc.) find a suitable
job. Companies will also gain from the ability to attract different intelligent, skilled
workers, and save money due to the reduction in costs that automatization brings.
The changing nature or recruitment, training, and talent acquisition shifts the skills that
are demanded; hence, people should obtain additional knowledge and qualifications to
be able to cope with the new conditions. The market needs are changing incredibly fast,
permanent job. Continual training programs and certifications are of huge importance in
the gig-economy based market today. The almost universal reach of computerization
means that people must be able to work with computers and algorithms. Everything is
transformed from paper to bits and databases. There is a significant number of programs
skills will boost their chances to be hired in the age of digitalization and provide them
significant number of occupations. At most risk are medium and low-skilled workers
journal or data entry. However, automatization allows companies to save money and
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employees to occupy more satisfying positions, if they improve their skills. The
Internet-based platforms that have come with digitalization are tools that allow people
to find more interesting, well-matched and flexible job. The Internet has already created
new types of occupations for contractors, freelancers, outsourced workers, the self-
employed etc. It enables people who could not work before to do so. All such positions
empower companies to reduce the responsibilities and costs associated with permanent
employees. These shifts have dramatically changed the economy and have created the
new term ‘the gig economy’. The gig economy refers to temporary contract workers and
the task-based approach. However, the gig economy is developing the global economy
today, so companies should adjust their cultures toward it to gain future revenues.
Employees need to develop their computer proficiency and be able to obtain new
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Chapter 3
This chapter focuses on the shift from an office work environment with traditional full-
employees to choose the conditions that are more suitable for them. The chapter will
provide in detail a description of the new types of work, such a freelance, self-
employed, or task-oriented, and consider the associated positive and negative aspects
for both employees and employers. Then, new skills will be discussed that are needed in
the age of digitalization, which has created such an array of new jobs. As was reviewed
in chapter one, a vast number of occupations will be replaced and disappear; however,
computerization and the Internet will demand new skills and create new jobs. Therefore,
the balance will be improved - people who now occupy low and mid-level positions
should obtain more proficiency and pass different training programs to stay employed.
gather people of all nationalities, genders and abilities to one place to give them a better
choice, and for employers and employees to find a perfect match. There are no
geographical or language boundaries that can narrow the search process thanks to the
capacity of the Internet. This chapter will discuss all these changes and how they reflect
on HR management.
traditional image of the average employee. The schedule that includes an eight-hour
workday, sick leave, holidays, vacations and awards is being gradually replaced by a
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flexible schedule that does not have any structure or boundaries. People work from
anywhere, at any time they want and on any day they can.
meaning that independent contractors who do not represent the company or its culture
are replacing the importance of the company to function as a single body with
Contractors
Companies prefer to hire different self-employed workers whom they do not need to
recruit as full-time employees and provide with several types of insurances. This type of
the company - they do tasks as external workers, not as a representative of the entity.
Dictionaries).
So, the company is not liable for the protection and social insurance of such workers,
while the self-employed are not obliged to come to an office and follow the rules of the
employer. The contractor gets the task that should be done according to the conditions
in an agreement, and gets a payment for this service; there are no other obligations from
either side. Such cooperation can be viewed from a positive and negative side for both
employers and workers. For the company, it is beneficial to hire different people to
perform a random task, and to not carry any responsibilities or obligations such as
health insurance, social protection, pensions, or additional benefits. However, from the
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other perspective, the company may lose its culture and strength due to a lack of
traditional workers who, in many cases, build up the foundation of prosperous firms.
Freelancers
contractor, but who can be characterized as having a less formal relationship. According
to the Oxford dictionary, a freelancer is “self-employed and hired to work for different
instance, in many cases are freelancers. Several magazines and newspapers can hire one
such person at the same time. However, they are independent and are considered
supernumerary employees.
people (even if they have a permanent job) work as freelancers to obtain additional
profits. Platforms such as Freelancer, TaskRabbit, and Amazon Services, etc., enable
people to earn some extra money, or to turn a certain job into a full-time occupation. As
a contractor for a firm, a freelancer does not have any limits on the number of daily
working hours, expected presence in an office or other such responsibilities. The work
As with a contractor, a freelancer enjoys a type of employment that also has positive
and negative aspects. Freelancing allows people to obtain several tasks from different
employees at the same time, and depending on the complexity of the task a person can
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negotiate the remuneration - only the deadline and some requirements (guidelines) need
be followed, otherwise the freelancer has absolute flexibility and freedom of choice
regarding when and where to work. One of the main issues that people have in their
to a freelance type of employment will be a possible solution for many who seek to
escape such stress. According to the Citi GPS report, “In Britain, the number of people
in self-employment has increased by more than 30% since 2000, with the result that one
in seven is self-employed. In America, the rise of self-employment has been even more
substantial, growing by nearly 50% over the same period” (Frey, C. B., & Osborne, M.
2015,p.65).
For employers, this system saves money, reduces responsibilities, and enables them to
attract different kinds of specialists without having to hire them. However, there is a
risk that freelancers will be underpaid due to the enormous competitiveness of the
employment market. Employers seek freelancers who can complete a task at a cost that
is lower than a standard worker demands; hence, companies will bias towards the
cheaper worker. To get a job, many freelancers lower the cost of their labor, and as a
result, the overall fee for freelance jobs may decrease. That will not only impact the
Outsourcing
When considering the newly created job title ‘freelancer,' it is important to mention
other types of jobs that flow out of it: outsourcing and crowdsourcing. According to the
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organization to do some of its work, rather than using its own employees to do it”
with relatively cheap labor costs, such as India. “Digital technologies such as cloud
outsource tasks, not only to more specialized locations or workers but also to emerging
The main reason companies use outsourcing is to reduce the expense of its employees.
It is more beneficial for the employer to outsource half of the work that does not
demand any specific knowledge of the company’s operations to a third party that can do
it relatively cheaply. Usually, work that is not related to critical thinking and generating
new solutions is directed to the other company or people to complete. Hence, businesses
and the country where the work is outsourced both benefit, while the domestic labor
Crowdsourcing
or just random people that want to earn some money, participate and cooperate, in some
cases even to find a solution to a particular issue (it may be related to a product or web
allows quite a wide range of data from different specialists or customers to be collected.
