Nudging Monsters to Help the Poor

Policy Recommendations to Catalyze Informal Sector Job Marketplaces

Abstract

Rather than building informal sector digital job exchanges themselves, governments should encourage an eco-system of exchanges by lowering costs and barriers of entry and encourage a sufficient market for competing exchanges to innovate against each other — even in smaller, poor countries.

In particular, governments should:

1. Encourage the use of standard digital formats for job seekers and jobs, enabling friction-less and free digital interoperability among employers, job seekers, government ministries, schools and digital exchanges.

2. Expose job seeker registration data collected by government agencies to job exchanges, freely and transparently in order to lower the costs of job seeker enrollment

3. Expose digital verification APIs of government identification, school and certificate programs so exchanges can easily showcase these verified job seekers to employers

4. Avoid creating employer or customer facing digital exchanges themselves, but instead allow multiple exchanges to compete for employer revenue, with varying levels of usability, accessibility, technical outreach and placement services.

The Value of Choice in Livelihoods

We have ample evidence that efficient markets enable buyers and seller to access goods and labor more quickly and cheaply. The same is true for informal sector job choices, with much being written by authors such as Amartya Sen who argue that the purpose of development should be to enhance freedom, with the choice of livelihood being the among the most important of human freedoms.

Thus, in addition to the goal of creating more jobs, well-meaning governments also should strive to enhance the choice of livelihoods for all citizens. In this sense, governments and digital job exchanges, such as babajob.com and monster.com, share similar goals. Namely to connect everyone to relevant job opportunities that are located where job seekers want to work, pay attractive wages and perform valuable activities for which the job seeker is currently qualified. Additionally, both share the goal of connecting employers with large pools of relevant, qualified labor.

This may sound simple to say but is in fact quite difficult in practice, with countless inefficiencies hindering the marketplace and individual choices. Job seekers are often only aware of jobs that are known to their social network. In the informal sector, centralized, accessible and searchable repositories of jobs rarely exist. Though digital exchanges may exist, informal sector workers may lack the literacy or skills to access PC-based, English language website. Employers complain of a need to hire but lack access to large pools of job seekers. Jobs and job seekers are rarely geo-coded — i.e. exactly where on earth are they — even though every job seeker wants a job with a short commute and savvy employers know that job seekers with long commutes often quit. Finally, business models that are sustainable for high-end labor — e.g. a recruiter is paid one month’s salary when an employer hires a job seeker — often are not profitable or scalable for informal sector labor.

In short, the problem of creating scale-able, compelling and effective exchanges of labor is hard one, but one with great promise and great potential value to the broader economy.

Work to date

Ministries of Labor around the world often have the mandate to aid job connections among the poor and employers who wish to hire them, but frankly building efficient, usable and popular marketplaces where every job seeker and employer is actively engaged in the system has been achieved by no government system. All too often, governments create regional offices where desperate job seekers register themselves with a paper photographs and fill out hand written paper sheets describing their skills, only to see these files of paper lie fallow for years, with little connection to employers and few interviews occurring. These job seeker registrations often are not digitally searchable or accessible to relevant businesses. Additionally they become out of date when job seekers move, change their mobile numbers or gain a new higher paying job or skill that make them no longer relevant for employers who did see their government registration information.

Even when governments have created or partnered with private companies to create digital labor exchanges, these exchanges rarely have the mandate or incentive to make the exchange truly thrive. They seldom invest in intelligent algorithms to appropriately match job seekers and employers, continuous optimization their user experiences to maximize usability and accessibility on all platforms (e.g. Call Centers, automated voice systems, SMS, the mobile web, android applications and the PC web, etc), constant evolution of innovative marketing strategies to reach every business and convince them to post their jobs on the exchange and rarely experiment with new service offerings that maximize job seeker and employer satisfaction, connection, revenue and usage.

In short, governments are generally bad at behaving like an ecosystem of innovative, competing businesses, even when they engage in public-private partnerships.

Digital Exchanges for White Collar Labor

It’s worth looking at why digital job exchanges today work well for white-collar labor but have had less success with informal sector workers.

