Fuelling the gig economy: why the blockchain could revolutionise the job market
by Simon Rikmenspoel, founder & head of product, Hiway
As the freelance workforce booms, how can we embrace this opportunity and use technological advancements to change the world for the better?
The world of work has evolved hugely in recent years. In the last decade alone, I have seen the employment industry become increasingly digitalised and automated, and with new generations demanding more from their careers this trend is only set to continue.
Perhaps the greatest influence and defining movement has been the emergence of the gig economy. The fallout of the great financial crisis in 2007–08 brought huge uncertainty to the job market. Career paths were hit by instability, opportunities for talented young graduates dried up and the working population found that the traditional 9–5 no longer gave them the long-term security it used to. I saw this first hand when I made the leap into self-employment, setting up my own business in spite of the challenges. For many, freelancing became an all the more appealing prospect, more suited to the needs of a workforce driven by autonomy, flexibility and freedom.
Today, employees are determining their own paths. Combined with the need for more adaptability, there is also a growing desire to build more diverse experience. The world we live in lends itself to nimbler ways of working and career deviations are common place. Such is the boom in independent working, a recent survey by revealed that 40% of businesses in the US expect to increase their use of freelance workers in the next five years. There is great advantage for the employer too: contingent workers offer skillsets beyond those of the core workforce and offer greater variability tailored to the needs of seasonal changes within the business and ad hoc projects. And in a post-GFC era, the added advantage of controlled labour costs (with work commissioned on a needs-must basis) is also a considerable lure.
Consequently, there is a massive opportunity for reviewing how we approach recruitment. The landscape has changed, workers have new attitudes and technology is enabling new approaches. Yet, in many respects, the employment industry itself has been slow to respond.
Long established, ‘traditional’ recruitment agencies are still an exceptionally dominant force — as demonstrated by multi-billion dollar revenues and global market reach. Adecco and Randstad, two of the biggest players in the market, generated €22.5bn and €20.7bn respectively in 2016 alone, and with over 62,000 combined full time employees placed annually it’s clear to see there is still value in the conventional agency model.
However, this centrally executed way of working is becoming increasingly outdated and plagued by a variety of challenges. While technology is rapidly changing how we work, it has not been effectively integrated into how we find that work in the first place. From old-fashioned search and match tools to archaic operational processes, the employment industry has not yet fully embraced the opportunity of emerging tech. These dated systems hinder cost efficiency and also have implications for global scalability — an ambition often limited by the complexities of cross-border working and liquidity limitations. Most significantly, these challenges often result in huge operational costs that directly impact the customer in the form of hefty service fees.
What’s more, recruitment agencies have long suffered from a bad reputation, whether justified or not. With issues of diversity and equality increasingly impacting hiring policies, there is growing pressure to eliminate any factors that could contribute to discrimination. Unfortunately, agencies have at times facilitated employer prejudice and fuelled distrust thanks to lack of transparent practice. With a traditional recruitment agency there is still huge reliance on a third party to make every agreement and transaction go smoothly — and all too often that just doesn’t play out in reality. Workers wanting to claim back their independence and free themselves from corporate politics including muddy HR processes is another key factor in the gig economy’s growth.
Acknowledging the opportunity of today’s thriving freelance economy and the issues faced by the old guard of recruitment, a number of challenger brands are emerging — offering technologically driven solutions that facilitate a boundary free employment market more suited to the needs to modern day working.
Online platforms such as Fiverr, Upwork and Thumbtack are changing the way freelancers engage new clients. Powered digitally and with the flexibility of project based work that can be executed remotely, these platforms are providing the freedom that gig workers crave. Yet despite their modernisations, the likes of Fiverr still struggle with some of the challenges hindering established players. In just eight years it has grown to service over 8 million jobs annually, yet despite simplified processes Fiverr is still an extremely expensive service taking a cut of around 23% from a project fee — a sum similar to that of other online competitors.
These challengers are also still small fish in a big sea. Despite an arguably wider reach, facilitated by online operations, the likes of Fiverr and Upwork are not yet on a par with the traditional agencies — a fact reflected in fractional revenue figures and far smaller placement rates.
In short, there is a gap in the market and a real need for a more modern way of approaching employment — both for the employee and employer. To address this, we need to be progressive and look to the most ground-breaking technological developments currently available. Now is the time to be ahead of the curve and I believe we can do this with the integration of some of the key pillars of the Fourth Industrial Revolution: big data, blockchain and artificial intelligence.
So, why is this technology relevant to our industry? Let’s explore blockchain, specifically. In essence, blockchain makes it possible to trust people online without the need for a middleman — expediting quicker, safer and cheaper processes. This network of technology has created the phenomenon of smart contracts, a derivative of the blockchain that allows people to write self-executing contracts and essentially bring trust to a collaboration where involved parties may never even meet. Something critical for the thriving global gig economy. This all sounds quite general but these developments can change the world — and in our case the whole work environment — for the better.
Built into the right business, these innovations will ultimately reinstall trust to the recruitment process, eradicate issues of discrimination, lower fees and enable smoother financial procedures. That business is Hiway — a platform that facilitates connections and is accessible to anyone who has skills to share or a job to offer. No borders, no boundaries. Consider what AirBnB brought to the hospitality sector and what Uber brought to the transportation network industry; that is our ambition for the job market — but with a decentralised approach using the power of the blockchain. We believe that Hiway can truly address the challenges holding the rest of the employment industry back, and ultimately empower those looking for a job or wanting a job done in equal measure.
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