Hence, this collecting of information from different sides promotes better results.
However, there are also some issues that may occur, such as an overloaded of data that
will need additional sources to normalize, and the cost of labor will decrease due to the
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New skills that create new job titles
Without doubt, new types of employment enable people to have more flexible
schedules, to have more freedom in their career choices and to be mobile thanks to the
Internet. Digitalization creates new jobs that demand new skills from employees.
first and primary skill requirement knows how to use computers and the Internet. The
paper “Exploring the Digital Nation” (Strickling, L. E., & Doms, M., 2013) analyses
Internet usage among diverse groups of people and explores its impact on society with
regard to employment, health and communication. The paper claims that the increasing
adoption of the Internet will positively impact both employment, by boosting it in the
health sector, and society, through communication (p.5). People that know how to use
the Internet and new technologies are most likely to find better offers on the labor
market. Also, the fast-changing nature of employment in the digital age requires
workers to boost their qualification and knowledge through a different kind of training -
most of which involves online courses. Hence, to be able to obtain work and get new
skills, people must have the basic capacity to use computers and the Internet.
E-skills
Other crucial skills that are essential to obtain are ‘E-skills’. According to the Eurostat
and develop them.” E-skills are divided into three categories: ICT practitioner skills,
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• “ICT practitioner skills are the capabilities required for researching, developing,
systems.”
• “ICT user skills are the capabilities required for the effective application of ICT
systems and devices by the individual. ICT users apply systems as tools in support of
their own work. User skills cover the use of common software tools and of specialised
tools supporting business functions within industry. At the general level, they cover
"digital literacy".”
provided by ICT, notably the internet; to ensure more efficient and effective
So, it is not enough to know how to use modern technologies - it is important to be able
skills of employees so they can perform tasks; therefore, it is crucial to have such skills
in order to stay employed. Otherwise, there is the huge danger that a worker shifts to
method. According to the Eurostat data for the EU-28, approximately 56% of people
have obtained E-skills by the learning-by-doing method, and 51% with the help of their
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friends, colleagues, etc. At the same time only 28% of individuals have preferred to
acquire E-skills through different education providers such as schools, universities, etc.
(Valsamis et al., 2015, p.40). From this information, it may be concluded that most
people do not fully realize the significance of obtaining E-skills, hence, they prefer self-
However, the picture will change with the growth of digitalization’s impact on the
employment sector.
Another change that digitalization has brought to work-skills requirements is the need
for new generic skills. According to a study conducted in 2011 by the Institute for the
Future (IFTF), the following important generic skills may need by a person to be
• “Sense Making: The ability to determine the deeper meaning or significance of what is
being expressed. Critical thinking is one of the skills that machines do not have.”
• “Social Intelligence: The ability to connect to others in a deep and direct way, to
collaborate with others and to process information quickly and respond appropriately.“
• “Computational Thinking: The ability to translate vast amounts of data into abstract
• “New-Media Literacy: The ability to critically assess and develop content that uses
new media forms, and to leverage these media for persuasive communication.”
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• “Cognitive Load Management: The ability to discriminate and filter information for
have to acquire both E-skills (that include ICT practitioner, ICT user, and E-Business
skills) and new generic skills (such as Sense-Making, Social Intelligence, and Virtual
New types of jobs that it creates, such as outsourcing, crowdsourcing, freelance, etc. do
not demand a place of work in a particular location; the workplace transfers from a
work, or their labor may be underestimated and underpaid). This absence of limitations
enables people to reach markets that had been closed for them previously. Thanks to
digitalization and its impact on the increase of self-employment, individuals may work
across geographic regions is seen as the biggest benefit of cloud computing” (Oxford
Economics, 2012, p. 9). Great examples are online platforms such as eBay, Etsy, etc.
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Etsy, for instance, allows self-employed individuals (sellers that can open their online
shops offering their crafts on the website) to access a significant number of customers
from different countries for an incredibly low price. According to the Citi GPS report
workers” (Frey, C. et al., 2015, p. 65). Also, new technologies enable an E-business to
prosper due to the relatively low investment and operating costs involved. Only a
recruit contractors, the self-employed and freelancers, and outsource many tasks so as to
escape the liability of hiring employees, and avoid paying additional tax and social and
Besides all the possible benefits that digitalization provides to employees, there are
some negative aspects. The new approach to the work environment and the way
there are several risks that these types of employment may cause people.
Firstly, it seems more beneficial for the hired side (contractors, freelancers, etc.) to have
absolute freedom of choice over the place and time of work; however, they have to meet
deadlines that are set by the employers, otherwise they will not get an appropriate
payment. Such workers are not paid regular salaries and are obliged to complete one or
several specific tasks by an agreed date in order to receive payment - the employer is
not required to pay fixed salaries, wages, insurances or provide office space with other
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facilities; hence, it could be concluded that the new types of employment are more
beneficial for the companies rather than the workers. Nevertheless, such employees
have to spend extra time to comply with the agreed deadlines, so may be more stressed
and anxious.
Another concern that may occur is a lack of the personal time and space. People that
work in an office according to a regular schedule tend to perceive time out of the office
as non-work time. So, they can turn off their mobiles and be offline, spending time with
their family or friends. New types of employees, on the contrary, are always reachable
through the Internet. They cannot switch their mobile devices off because their job is on
the devices. Hence, these individuals become more detached from their families, and
they almost have no time free of online connection. There is a blurred border between
As a result, there is a huge risk for these employees that they become overstressed,
overwhelmed and psychologically unstable. The issue of sleep disorder may also occur
because of the unregulated work hours, and the inability of many individuals to manage
their time.
The new structures of employment may change the conditions and work environment
for people, making them more flexible in terms of time, location and some tasks they
can perform. These workers can simultaneously complete several tasks and may work
anywhere at any time. They can switch tasks, occupations, and locations. However, they
miss the opportunity to be part of a company’s culture, to get a stable salary, and to
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receive social protection and health insurance. They can be mobile, but this mobility
also means that they are obliged to be online 24/7, again possibly causing mental issues
and an inability to properly manage their time. Also, the new approach to talent
acquisition demands new skills from people. They have to be extremely familiar with
the Internet and obtain both E-skills and generic skills. As a result, digitalization obliges
employees to learn more skills and attend different training courses to be able to be
recruited. Digitalization does indeed provide benefits for employees; however, the gain
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Chapter 4
regarding the policies and regulations that should be adjusted. As has been mentioned in
reducing the number of occupations and creating new types. Such new jobs contain
other requirements and treatments from the employers. Hence, standard policies and
regulations have to be reconsidered and adjusted. The rules and regulations that exist
now are focused on regular full or part-time employment; however, there are no
risk of mistreatment from the side of their employers regarding low wages, lack of
social protection and medical insurance. As has been discussed in chapter three, new
forms of digital employment put aside liabilities from the hiring side.
