Borderless Hiring in Europe: A Defining Workplace Trend for 2023

At the beginning of this new year, it’s important to pause and take stock. So, with our sights set on 2023, what are the major European workplace trends that you need to be planning for?

Instead of listing out a range of trends in this article, we’ve decided to go deeper on one macro-trend: borderless hiring. As we hope you’ll see throughout this article, we believe this macro-trend will have multiple strategic impacts for businesses in Europe during 2023. While cross-border hiring is not new, we believe the challenges faced by European businesses in 2023 will drive it to a new level. 

2023 European Outlook: Recession and Skills Shortages Take Hold

This is unlikely to be breaking news to you – 2023 looks set to be a challenging year for businesses, with the pressures of recession starting to be felt in every major European market. With double digit inflation rates in many countries, and an increase in interest rates, the business environment has changed dramatically. 

Organizations continue to grapple with the talent shortage, whilst having to pay very close attention to their bottom line. According to Eurostat, 3% of all available roles remain vacant in Europe. That’s around 6 million jobs that are going unfilled - the highest number of vacancies since 2006, when Eurostat started compiling this data. Knock-on effects include an obvious loss of productivity as departments continue to be understaffed, as well as organizations having to pay higher rates to attract skilled workers who now have the balance of power firmly on their side.

All of this means organizations will need to find new and innovative ways to unlock growth in 2023.

Eastern Europe Presents Opportunities

With organizations understandably prioritizing cost and expense reduction at the start of the new year, the need to optimize staffing and contingent worker spend is front of mind. As part of these cost-reductions, Magnit data already suggests there has been a drive to invest in lower-cost locations such as Poland and other areas in Central and Eastern Europe.

However, the war in Ukraine has also complicated the market. There were growing and highly-skilled contingent talent pools in Central and Eastern Europe prior to the recent conflict escalation — particularly with independent contractors and as a location for nearshoring. Opportunities remain to access cheaper high-skilled labor in these markets, especially in the IT sector. In Poland especially, the recent influx of Ukrainian refugees from the War has brought specialist talent from that country’s strong IT sector.

Remote Work: The Catalyst for A New Wave of Borderless Hiring

Traditional cross-border work, where an employee lives in one European country but physically works in another, accounts for less than 1% of EU employment. But the rise of remote work, post-COVID, has created the seed bed for a new wave of cross-border hiring. 

Prior to the pandemic, 3% of European employees worked remotely. In 2020 that jumped to 11% and by 2021 the number had further increased to 13.5% of all European workers. That’s a dramatic increase and it looks here to stay. In fact, looking at job listings to illustrate, although restrictions were relaxed in much of Europe in the Spring of 2021, remote-first job openings remained high with around seven times the number compared to before the pandemic.

But this is about more than simply where employees work. The growth in remote work and work from home has been accompanied by trends like the Great Resignation, where large numbers of people have started to rethink what they want from their careers. However, it’s not only individuals who have had the opportunity to reframe – forward-thinking organizations are reframing hiring policies to make the most of the current environment. In this new remote-friendly working world, borderless hiring has suddenly become a more natural go-to. After all, when remote work is the norm, why would all your employees need to be based in the same country?

Step Two: Embracing the Extended Workforce

We’ve covered how borderless hiring can bring value. Going further, we believe the biggest opportunity in 2023 is for organizations to combine this borderless approach with a total talent strategy that fully embraces contingent workers as an integral part of their workforce.

Why? Because a highly skilled contingent workforce, which is remote and borderless by design, not only allows an organization to expand their talent reach but also stay competitive in increasingly difficult economic times. By coupling cross-border hiring with the use of contingent workers, companies can take advantage of the benefits of both strategies. Contingent workers provide specialized skills and expertise on a project basis, while the cross-border hiring allows access to a wider pool of those specialized skills. 

But why is 2023 the year to make a strong contingent workforce a strategic priority for your organization? 

• Firstly, contingent workers provide flexibility since they are a part of the organization's workforce that can be easily scaled up or down depending on the needs of the business. This allows companies to quickly respond to changes in demand, without being locked into long-term commitments. 
• Secondly, contingent workers bring a wide range of skills and expertise to the table. They can help businesses access specialized skills on an as-needed basis, without the need to invest in expensive training programs. 
• Thirdly, using contingent workers can help reduce labor costs, as businesses only pay for the hours worked or the work completed, rather than maintaining a full-time staff.
• Finally, embracing contingent workers can help businesses stay competitive in an ever-changing market, by allowing them to quickly adapt to new technologies and trends. 

Key Considerations for Borderless Hiring, Powered by the Contingent Workforce

If the above sounds promising, don’t leave us quite yet. Being successful with your cross-border hiring and contingent workforce strategies in 2023 will require awareness and preparation for the challenges involved. 

Retention and culture are key considerations when combining cross-border hiring and a focus on contingent workers. In many organizations, remote workers are struggling to feel fully integrated into the company culture, which can lead to high turnover rates. Additionally, if those remote and cross-border workers also happen to be contingent workers, you may strike another issue – they may not feel as invested in the company as permanent employees, which can also lead to retention issues. To mitigate these challenges, organizations should make a concerted effort to create a sense of belonging and community among all employees, regardless of their employment status.

Legal and compliance factors are other important considerations. Each country has its own set of laws and regulations governing the hiring and treatment of contingent workers, and companies need to ensure they comply these laws to avoid legal penalties. Additionally, companies must take care to ensure that they are not inadvertently engaging in discriminatory practices or exploiting workers. Companies should seek the help of legal experts to stay compliant. 

Finally, it's important for procurement and HR teams to work together when it comes to managing cross-border hiring and building a contingent workforce. In most organizations the procurement team is responsible for sourcing and contracting contingent workers, while the HR team is responsible for managing and retaining these workers. By working together, these teams can ensure that the company is getting the best talent at the best price, while also taking into account the needs of the business and the well-being of the workers.

Solutions to Manage Borderless Hiring

As the contingent workforce grows, there is an exponential increase in the complexity of managing sourcing, regulations, pay rates, and worker benefits. Organizations need solutions that optimize compliance, payroll, and benefits processes to mitigate risk and maximize the contingent worker experience.

Magnit delivers the industry’s most comprehensive Employer of Record (EoR) services for enterprises worldwide, which is fully customizable to fit your requirements.

Compliance Risk: Ensure compliance of all labor laws by properly classifying and verifying workers. We handle onboarding functions, redeployment and third-party payrolling services for a range of different workers.

Cost Savings: Increase efficiency with well-managed payrolling capabilities that track time, billing and expenses. And leverage our utilization metrics to identify opportunities for cost savings.

Worker Experience: Provide a superior worker experience as part of today's leading global workforce management programs by offering workers on-demand pay, top-tier benefits and streamlined technology.

Find out more about our Employer of Record Solution.

If you’re interested in learning more about how Magnit is helping organizations implement winning contingent workforce programs globally, please contact a Magnit representative at info@magnitglobal.com.

Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of Magnit and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.