· Job seeker profile information is easily available and in a digital format. In general, job seekers fill out an online profile or registration page, meaning the marginal cost of job seeker acquisition is often just the cost of advertising and search engine optimization to attract the job seeker to the website. Compare this to the cost of registering informal sector candidates — where each job seeker’s information must be manually typed into a computer in person, from a hand-written sheet or transliterated from an un-structured Microsoft word document.

· Relatively high-degrees of trust in the job seeker data. LinkedIn’s success is certainly connected to the fact given the site is so public and much of the resume/CV data is validated by the user’s social network. Because of this, it is difficult for job seekers to lie about their true experience. This fact makes employers trust the data on linkedin. If a mechanism could validate that an informal job seeker truly was who she said she was and truly had the certificates or schooling she asserted she had, employers would value this implicit trust, would be more likely to use the exchange and pay her more.

· Employers and placement agencies pay for advertising and access to digitized job seekers. The primary business model of most large exchanges is to charge employers and placement agencies for access to their pool of job seekers and to sell advertising so that motivated employers can widely distribute their need for workers. This is only possible because the medium — the PC-based internet — is accessible and consumed by both white-collar job seekers and employers. To connect informal sector job seekers to a medium where they can access personalized job recommendations requires much more innovation, iteration and capital.

Making private job exchanges thrive while aiding the poor: Recommendations

Given the difficulty of this problem, this paper argues that the goal of government interventions should be to encourage an ecosystem of informal market job exchanges.

1. Encourage standard digital formats for jobs and seekers. Standard formats for job seekers implies that job exchanges can easily parse and digitalize data and important consume data from other sources. In particular, standard formats would allow enable job sites to easily showcase any job seeker CV or resume sent to them in the standard format. These standardized CVs could arrive from a variety of channels, government agencies, mobile applications, agents or schools as shown below; the primary benefit is it lowers the cost of job seeker registration and makes data exchange more viable, even for informal job seekers. Conveniently, the industry has already created standardized formats for Jobs, Organizations and Candidates on schema.org that government can use as a starting point.

2. Expose job seeker information collected by government agencies to exchanges at no cost or a nominal charge. As mentioned above, governments around the world already register informal sector job seekers — they just do a less-than stellar job of connecting those job seekers to relevant employers and ensuring they get hired. By making this registration information, CVs, pictures and authenticated government identification information available to exchanges, it gives the exchanges a valuable asset that they can then sell to employers. The private exchange still must spend on employer outreach and marketing, great interfaces, manual effort and algorithms to connect relevant employers and job seekers, customer service and a variety of other services but one of its core cost areas — the digitization of job seeker information — is removed, thus enabling new entrants to enter the market at lower costs. This is particularly important in smaller job markets such as the Congo or Liberia where no major digital job exchanges exist today. It also would allow existing exchanges to more easily extend their services to a now digitized pool of informal sector workers. A complaint mechanism should be put in place to ensure that exchanges do not abuse the data rights they have been granted, but given that they monetize this data, they have a clear incentive to play by the rules or risk loss of data access.

2. Enable companies — including exchanges — to digitally verify informal sector job seekers. We at Babajob.com find that employers want their prospective candidates to prove their identity with government issued ID and pay more to those candidates that do. Conversely, we’ve seen that job seekers who have no official identity or documents are often the lowest paid and most exploited. Hence, if governments can provide digital API mechanisms for exchanges to validate the identity of job seekers, then they can showcase and highlight these validated users, connect them to employers who will pay more for these verified candidates.

Summary

Governments can help make informal job marketplaces viable businesses for private exchanges and in doing so, give millions of informal sector job seekers better livelihood choices.

Appendix: Relevant examples

SABRE and online flight ticketing — By standardizing the data APIs for plane tickets, SABRE’s standardization enabled a large ecosystem of first travel agent and later travel websites, to leverage the same data set of available flights, but compete on better service, searching and innovative algorithms to discover lower prices, such that we now have hundreds of websites like expedia.com, hipmunk.com, kayak.com and others innovating against each other.

Chinese job exchanges — China aggregates jobs and makes these feeds available to private exchanges who distribute the job information. For example, MobileJobHunt leverages a feed of digitalize jobs from the Chinese government and then created customized mobile applications to ensure that their job search app was available on mobile handsets from hundreds of phone manufacturers.