Hence, many employers may take advantage of this fact and unfairly treat the workers
they hire. Therefore, the government should take control of the defining of the new
existing policies or implement new ones. The responsibilities of the employers and
The shift that digitalization has brought to work has changed its nature, and as a result,
the way companies treat their new employees, such as contractors, freelancers, etc., has
significantly changed. The companies are empowered to reduce their liabilities towards
such employees due to a lack of policies and regulations from the government’s side.
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To obtain the same rights as regular full and part-time employees, the self-employed,
freelancers, etc. should receive recognition and thus written rights from the appropriate
According to Kathleen Walker Shaw (2016), the rapporteur of the European Economic
and Social Committee, “Some new forms of employment have been driven by a desire
to avoid the costs and obligations of more standard forms of employment. There is a
risk that without effective rights and protections, monitoring and enforcement, many
new forms of employment relationship will result in a race to the bottom of pay and
conditions, and fuel widening income inequalities, thus reducing disposable income and
suppressing demand and potential for economic growth across the EU and lead to
their levels of pay and conditions through collective agreements is vital to maintaining a
living wage”.
A prime example is the issue that has arisen with the modern platform Uber. It once
have to be considered. The question that has occurred in court is whether Uber drivers
are Uber’s employees (meaning the company is entirely responsible for their health
insurance or taxation and for potential risks that they can be exposed to, such as
collision with another car) or independent contractors? It is not beneficial for the
company to consider the drivers as its employees because it means that Uber is liable
32
for everything and will lose money. However, the company binds its workers with so
many limitations that are not common when the person is an independent contractor.
Uber, it can be argued, treats its drivers as its employees and demands appropriate
independent employees. Alan Hyde (2015), Professor of Law and Sidney Reitman
Scholar, in his article “Uber drivers stuck in legal limbo as US labor laws fail to keep
up” cites the Supreme Court’s note: “the line between employee and independent
Hence, unfair employers may easily violate the rights of contractors while there is no
legal framework that can legitimately deal with such issues. Therefore, new types of
employment have to be covered by the same rights as are traditional types, through
appropriate policies and regulations that will oblige employers to provide them with the
Traditional contracts and bargains are not suitable for new types of employees
working hours and the workplace. Also, as already discussed, those people are hired to
complete specific tasks, and they are not considered part of the permanent collective.
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Wage discrimination: due to the quite high competition among freelancers, contractors,
outsource workers, etc., an employer can decrease the payment to a minimum and still
find a person who will agree to complete the task for such a low amount. A great
example that illustrates this point is the online platform Freelancer. It works as follows:
an employer places a task, the deadline, and the payment range (for instance 30$-50$);
freelancers then bid on the task and usually try to put a low price to have more chance
of winning - as a result, the employer can choose the workers that can do the task for
way, and determine such limits on appropriate payments. Hence, this trend may
decrease not only the payment for the new types of employees, but also reduce the
overall cost of labor in the world, because companies would prefer to outsource a
Social protection: the main feature that attracts many people to switch to freelancing
and self-employment is the flexibility available in terms of time and location. There is
no need to wake up early in the morning and go to an office that may be located far
from home, and people do not have to then spend hours in the workplace. The new
types of job allow individuals to work from anywhere and at any time that they prefer.
It is indeed convenient because there is an enormous number of people that are not able
to concentrate in the morning, while the peak of their activity starts in the evening.
Thus, such people prefer to leave their tasks until the night. Others cannot complete a
task in one sitting, so they do parts during the whole day, keeping their laptop or other
34
electronic devices with them. Today, many coffee shops and small cafes have turned
into offices for many of the self-employed. Freelancing enables individuals to make a
However, such non-traditional workers can be at risk from always engaging with their
work, because there are no limitations on their work hours as exist in traditional forms
of employment. So, because freelancers, the self-employed, etc., work from anywhere
at any time; they do not have boundaries between their job and free time. This could
negatively affect their social life, their family relationships and even their health. The
authors of the study “Employment and Skills Aspect of the Digital Single Market
Strategy” assume that the flexibility that new types of employment provide may also be
considered negative because “increased work intensification and the obligation for
workers to always be available may cause stress and burn-out. Moreover, there are also
concerns about access to social protection for workers under these flexible work
Also, as a freelancer or contractor, a person does not have any protection from the law
company has to give an employee one or two months to find a new job (meaning the
worker is warned that he or she will be fired after the stipulated period). A company
may fire non-traditional employees at any time it considers that the quality of their work
is unsatisfactory or that their services are no longer needed. As a result, there will be no
social protection from the government because there are no policies covering the
35
A pension is another type of social protection that is at risk of disappearing for new
Health insurance: another aspect, besides social protection, that is typical for
for people such as builders, who are engaged in work that involves a higher risk of
the new types of employment are not able to obtain the same rights as traditionally hired
employees and cannot get the medical protection from the company paying them.
Because these individuals are not employees of an enterprise in the traditional sense,
they are not able to get the same treatment, because the enterprise is not liable for them
Hence, it is not obligatory to provide them with medical insurance and other social
benefits. The huge majority of employees that shift from a traditional approach to the
new digitalized one suffer from mistreatment by companies - a lack of health insurance
is one example. Even if an individual is not a part of a company, there still have to be
policies and regulations that will ensure he or she has the same rights and receives the
36
Taxation policies
Another key issue that arises from the digitalization of the workplace and its impact on
policies and regulations is the adjustment of tax requirements. There are many types of
taxes that companies have to pay to operate legally - one is employee tax. However,
new kinds of employment (freelance, self-employment, outsourcing, etc.) are all non-
permanent, and, as discussed earlier, the company is not liable for such workers’
insurances and taxation. Many freelancers work without any contract or sell their craft
individuals sell different products that they have made or bought). Outsourcing is also
linked with jobs done through the Internet by people from other countries.
