Slide 1

Category: The Pamphleteers

Written by Wingham Rowan, Director, the Beyond Jobs programme.

It’s just one more trade on the Baltic Exchange website. With a couple of keystrokes a trader purchases space in the hold of a westbound bulk freighter. Entering his requirements bought up all the competing options for moving the cargo so he could make a selection. But the speed and convenience of this transaction is just one of the benefits.

Having one widely used trading forum delivers data on demand, supply and pricing that allows everyone to maximise their opportunities. Good behaviour is enforced; to be barred from the Baltic would be unthinkable for industry titans. Ease of buying has unlocked new demand and enabled new sellers to enter the market. Shipowners can sell cargo space that might otherwise be wasted.

Now let’s focus on another economic resource prone to wastage: the millions of hours every day that people around the UK want to work. The problems of the job market are well understood. I want to look at its less scrutinised fringes: the world of ad hoc dog walking, odd hours of work in a busy pub, hiring out your possessions to neighbours, local deliveries, letting a paying tourist stay on your sofa tonight, lending small amounts of cash for a week and so on.

Suppose our Baltic trader switches into this market for a moment. Perhaps he wants a babysitter this evening? He will find a sector dissipated among dozens of markets. Each is low tech: little more than classified adverts with a search facility. He will have to send messages to ten or so potential sitters to try to find one who might do his job tonight. He will not know if each is reliable, qualified or even who they say they are. If he does find someone, the site will add a mark-up of 10-20% to his costs.

There is a broad swathe of the economy where transactions are overhead laden, risky and time-consuming. Call it the local services market. It covers areas as diverse as; tutoring, ride-shares, cleaning, ad-hoc call centre work, homecare, hire of video games and rental of a home parking space. The thin data available points to some £200m a day of this activity now happening, illegally, in the untaxed economy. A further £100m of demand is simply not met: there is no market efficient enough. Why the disparity? Why can’t the Baltic trader hire a neighbour’s bike or get someone to clean his car as easily as he diverts a huge ship to pick up a load in Qingdao? If all this potential activity could be bought into the legitimate economy there could be an uptick in GDP with the resulting opportunity going to people who need it most.

Michael Mainelli and the Long Finance team, I know, will argue imperfect money and a lack of credit is the problem. I have spent 20 years working towards better local services markets in a variety of UK government funded projects. I believe the purely financial issues are secondary, and could be more easily solved if the overarching problem was cracked.

The core problem is that these markets involve probably the most demanding transactions in any market anywhere. The complexities include:
1. Lack of computerisation: global shipping companies have inventory systems that can be plugged into the Baltic database. Mrs Jones - who would like to provide ad hoc gardening, home hairdressing and reflexology while periodically renting out her barebecue set and party dress - doesn’t. Her availability has multiple parameters: How far will she travel? When can she be contacted? How much notice does she need? How is her price to be calculated? And so on.
2. Quality is an enormous variable: book space on a Maersk vessel and you don’t worry about whether it will turn up. The ship doesn’t have down days, family emergencies or a tendency to run out of credit on its mobile when an unpopular booking needs to be confirmed. It won’t steal your household goods or gossip about your family life around the community.
3. Demand and supply are hard to aggregate: any market needs to be launched cost-effectively. Once the world’s biggest shipping lines and largest buyers see value in a universal exchange at the Baltic you have a deep market overnight. But getting millions of Mrs. Jones’ who want to sell and buy in diverse sectors aligned is more challenging. Companies have burned through hundreds of millions trying to brand build their way to dominance in local services. A tiny handful have established themselves in one niche: AirBnB for rental of spare rooms, BlaBlaCar for paid rideshares and Taskpanda for errands are well known success stories.

But there’s an emerging view that government could be a catalyst that solves these problems. The public sector is our biggest buyer of fragmented labour. Government sets the regulations and controls databases of who is licenced to do what. It oversees dispute resolution mechanisms along with tax and benefits regimes. All this could be aligned with the needs of a new generation of markets for ad hoc economic opportunity. That should incentivise the private sector to invest in advanced exchanges in which they take a competitive cut of each transaction.

Politicians would have much to gain from doing this. The UK currently spends about £1bn a year on job creation: subsidies to employers and support for job seekers. The reported 3.5% success rate is not widely regarded as a good RoI. Perhaps policymakers are too focused on jobs even as evidence that the job market is “hollowing out” mounts?

In September 2013, I founded the Beyond Jobs project. We have core technology, funded by government, that can trade the time of enterprising blue collar workers as efficiently as the Baltic. But technology is just part of the solution. We need to see a policy shift that recognises a new reality: a traditional job is now just one part of the spectrum of economic opportunity for millions of low income Brits.

Having a comprehensive platform for thousands of sectors in which people can sell their time, or the time of their possessions, could be revolutionary. I might have built up a valuable track record of availability in the official markets. Should I be offering myself as a window cleaner? Real time market data around my home could be a click away. Indices that could rival the FTSE or Dow in significance might inform my decisions. The platform could identify areas of undersupply and facilitate investment in up-skilling of provenly reliable traders.

The right platform could enable new efficiencies in volunteering, timebanking, alternative currencies and low level financial services. It could underpin radical models for public services and participatory democracy.

After years around Whitehall I have no illusions that seeking this policy re-alignment will be easy. I am keen to engage with financiers who have an interest in the intersection of new technologies, policy and social progress. Because if anyone knows how transformative new trading exchanges can be, it’s probably the City.

Our website is www.BeyondJobs.com. Please get in touch if our vision interests you.

Comments   

#3 Jan-Peter Onstwedder 2014-02-27 14:48
I love the idea behind Wingham's post. I have a steady trickle of jobs that need doing for which I would happily pay someone (including taxes etc., i.e., officially) if only I could easily find a local, reliable, individual. I've tried various tools like Rated People but the hit rate is depressingly low, so if there is a promising alternative I'll sign up. But I do wonder if there is a way to avoid the 'trip advisor' problem of fraudulent reviews, whether there is a way to provide me with financial insurance if a cleaner turns out be a thief, etc. Trust is essential, and hard to come by at this level of the economy.
#2 Wingham Rowan 2014-02-17 16:22
Con, thanks for this thought provoking response. But - at the risk of sounding glib - are you sure "having a job" is quite as fantastic as government tends to assume? You may be aware of BIS research on the hollowing out of labour: a handful of people have quality jobs (including most of us on this site one suspects).

But millions are increasingly finding themselves striving for souless, prospectless, wage slavery.

That's why, I believe, we need to look at ad hoc economic activity. At present it's synonymous with insecurity and bottom-of-the-h eap. But I am suggesting that could be reversed. Why shouldn't people working on their own terms, at the times of their choosing, across a personalised swathe of markets be insured and pensioned by competing providers?

At the moment this can seem laughable. That may be because our markets for this sort of activity are so primitive compared to what's now possible!
#1 Con Keating 2014-02-17 15:15
I like this posting a lot. That said, we are really talking about local services and peronal services are non-tradable goods. The local aspect creates issues for aggregation - what are the boundaries - how far away is that pizza shop is important if you want it to arrive warm. There are also problems associated with price discovery. I would also have reservations about commingling volunteering and paid work - it is not difficult to see the possibilities for exploitatio. My final major reservation is really over whetehrb this is something that government should be activley involved in. The ancillary question here is what quality can we expect from a government that relies on fragmented labour. In this situation there really is no incentive for the individual to develop their human capital and little likelihood of job specific investment.

If you would like to post a comment on this blog, please sign in or register.