The Global Financial Crises, including the current Eurozone woes, have created an international environment of economic uncertainty, shaking the foundations of big business. Shattered business confidence and a fear of insolvency have driven companies to introduce methods designed to increase flexibility and cut costs, believing that this will strengthen their ground against future turbulent market activity. There are two main ways this has been achieved in the realm of employer-employee dynamic.
New Work Trends
One common approach of large- and medium-sized companies has been to reduce the number of full-time staff and to replace them with a contingent workforce, allowing companies to adjust their staff numbers according to prosperity and need.
According to Emergent Research – which analyses the small business economy in the US - the trend is widespread amongst firms in all industries, and is set to continue with increasing velocity into 2012. Outside the US, similar tendencies can be observed. The European Trade Union Confederation confirms this upward trend:
More and more companies are using temporary agency work to cut costs and increase flexibility by allowing them to adjust their staffing needs at short notice. It helps employers to find workers with specific skills, as and when they want them, while avoiding recruitment and administration expenses.
As well as increased flexibility, the financial benefit of hiring a contingent workforce is two-fold. First are the direct savings made on full-time salaries when the man power is unnecessary. Second, salary supplements and packages, to which independent workers are non entitled, are also being cut. Healthcare, dental packages, entertainment allowances and childcare compensation are no longer the responsibility of the employing firm, and extra curricular activities such as training programs are scrapped.
Growing Corporate Scepticism
Another repercussion of the volatile economic climate has been the widespread reduction of salaries, frozen bonuses and promotions, mandatory unpaid furloughs and lowering of compensation, besides the universal firing of staff. While these measures have been imposed in order to reduce costs and safeguard companies against insurgency, they have tainted the image of security the 'big corporation' used to project, the 9-5 job looking less and less attractive.
The measures companies have taken in order to protect themselves from outside market forces have signalled a seismic shift in work trends, gaining momentum at an incredible pace. The loss of non-monetary benefits, together with the threat of redundancy, less favourable working conditions, and the fact that large-scale companies are now hiring freelancers means that the margin of comparative risk between independent employment and company employment has decreased. Furthermore, those risks traditionally associated with freelancing can now be applied to firms.
An Opportunity for the Coworking Movement
As a result, more and more individuals, who ordinarily search for employment in a company, are now opting to work for themselves. Numerous studies from all corners point to the increasing number of self-employed entrepreneurs, with figures set to rise. This trend, coupled with astoundingly rapid technological advancement, means that a significant, permanent and mobile workforce is in creation – in need of a whole lot of desks.
Stating that coworking spaces are designed to meet the needs of the independent worker is a given. But there is another point in question. In contrast to the developments of corporate arena, the relatively new coworking model reduces some of the risks independent workers used to face. Most notably, a main concern of the freelancer is the consistency and frequency of work. Working in a coworking space however, while no means guarantees a string of jobs, does present an environment in which business connections and networking happen, thereby increasing the chances a worker has to sell his skills.
In addition, the coworking space differers from a conventional working environment in that its foundations are based on community and trust. During a time when a growing distrust of corporate and financial institutions is evident, this notion could help coworking spaces emerge as a serious and widely-known working solution, and gives them the upper moral ground.
Economics and emotions: what this means for Coworking
An emotional repercussion of the economic downturn, and companies’ measures to rise above it, has been a growing collective distrust of the corporate world. This is quantified by the numerous community and revolutionary movements taking place everywhere. Examples are abundant, though perhaps the most notable is the Occupy Wall Street Protest in Washington DC, which quantifies the distrust and anger felt by members of the general public towards financial institutions and the corporate world it inhabits.
Our scepticism of big- and medium-sized companies reflects our frustration of poor decision making by seemingly omnipotent bodies that affect the broader public, and the collective need for trust in institutions. These sentiments have been translated into demonstrations like the Wall Street Protest, for one, but also support and spur the upward trend of independent workers.
Where big- and medium-sized companies lack in reliance and honest practice, coworking spaces make up for in volumes. Founded on community, coworking spaces are places where coworkers are able to develop relationships based on trust – both between themselves and the space, and between coworkers.
Once a social bond has been forged, the serendipitous element of creation and commerce can take place. Unlike in a big company, however, the business exchange can happen with a sense of emotional security. Working with other independents trumps working with the co-worker in the cubicle opposite because of its voluntary nature and the relationship and sense of community established before that point. In this sense, coworking can position itself as the new way forward for freelancers, and the new image of security which is quickly fading from the 'office job'.
These points of course do not mean that ex-employees or newfound freelancers will flock to their nearest coworking space, but it does present spaces with a unique opportunity to position themselves as the alternative.
If coworking spaces enter the market as a workspaces which take the risk out of freelancing and entrepreneurship, while providing an environment based on community and trust, the movement has an exceptional possibility to boom, as corporate image busts.