In the case of the self-employed and contractors, they are usually liable to pay taxes for
and tax them appropriately. For the outsourced labor force, the issue is even more
complicated because such workers may be from other countries and may complete tasks
Another similar issue involves online platforms, such as Uber, that allow customers to
provide services to other customers. Uber operates in many countries, but it hides its
profits in offshore, tax-friendly countries, and the countries in which the company
makes money, and replaces traditional taxi service firms that pay taxes to those
particular countries, suffer. For instance, in the year 2014 in the UK, Uber paid £22,134
in corporate tax while its profit was £866,000 (“Uber pays £22,000 tax on £866,000 UK
profit”, 2015). The company generates huge profits; however, due to digitalization,
there is no need for it to have branches in every country it operates in, because it runs its
37
business through the Internet. Therefore, Uber can officially move its headquarter to the
state with the lowest taxes and avoid paying huge amounts of money.
Both states and workers may be harmed by the unregulated actions of such platforms as
Uber. Hence, the question that arises is who is liable for the payment of taxes - the
company or the temporary employees? And to which state do those taxes have to be
paid? The issue of jurisdiction is the crucial part of the taxation agenda because, as
stated in the EU Policy Department’s report ‘ Tax Challenges in the Digital Economy,'
where they are obliged to pay their taxes. E-commerce eliminates the need for a
physical presence or nexus of a company in order to have access to its customers there.”
Hence, the digitalized economy empowers businesses that run E-commerce to avoid tax
payments in the countries they operate in, due to a lack of jurisdiction. The government
has to regulate and adjust its legislations to prevent such platforms - that are not
physically present in each country they operate in - from inappropriate conduct towards
taxation policies. Also, the digitalized economy’s products, such as intellectual property
or patents, are intangible. Hence, it is complicated to determine their real value, and
All such issues with taxation in the digitalized economy may negatively affect both
employees and states because online platforms that provide services may escape paying
tax in the country they operate in, while at the same time they can offer cheaper services
38
that replace traditional companies on the local market and people may lose their jobs.
commerce businesses, and individuals that prefer new types of employment, such as
freelancers.
The authors of the paper “Digitalisation for equality, participation and cooperation in
industry” represented by the IndustriAll European Trade Union, also observe this issue
• “The labour law and collective agreements applicable to a given employee must be
that of his/her physical place of effective work, i.e. also his/her home if s/he works
• “The tax regime applicable to the company's profits should be determined according
to all firms having employees that physically work in more than one Member State of
the EU.”
So, to prevent unfair practices involving tax avoidance, the report suggests focusing on
the countries in which an employee has a physical presence, rather than the settled
headquarters of the companies. This approach will lead to the stabilization of tax
collection from firms that operate within several territories, increasing transparency and
fairness.
39
Rights of employees and employer responsibilities
To keep the labor market safe in the digital economy, the rights of employees and the
Information Systems and Services, The University of Sydney, in his article “Protecting
the rights of the digital workforce in the ‘gig’ economy,” claims that “basic issues such
bargain collectively for a decent minimum wage and conditions; and the need for
balanced service-level agreements, must all be dealt with fairly.” New types of
adjust existing rights or generate new ones. Otherwise, those individuals lack legislative
protection and may suffer illegitimate treatment from the hiring side. Also, the rights
and duties of a company towards these new types of employees and its taxation
individuals they are hiring, even if those people are external workers. The government
has to determine the legal obligations of employers to prevent unfair treatment of their
Digitalization may be perceived negatively due to its unfair treatment of new types of
legislations and policies towards E-commerce businesses, those companies now gain
from the new Internet approaches. They can cut their costs and reduce responsibilities to
their employees (such as contractors, freelancers, etc.) and to the governments of the
countries they operate in. To protect workers from unethical treatment, the existing
regulations and policies have to be adjusted or transformed. Otherwise, many new types
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Chapter 5
discussing the potential opportunities and threats that they may experience. As has been
mentioned, the changing nature of employment has dramatically affected the conditions
experienced by employees. However, employers are also affected by these changes and
This chapter’s aim is to look at digitalization and its effect on the work environment
It focuses on both the challenges and potential gains. The main challenge that is
analyzed in the chapter is the unstable relationship between employee and employer,
possibly decreasing productivity and worker output. For the purpose of better
The huge advantage of digitalization for employers is the Internet’s capacity to provide
This chapter describes new methods of recruitment and training through online talent
platforms. Mainly it discusses the impact on productivity, quality, and fit of the
employees for employers. Online talent platforms provide almost unlimited access to
different labor markets that enables employers to widen their choice and find the best
making online platforms the leading tools in recruitment and talent acquisition. The era
of printed resumes and advertisements in job columns of newspapers has been entirely
41
replaced by the new digitalized approach that uses the Internet as the primary tool for
Also, those platforms allow skills to be defined that are urgently needed on the market,
and provide people with this information. These skills may be predetermined by online
talent platforms by analyzing the significant amount of data that goes through them
(meaning that employers try to find people with essential skills by posting details of
positions on online platforms or using keywords in outreach. Hence, the system may
analyze this data and conclude what training people must complete to be competitive in
the labor market). This feature of digitalization is also beneficial for employers because
they do not want to spend resources on training and educating employees who may not
stay in the company for a long time. Instead, they create the need for specific skills and
expect potential candidates to get those skills (by spending their own money).
However, some platforms have damaging effects on employers. Such platforms are
service providers, including the well-known companies Uber, Amazon Services, etc.
