As companies become increasingly confident in a looming recession in 2023, contract workers are becoming a more attractive staffing option due to the relative flexibility with which organizations can eliminate contract roles compared with traditional employee positions.
“The vast majority of U.S. companies are confident that an economic downturn is on the way, and many executives are planning accordingly,” writes Tristan Bove in an article for Fortune. Bove reports that an astonishing 98% of U.S. CEOs expect a recession within the next 12 to 18 months. Some companies, especially tech and investment firms, have already announced hiring freezes in anticipation of a downturn, he adds.
“With confidence in the economy plummeting and recruiters less likely to hire permanent workers, companies are turning to employees who they don’t require a long-term commitment.”
A Turn to Temporary Roles
In a previous post, we noted that freelance work in the United States reached an all-time high of 60 million workers in 2022, meaning there is ample supply of available workers in the U.S. economy willing to take on temporary positions.
Bove also points to an increase—actually a “surge”—in temporary roles, pointing to data from the Financial Times indicating that “between May and November this year surged by 26% compared to the same period last year.” Bove says that is “the latest sign that companies are increasingly eager to cut costs as clouds gather over the economy for 2023.”
Balancing Temp and Full-Time Roles
Of course, contract workers aren’t a great fit for every organization, and many would much rather find someone willing to stay in a position for the long haul. The reality, however, is that many companies are anxious about their ability to continue to pay traditional employees in the event of an anticipated recession. This means the alternative to bringing on some contractors for a short period of time may simply be not to bring on any new staff at all.
Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.