The online labour market – more fragmentation or opportunity?

A version of the following article appeared in the Conversation in February 2014.

The Conversation article was republished in Business Review Weekly  the Australian Finacial Review, and the SBS News Website

Post script 27 February 2014 – the  Australian Financial Review reports on the success of the online agency Freelancer in its debut on the ASX and gives some insights into the nature of the business: We could be as big as Facebook: Freelancer CEO

Post script 13 March 2014 Response in the Business Review Weekly from co-founder and CEO of Airtasker to my article.

Online ‘job insecurity’ fears overly pessimistic: Airtasker co-founder Tim Fung

 

Getting a job in cyberspace? seller beware!

Some of the newest enterprises in cyberspace are those which link workers to anyone who wants a job done. The new enterprises are not concerned with employment or jobs but with ‘tasks’. These are small, one-off, discrete portions of work for completion within a short time frame at short notice.

They are different from employment websites like seek.com which have essentially substituted for newspapers in employment advertising.

Perusing a few Australian websites – AirtaskerOzlance and Sidekicker we see what’s on offer: home help tasks like cleaning or painting and small administrative jobs (Airtasker); web based assignments that can be done online (Ozlance); or explicitly business oriented, Sidekicker, offering helpers for office work, events, hospitality, and promotions. These Australian companies are in the market place with a number of international companies –OdeskFreelancer and Elance mostly offering online work like programming, web design and translation.

Are these cyber enterprises set to revolutionize employment and business practice? As an employment researcher, I have two sets of reactions.

My first set of reactions: so what? Many of us have done this sort of ‘fill in’ work at some stage in our working lives often while a student. At other stages, we have ourselves called in people on an ad-hoc basis to help out. I can think of times of asking people in for short term jobs like data entry, filing, editing, writing, media promotion etc. Any business, organization or household needs an extra pair of hands from time to time to get through an assignment or complete a one-off job that they don’t have the time or skills for themselves.

In one way, the online employment agencies are doing no more than providing a platform for what already happens informally through networks. They arguably extend opportunities for workers and businesses or households to make a mutually beneficial connection. They are also an inevitability of the internet age.

In addition, the online agencies extend what is already on offer by contracting and labour hire companies, as well as self-employed contractors such as office temps, cleaners, IT specialists, gardeners, labourers, tradespeople, But in the new model the middle-man (the contracting company) is eliminated –notwithstanding the cut which the online agency takes for itself out of the payment to the worker.

The type of work offered by online employment agencies extends the ‘casualisation’ of the workforce accounting now for around 20% of Australian employees. I have argued elsewhere that casualisation is increasingly part of ongoing employment arrangements for many businesses. The ‘helper’ employed through an online agency is just another ‘casualised’ worker.

So should there be any disquiet about the new employment arrangements? This is where my second set of reactions come in. Unlike other types of contracted and casual employment, these employment relationships fall outside any labour regulatory framework as provided through the Fair Work Act. This means they do not conform to minimum wage or health and safety requirements or provide for any other entitilements. While this is not dissimilar to the situation of any self-employed contractor, its desirability depends on whether the workers have a real choice in regards to this kind of employment and are able to negotiate satisfactory pay and conditions.

On the Airtasker website, a job to clean an apartment involving a couple of hours work – $40. Airtasker charges 15% commission for the job so the total payment the worker received – $34. At the time of my perusing, on the Ozlance website someone is looking for a web developer which has attracted 27 quotes ranging from $250 to $2000.

These bidding arrangements for jobs may encourage undercutting of wages across the board. While the agencies themselves insist that quality – as monitored through an online review process – is also an important component of the bidding and pricing process, it is hard to see that this will outweigh price for most contracts especially where quality factors are similar. Much online work can also be outsourced to low wage countries as we can see on the Freelancer Australian website, where people are offering their services for as low as $US6 and $US7 per hour.

Sidekicker runs a different model with a set minimal fee of $29 per hour but deducts 20% for itself so the worker will end with $23 per hour – maybe not so bad depending on what the job involves.

The online employment agencies promote the freedom and opportunity of freelancing work, but I wonder how many people find this type of work greatly congenial and rewarding over the long term. One IT commentator suggests that the returns to workers are low and that many people signed up for Airtasker get very little, if any, work at all.

The type of employment arrangement from the online agencies recalls some of the disturbing employment trends in the United States as recently portrayed in a Foreign Correspondent program and in other articles. The essence of these stories is that the post GFC recovery in employment in the USA is quite weak with many people forced intopart time, low wage and casual employment because there are so few decent jobs being generated. Nobel laureate Joseph Stiglitz believes this trend is consolidating inequality and also holding back the recovery.

In the Foreign Correspondent documentary, a young woman is employed in a bar with a nominal wage of $2.13 per hour and relies on gratuities to make a living. What kind of employment arrangement is this? In fact, it is an employment relationship which the online agencies also propagate.

The individual worker comes into the ‘labour’ market unfettered by any requirements, regulations or rights in relation to wages and conditions – simply what she can obtain on the day for her labour in a ‘market’ place much as a farmer would auction a sheep or a box of oranges.

Should we be worried about this trend in online employment agencies then? Well the answer it seems – that depends. In an economy and labour market with plentiful opportunity for decent work, it is really of no account and may suit some workers and some employers. But where opportunity for decent work is eroded as reports from the USA suggest, then the proliferation of unregulated employment arrangements are concerning in that they exacerbate inequality and dampen economic growth as Stiglitz argues.

Do online employment agencies have the potential to revolutionize business practice? At the most, they are taking forward what is already in train through long term trends in workforce casualisation and outsourcing as well as the ongoing fragmentation of employment and work. The question remains as to how far the agencies will strengthen these trends. Some of the pejorative names used by the companies for workers – runners (Airtasker,Hoprunners) sidekicks (Sidekicker) give a rather old world ‘colonial’ feel to the whole deal – as I commented in a SMH article earlier this year.

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