Their growth has caused many companies to experience huge losses because they are
not able to compete with platforms that have such marked price advantages and that are
more convenient for customers to use. They also embrace the new types of employees,
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Challenges for employers: the “psychological contract”
Without doubt, the changing nature of employment has affected both employees and
employers. In the previous chapters we discussed its effect on workers, both potential
opportunities and threats. Now, it is time to discuss what challenges the employer has to
overcome and what effect they will have. A good relationship between an employer and
his/her workers is a crucial part of the success of any company. As long as employees
are dedicated to their work, they are able to boost the company’s output and, as a result,
profit. However, no one will spend his or her time and energy without expecting good
rewards in terms of payment and the promise of a long-term relationship with the
company.
individual’s beliefs concerning the mutual obligations that exist been him/herself and
So, there is an intangible and unwritten agreement between the employee and employer
that supposes that there is a set of mutual obligations that have to be fulfilled to satisfy
both parties. In other words, the employee wants to receive a guarantee that he or she
will get appropriate reward and will stay at the company for a long-time, while the
employer needs workers to be dedicated to their jobs and do their best for the success of
the entity. The psychological contract, and its fulfillment by both sides, makes the
However, the issue that arises with digitalization and new types of employment is the
increasing distance between companies and workers. The shifts in the work
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environment have led to a constantly widening gap in the relationship between
employees and employers. Since there are fewer and fewer companies in which workers
can stay for several decades, workers’ trust and dedication to the entity decreases. It
tends to be that an employee changes jobs and locations more frequently than 10-15
years ago. The new digitalized environment encourages companies to neglect their
As a result, the psychological contract between the parties is weak due to the lack of
confidence in the long-lasting nature of the relationship. Knowing that he/she may be
replaced by a machine or fired because of cuts in the workforce, an employee will not
fulfill all his/her obligations of the psychological contract towards the company – the
lack of trust and loyalty to the employer takes over. This issue may dramatically affect
the output and productivity of workers, and, as a result, affect an employer’s status in
Online talent platforms that started to appear less than two decades ago, and which have
already significantly changed the nature of recruitment and employee acquisition, are
one of the primary tools offered by digitalization. They empower both traditional
workers and new-type employees to find work. These platforms allow people from
different countries with random skills to find a better fit with potential employers. Many
of these platforms are already of enormous importance in the labor market. For
example, LinkedIn is “the world's largest professional network with more than 433
million members in 200 countries and territories around the globe” (LinkedIn). To
44
generate such an enormous number of profiles from people across the globe, in one
place, would be almost impossible without digitalization and the advent of the Internet.
A McKinsey report called “A labor market that works: Connecting talent with
opportunity in the digital age” (Manyika, J., Lund, S., Robinson, K., Valentino, J., &
Dobbs, R., 2015,p.31), divided other such platforms into three categories, according to
The first group is the online talent platforms that aim to match individuals with
Careerbuilder, etc.
The second group of online talent platforms is focused on matching services and
workers with each other (contingent) such as Uber, Etsy, TaskRabbit, Amazon Home
The third and last group is aimed at discovering talents, and the most popular platforms
recruiting platforms that aim to match employees with the employers, have an almost
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and find better fits for both. The LinkedIn network, for instance, has more than 433
million members and according to a McKinsey report “facilitated nearly one million
new hires in 2014” (Manyika, J., et al., 2015,p.4). The Monster platform receives 29
resumes every minute, while during the same minute 7900 jobs are searched, and 2800
jobs are viewed (“Monster”, 2016). The online talent platform Glassdoor provides
potential employees with full information about companies and the conditions within
approval ratings, salary reports, interview reviews and questions, benefits reviews,
office photos and more. Unlike other jobs sites, all of this information is entirely shared
Thanks to these platforms, a company that wants to hire a candidate who meets all its
requirements, and a worker seeking to find the best workplace conditions, both benefit.
The crucial advantage of those networks is that the information about the companies is
open, as is access to the employees, even if currently employed in another firm, as they
still have their profile on LinkedIn where they keep all relevant information (as an
online resume). So, if a company decides to hire someone with particular skills, it can
‘steal’ the worker from its competitor. Before digitalization, all profiles were closed,
and it was complicated to find information about workers that were already employed.
However, online talent platforms have dramatically changed this. Therefore, this
transparency somehow makes companies provide better conditions for their employees
and treat them better to keep them. The platforms generate an enormous amount of data,
so they can provide a better match, and as a result, more people will be recruited and
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Better and more qualified matches of companies and employees
Digitalization also connects people that want to provide services with those who want
them, and online platforms such as Uber, Etsy, TaskRabbit, Amazon Home Services,
which individuals may promote themselves and their skills to a wide range of potential
customers. For instance, Etsy is an online network that enables sellers of handmade
craft to create a shop inside the website and sell their creations to people from different
countries and territories. The seller pays a fee for each item listed in the shop, and pays
a percentage commission of each sale; however, it is still quite a low price compared to
the amount some would need to pay to open a real store and put their handiwork there
(“Etsy”, 2016).
Uber is another platform that enables people that have a car to earn some extra money
by working as a taxi driver, and for customers to get a cheaper ride. TaskRabbit and
Amazon Services allow customers to find individuals that offer to do repair jobs around
the home. Upwork creates an online workplace for freelancers all over the world. All
together, these platforms create value for freelancers by empowering them to deliver
their services to a wide range of customers. Those consumers may also be small
companies (start-ups) that are not financially able to hire all workers on a full-time
basis. So, they can hire them as contractors, or freelancers to complete temporary tasks
For instance the Upwork online talent network “has created online marketplaces
connecting some four million businesses with more than nine million freelancers from
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180 countries, performing tasks such as web development, graphic design, and
However, there are potential downsides as well because the traditional companies that
were previously performing such tasks or services may face issues. For instance, Uber’s
online platform is already causing many problems for traditional taxi services. The
South Korea, and some states in the US. (Khosla, E. G., 2015). There are several
reasons for this. One of them is that Uber drivers do not need to have an exclusive
license like the one regular taxi drivers are required to obtain (a procedure for Uber
drivers does exist, but it is much easier), hence, this absence of regulations makes it less
safe and illegal in many countries. Another issue that Uber’s activities has raised is the
competitive standards of taxi services, which have dramatically decreased due to Uber’s
quite cheap tariffs. Hence, many taxi companies lose profits and a significant number of
clients.
services are suffering because they cannot provide the same facilities at such low prices
without experiencing losses. So, many people that are employed in traditional
companies may be dismissed, because it will not be profitable for many such businesses
to continue to operate.
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Doubtless, digitalization and its impact on employment methods through online talent
platforms has changed the nature of recruitment and talent acquisition. The McKinsey
prediction model estimates that those platforms may “raise global employment by 72
million full-time-equivalent positions (or 2.4 percent) by 2025.” Also, this model
predicted that many people will work extra even if they have a permanent job; the
report claims that some 200 million will add some extra hours and that they will work
through the contingent online platforms (Manyika, J., et al., 2015,p.9). So, online
platforms may encourage individuals to work more and give them the opportunity to
find more possibilities, and as a result, the overall number of employed will increase.
The great opportunity that online talent platforms give to both employees and
employers is that they provide a better match up between them. It is quite common that
a company cannot find appropriate candidates for positions; likewise, individuals with
high levels of proficiency are not able to find a position or company that will provide
approximately 37 percent of employees are not satisfied with the positions that they
occupy and the way the company they work for treats their skills (Manyika, J., et al.,
2015,p .17). Also, the dissatisfaction of workers is caused by low wages compared to
workers’ levels of education and proficiency. “In the United States, for example, more
than one-quarter of workers holding bachelor’s or advanced degrees earn less than the
median annual wage for two-year associate degree holders” (Manyika, J., et al.,
2015,p.24). This issue may be resolved by online platforms because they provide a
wider range of choice due to the absence of geographical borders and the capacity to
49
The same issue is rising among employers; many admit that it is difficult to find a
candidate that will fit their criteria. “Thirty-six percent of the 37,000 global employers
surveyed by Manpower stated that they could not find the talent they needed, in 2014.”
(Manyika, J., et al., 2015,p.18-19). So, online talent platforms enable employers to
widen their search by posting their job offers on those networks that generate enormous
amounts of data about potential employees. Also, they can search outside the borders of
their city or country. The same is true for workers that have the opportunity to seek job
So, online talent platforms are great tools to match employees and employers together,
and both can benefit from this. However, there is the possibility that the cost of
employment will reduce since a company may find the proper fit in countries with
lower average wages than in its country of operation. Such platforms also allow
(including crowdsourcing) and freelance platforms encourage the decline of wages (as
discussed in chapter two). The growth of the usage of these platforms may also decrease
recruitment and talent acquisition. Giam Swingers (2012), CEO of Deloitte Australia,
claims that the use of social media networks such as LinkedIn, Facebook, and Twitter in
recruiting new employees “has increased the ability of companies to promote their
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employment propositions and find quality people.” For Deloitte it has also reduced the
changed the nature of how employment is offered. The offline way that companies
departments. The information about employees was quite confidential and it was a
complicated and lengthy process to create portfolios. The whole process was long and
expensive. Online talent platforms now make the process more efficient, more
accessible and less costly. Companies do not have to spend huge amounts on HR
departments or external recruiting firms. Online talent platforms allow access to the full
range of potential employees; hence, there is no need for costly advertisements and
other campaigns to attract workers. Moreover, before these new networks existed, the
range of choice was quite small - to obtain a desired employee from another country
was complicated and involved many mediators, such as recruitment agents. The
recruitment and talent acquisition process before digitalization was quite expensive and
demanding. All the information on workers and their conditions was confidential.
Hence, companies were not able to get access to this data from another company, just as
employees were not able to widen their search for a better job.
Cecilia Chen and Marcus Haymon (2016), authors of “Realizing the potential of digital
advertisements, recruitment agencies, etc., are inefficient, costly and slow. In contrast,
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online methods of talent acquisition allow more transparency among companies due to
the need to maintain a good reputation to be then able to attract more employees, reduce
costs and the time invested, and enable workers to show more skills and experience
(p.2).
Nevertheless, this new method of offering and gaining employment may also be
considered from a downside; even if it reduces costs and allows more efficient
• Companies may easily attract employees from other businesses that provide better
conditions; hence, there could be massive liquidity of workers. Because of the open
availability of data on companies and their employees, there is also no guarantee for
current employees that the ‘better-fit’ candidate that has been ‘stolen’ from a competitor
company that did not treat him or her well enough will not replace them.
and agencies by networks and machines. The human factor is replaced by computer-
based artificial intelligence. Computers and algorithms use keywords to check resumes
and applications instead of the people themselves. In a similar way, many employers
search for potential workers on online talent platforms using some keywords to filter
candidates. This approach may ignore a lot of other suitable candidates who simply
have not included enough information about their skills and experience. As a result, to
the online talent platforms in a way that the computer will accept, using keywords.
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Determining future skills and training for employees
Online talent platforms serve as great tools that allow users to determine more precisely
which training and skills are needed or demanded in the labor market. Because of the
significant amount of data that such platforms generate they can predict future trends in
recruitment criteria and types of training. These networks can process the input of
employers (i.e. what skills they are looking for) from different regions, and as a result,
determine a list of skills that candidates need to acquire to be desirable in that area or on
the labor market in general, and recommend which training be completed. This is
another huge advantage for employers because they can encourage employees to follow
labor-market trends, and to get the skills needed with their own money.
Chen and Haymon (2016) suggest “for instance, LinkedIn can identify actionable trends
in regional labor markets, such as which are growing and which are waning, making it
possible to recommend related and more successful fields to users in waning industries”
(p.3). Hence, online talent networks serve to benefit both employers and employees,
because first they allow employers to specify all the skills they require, and second, they
help employees to be aware of trends and in-demand skills. As a result, through online
talent platforms, the hiring side may encourage potential candidates to develop skills
that they already have or to obtain new ones. The authors of the McKinsey report also
emphasize that “capturing this data and applying sophisticated analytics could produce
better insight into how the demand for special skills and occupations is evolving – and
in greater detail and something much closer to real time than traditional labor statistics”
53
Employers will have a wider range of choice while employees will have more
between skills needed and the individuals that have them. For instance, the significant
growth of tech industries and E-commerce platforms has led to a huge divide between
the workforce needed in this sphere and the number of individuals that are competent
and have the demanded set of skills to complete tasks properly. Therefore, online talent
programs are linked to different training programs that exist to fix this issue by
providing certificate programs for individuals who want to obtain those skills or to
develop them. One such example is Andela, a company based in Lagos that provides
different free training programs in software development and business, and after
individuals complete the program, Andela places them in top tech companies. So, talent
demanded and provide candidates with both data about the desired abilities and training
programs to achieve them. The online talent platforms have a positive overall impact on
closing the gap between skills needed and individuals that have those skills.
challenges for companies. The main issue is a lack of loyalty and dedication from the
side of employees. The increasing gap between workers and companies is reflected in
the untruthful attitude of employees, and the resulting effect on total output.
However, new technologies such as online talent platforms create many opportunities
for companies because they are designed to attract freelancers, contractors, etc. Hence,
small firms, start-ups or entities that want to reduce costs may use them to find
54
temporary workers. These technologies could however be considered both beneficial
and dangerous for businesses due to the increasing popularity of online platforms, such
traditional approaches, such as newspaper posts and recruitment agencies, with online
talent platforms. These networks eliminate the need for the costly and time-consuming
recruitment process thanks to their ability to generate data about employees and
employers. Also, these platforms are linked with different training programs that may
provide candidates with various types of training. This will be beneficial for companies
as well.
Nevertheless, some issues may arise. Online talent platforms that match customers with
each other may cause the bankruptcy of many companies that provide the same
services. Also, there is the huge possibility of high liquidity of workers on the labor
market due to the easily accessible information about companies and employees. In
addition, a major risk is the disappearing human factor when choosing candidates. Even
appropriate for a job. People still have to include the human factor in the recruitment
process; machines are not able to take into account certain factors, and they operate by
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Chapter 6
Practical part
The previous chapters analyzed how digitalization has influenced work environments,
specifically from the perspectives of employees and employers. The analysis is based
on the opinions and reports of credible authorities. However, it is still important to ask
people that work in HR management on a daily basis for their thoughts and opinions. I
decided to go outside the library, leave reports and books, and ask people who are
directly related to my topic. My first interview was with the HR Manager from the
for 15 years and I chose her because she saw how the labor market has been changing
during the extended period. My next interview was with the entrepreneur and professor,
Jeff Medeiros who is also speaking at the conferences about the digital entrepreneurship
and digital revolution. That was such an interesting conversation because he is a co-
founder of the start-up Iriiis, and he told me a lot of how they manage their teams in
Interview #1
Participant: X
Interviewer: Firstly, I would like to thank you for allowing me to interview you. Could
you please tell me about the company you work for? For how many years have you
56
Participant:
I’ve worked as an HR Manager for almost ten years for the Caspian Pipe Coatings
Company. It is an enterprise that is unique in the pipe coating business in the Caspian
Participant:
I am more than confident that people with the right qualifications are the backbone of
any organization and play a crucial role in its development and achieving the goals set
by it.
Interviewer: How would you describe the labor market today? Is it challenging to find
an appropriate and suitable candidate? What are the main issues that may occur?
Participant:
I know the labor market in Baku in detail: we select a huge number of employees from
the local market, and some specialists that cannot be found locally are recruited from
abroad. The labor market in Baku is full of young people with high levels of education
and the desire to work for large-scale enterprises, but there is a noticeable lack of
Labor market, many companies have special internal programs that enable them to
57
employ inexperienced people - these individual development programs grow specialists
Interviewer: Do you think that the relationships between employers and employees
have changed over recent decades? How would you describe them now?
Participant:
Sure, relations between employer and employees have become more professional. I
think that it has become possible due to the number of employees who have developed
their professional skills around the world and gained supplementary knowledge by
attending trainings, conferences, etc., where they communicate with participants, share
their abilities and take on new methods. Corporate culture has also become integrated in
Interviewer: Would you agree that employees today cannot rely upon one company
Participant:
The labor market in Azerbaijan is becoming more flexible and full of qualified
candidates year by year. The tendency of candidates to raise their knowledge and skills
to the goals and strategy of the organization makes the business thrive. Companies
58
invest in potential candidates and try to attract their interest in the company – a
hire the best candidates and keep them for as long as possible in order to fulfill the
company’s aims. Staff that are interested in long-term contracts need to work above
their qualifications.
Participant:
The recruitment & selection process is one of the most important procedures in any
company. As HR Manager, I made this procedure as effective and targeted and result-
clear title and job description and specific requirements for candidates; a step-by-step
approach according to the company’s internal procedure enables me to select the one
that I was looking for. I try to meet with shortlisted candidates individually and find out
more about their qualifications and personality – more than they described in their
question or creating an unexpected situation gives me the chance to discover some sides
Interviewer: How have you observed the way the Internet and new technologies have
changed the nature of employment? What are your predictions about future shifts in
59
Participant:
The Internet and new technologies have widened the talent pool that we search and
made the number of candidates we select from huge. Placement of ads has become
speedy and attracting candidates easier, but an individual face-to-face interview is still
preferable and the most efficient method to get the right person for an opening. Even
though, the Internet and new technologies are faster and more effective, they do
sometimes waste our time as we try to fish out the necessary information.
It is hard to fully predict shifts on the market, but I guess we will observe more skilled
workers in the near future? If so, what effect on the labor market may it cause in
your opinion?
Participant:
I guess that the computerization processes will capture many spheres in which only
specific mechanical actions are important, but business cannot be effective without real
workers who brings their creativity to what they do. The effect of total computerization
will be tremendous; the hiring process will slow down significantly due to
people. But on the other hand, we will observe increased output by companies
providing the possibility to reduce work hours, increase vacation days, make the
60
Interviewer: Do you find new technologies helpful, such as online talent platforms
(LinkedIn etc.) that allow recruiters to attract employees via the Internet?
Participant:
I find online talent platforms very useful when I need to make quick announcements
and spread them to the wider public in order to fulfill urgent vacancies. Since almost all
Interviewer: Does the company you work for prefer to use a traditional approach
towards employment agreements (i.e. a contract with full social and health
Participant:
Our company mainly uses the traditional approach since we think that such contracts
and social benefits are necessary to attract and retain skilled personnel for a long period,
and this approach makes them confident about the seriousness of the employer.
However, we do use new types of employment agreements as well, but mostly for short-
term needs.
Interviewer: Do you believe that new technologies and the Internet will increase the
61
Participant:
It depends: the person who uses these tools properly (E-learning, webinars etc.) will
increase his/her “quality” and thus will be more competitive on the labor market.
for both employers and workers? Or are there some who will suffer from it?
Participant:
I think that there is a win/win situation for both sides. For example, freelancers or
minimum number of working hours for them due to local legislation. Also, a company
can spend less because it pays only for the volume of the work done.
Interview #2
Participant: Y
Interviewer: Firstly, I would like to thank you for allowing me to interview you. Could
you please tell me about the company you are working for? For how many years do
Participant:
commerce. I teach both undergraduate programs and MBA programs. I also speak on
62
conferences on the topics of the digital entrepreneurship, digital revolution, enabled by
unable people to get control of their online digital universe. We are about two month for
the release of the Iriiis. Iriiis is the name of our project. Our team is working in the
multiple regions around the world, leveraging different resources in the different
strategy finance and legal in Silicon Valley, research in New York City.
Participant:
The number one resource of any company is the people. This is it, full statement that
does not any additional explanations. Some people think that you can substitute people
by automation; you are a fool if you think that you can replace creativity, or find a
substitute many humans, but obviously, machines cannot do more than they are
programmed to do. Therefore, machines may substitute only employees whose work is
not related to intelligence or thinking. However, when we are talking about intelligent
work and adding value to the company, people are the best resource for doing these
things.
Interviewer: How would you describe the labor market today? Is it challenging to find
an appropriate suitable candidate? What are the main issues that may occur?
63
Participant:
It is a very good question. The labor market is undereducated, under skilled, and under
challenged. Too many people are given tasks that are mind numbing. We kind of stuck
in the place people are doing mindless job that are not fulfilling. The real problem is
that in the future people have to do more than computers. They have to shift their skill
set.
For instance, McDonalds now employ people to get burgers flipped, however, in the
future machines will do that. So, those people are at risk of unemployment. Those
people have to improve themselves. To be able to do a job that robot cannot do, people
have to educate themselves. The skill gap is increasing dramatically fast. People-skills-
education.
Interviewer: Do you think that the relationships between employers and employees
have changed during several decades? How would you describe them now? Would
you agree that employees today couldn’t rely upon one company for the long-term
employment?
Participant:
My dad who is a very wise businessman usually tells me “we are now in the generation
my skills.” You are totally responsible for your employability. There is no loyalty in
both sides. It is not a big thing. Who does the best job keeps the job. As long as you do
not look at it negatively this is the opportunity. If you are looking for the job for life you
will probably be disappointed. If you get laid off you should not be depressed. Go and
do what you want. Furthermore, it is global. Before companies had captive audience.
64
Now when everything is online, no longer you are captive for the company you are
working for. There is a hyper reorganizing. The relationships are endless. This is the
However, I can imagine why many people want to have one stable job, and why they
are afraid to lose it. I am considering my own country United States of America as an
example. One of the benefits that companies provide to employees is the health
insurance, comparing to Europe where the government provides the health insurance, it
may be seen very negative. People are stick to the employers in US because they are
afraid to lose their insurance that may be crucial for them or their family members.
Hence, they are usually in the stage of anxiety and are afraid to quite their jobs or to be
fired. Those reasons affect people’s perception of work, and increase their desire to be
employed in one company for a long time. They want to save a “safe net”.
to find the ‘best fit’ candidate? Do you find helpful new technologies such as online
talent platforms (such as LinkedIn) that allow attracting employees via the Internet?
Do you think that new computerized ways when the algorithms used to sort of
Participant:
I prefer both old school and new school. Why? Why would you limit your access to the
next great resources? It is a super set. Most people are old school. You really have to
integrate old school with new school because the new technologies are fascinating.
Considering your question about the “sorting methods of computers”, there is a number
65
of issues such as combination of the large database and data issues. You cannot
interview 1000 people. So, you have to allow computers to somehow sort those
candidates. The smart thing that you can do is to develop the program itself. It is also
smart to spend some time following your intuition, and making connection to the
communities of people where talent may exist. Don’t miss human element. I personally
Interviewer: So, you have said that your company is spread to several countries, is it
difficult to manage the company that has its part in different locations?
Participant:
It is difficult. It is fun challenging. Cultural norms and work environment norms are
different from region to region. Although you can impose some normality or global
consistency you have to be careful to deviate too much. For instance, Indians do not
show up to work earlier than 10 a.m., but than could stay till night, ten years ago I
would encourage them to start working day at 8 a.m. because it is more common in the
Western countries; however now I realize that this is cultural difference and I have to
accept it.
managing people. The beauty of this generation is that you can work whenever you
want, you can work in different countries and find workers all over the world. People
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Conclusion and Discussion
7.1 Conclusion
employment, creating both challenges and opportunities for companies and workers.
However, as has been discussed in this paper, digitalization is the main cause of the
increasing gap in the relationships between employees and employers. The new types of
employment may be seen as beneficial at first glance, however, after deeper analysis,
obvious issues appear that can significantly harm employees. Freelancers, contractors or
other representatives of the new types of employment, lack the feeling of being part of a
company, and do not have fair conditions because there are no scheduled office hours,
benefit protections and health insurance. It is assumed that a flexible schedule and
limited number of tasks are advantages for these types of employees; however, these
conditions remove the responsibilities on the part of employers to provide workers with
office space or social and health insurance. In addition, employees cannot distinguish
between the time they have to spend on their work and the time they are not working.
They have to be constantly online to be in touch with employers, and cannot live with
their mobile or Internet turned off. These conditions create an unhealthy atmosphere
and may lead to issues with mental health, as well as problems in communication with
people that surround those workers. There are no regulations for these new types of
employments; hence, there are no legislative norms for employers that they have to
follow. So, it could be argued that employers have fewer responsibilities with these new
types of workers because they can even be in different locations, and their relationships
involved. This may negatively affect the company as well because before
digitalization’s effect on the nature of employment, workers were prone to stay at one
67
company for a long period of time (even their entire careers). However, today it is very
rare that someone is employed for decades. Employees change companies, and
companies prefer to replace or fire workers that they do not need any more. As a result,
the mental relationships between employers and employees are becoming more
distance, and workers are not dedicated to the company’s goals because they realize that
they can be laid off at any time. Hence, the shifts in the nature of employment that have
There are many positive aspect of digitalization that it has brought to workers and
employers. The Internet allows employers to hire people from different locations, use
robots to complete some tasks, reduce costs and find more talent via online platforms.
However, digitalization also breaks the employment sector into the small gigs, and
employees cannot rely upon one employer but have to constantly be searching for new
jobs. This distance relationships between employers and employees is reflected in a lack
of loyalty from workers towards companies. As a result, both employees and employers
68
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