European Telework Online

For some years one of Europe's main challenges has been unemployment - a net shortage of jobs and work opportunities in most countries and most regions. This is now changing and most of Europe is moving into economic growth mode. But a new dilemma has emerged: an increasing shortage of skills in the places enjoying the best economic growth, coupled with a continuing - sometimes worsening - shortage of attractive work opportunities in other regions. The shortage of skills hampers the pace of recovery and growth in one place; high unemployment and lack of opportunities hampers social cohesion and enhancement in another. Often those who are unemployed or underemployed in one place have skills that are in short supply elsewhere. Bridging the two can transform both business and employment prospects.

Many of the most attractive new work opportunities are connected with the new Networked Economy. After years of caution, investors are now keen to fund the best-prepared new e-business ventures, and traditional companies are now quite rapidly stepping up their response to Internet opportunities and threats. EITO2000 reports that take up of e-commerce by European companies will more than double between 1999-2000 and more than double again in the following year. The innovators are creating new work opportunities but skill shortages are widely reported as a constraint on more rapid growth. The number of unfilled IT jobs in Europe will grow from 500,000 in 1998 to an estimated 1.6 millions by 2002:

Each unfilled IT job represents a constraint on growth, avoidable unemployment for people who have the right skills but in the wrong place, and a constraint on reaching our eEurope goals. In particular, it undermines the goal of "fully exploiting the employment potential of the Information Society", set out in Europe's Employment Strategy and the Commission's new report, Strategies for jobs in the Information Society. From an enterprise and growth perspective, once it becomes difficult to fill jobs, companies are forced to rein in the pace of their ICT investment. Europe already lags the USA in ICT investment; the gap will continue to worsen as it becomes more difficult to find the skills to implement and exploit e-business and other technologies.

Since 1993 EITO's annual reports have tracked relative investment in ICTs. Europe approximately matches Japan, but the USA has consistently shown a much higher propensity to buy and use ICTs. In 1998 Europe invested about 2.5% of GDP in ICTs, compared with 4.5% in the USA. Because average local costs for computers and telecommunications have usually been lower in the USA than in Europe, while per capita GDP is higher, the gap in acquisition and use of technologies is even larger than the percentage spend suggests. Annual ICT spending per capita shows a similar gap:

Data from surveys in 1999 show that European enterprises are becoming more ready to invest in ICTs, but if they cannot find the skilled people to implement new systems, the investment gap will continue and perhaps widen.

At European Telework Online we now respond to more than two thousand people a month who have useful skills to offer but cannot find appropriate work. A good proportion of these people have skills that are in high current demand such as Java programming. But in our consulting work we constantly meet companies that would develop their online marketing and business activities more quickly and effectively if they could find people with the right skills. This is a tragic waste of human talents, as well as putting a brake on Europe's ability to compete in the Networked Economy.

This applies also to skills other than those directly associated with ICTs. If a company in (say) Portugal wants to capitalise on e-commerce methods by marketing across the European single market, they need to tap high quality skills in translation, website copywriting and other culturally sensitive aspects in order to sell to customers in Germany or Finland. European companies need even wider sets of skills to tackle online opportunities in the North American market, or the big growth markets of India and China. If you want a website that will have a high impact in China, many of the relevant skills to adapt your presentation and messages can be tapped online in China itself but will be hard to find along the Douro valley. This approach to accessing skills doesn't mean your Chinese "localisation" experts are taking away jobs from people back home in Portugal; quite the revers. When your marketing effort in the new market succeeds it means more business for the company and better work opportunities for local managers and staffs.

Many projects and initiatives throughout the 1990s have sought to address this dilemma - including several that have emerged from the Commission's research and technology development programmes, and through ADAPT and other Social Fund actions. Most of these have yielded disappointing results and few have both survived and prospered beyond their publicly funded stages. Ongoing assessment of the market provides two main reasons for this failure:

• First, those who have designed and managed the projects have failed to properly evaluate the market and have lacked crucial marketing and business skills, and
• Second, the costs of market entry and market development have been seriously underestimated.

Until very recently, there has also been a serious market imbalance. A growing supply of individuals connected to the Internet and looking for work, has met relatively low demand from companies, who have tended to focus on purely local recruitment.

The market imbalance is now correcting itself, through a combination of increasing recruitment problems in high growth regions, accompanied by rapidly increasing awareness and use of the Internet among growth-oriented companies. This still doesn't mean the problem of mapping skills to opportunities will solve itself; the Internet is a large, complex and confusing environment and there is little chance that the right work-seeker will encounter the right skills-seeker without appropriate help. But a new market for "distance work" is now definitely there to be developed.

In the new market for distance working, the main immediate opportunities are for contract or "freelance" work rather than for conventional employer-employee relationships. This may not be what all observers would like to see, but it is a fact of the market and wishing otherwise won't make it go away. There are significant practical and organisational barriers inhibiting both employers and individuals from agreeing normal contracts of employment when geographically distant from each other. When the separation also includes national boundaries there are additional legal, fiscal and regulatory complications - or fears about these, which has the same effect!

Even accepting that freelance contract working is the most accessible bridge between skill shortages and distant under-utilised skills, there are still barrier to be addressed. How can the enterprise be assured that a person to far away to meet and interview really can deploy the requisite skills and can be trusted to undertake and deliver on a project in a satisfactory way? How can the skilled individual be assured that an unknown distant company will pay for work that has been satisfactorily completed? How will the two of them resolve the differences or misunderstandings that inevitably can arise - for example when the enterprise says "This is not what we asked for" and the individual responsds "But I've delivered what you specified". These are the kinds of problems that inhibit distance working and cause most companies to still insist that even contract staff must work "on site". This severely restricts opportunities for people who live at a distance from centres of commercial growth, as well as the pool of talent accessible by enterprises.

So the new market won't happen automatically. It needs to be developed. But analysis clearly suggests what is needed to build the new market and to start addressing Europe's new skills, employment and enterprise dilemma:

1. A neutral environment in which enterprises can declare their needs and individuals can declare their skills, experience and competences;
2. Mechanisms to develop confidence and trust - some kind of third party assurances underpinning the abilities of the individual, the quality of the work, on time payment for work completed and fair arbitration in the case of differences;
3. Minimal overheads for both enterprises and individuals, so that early encounters can be on the basis of small, manageable, low risk work packages, while still yielding value for both parties;
4. Active and sustained marketing so as to surface both the work opportunities and the underused talents and to persuade companies and individuals to try out the approach.

In mainstream recruiting (for conventional jobs with contracts of employment) there has been a recent explosion of e-commerce activity, in Europe as well as in the USA. Every country now has websites promoting "jobs databases", inviting individuals to enter their CVs or résumés and employers to declare their vacancies. In some cases these even have a strong international flavour. However it is still difficult to find web sites that have a coherent approach to any form of distance working, whether for conventional jobs or freelance project work. The general assumption is that employer and worker will be able to meet, assess each other and negotiate in the usual way. On the few sites that show any interest in "home based working", a majority of the so-called "work offers" are really business propositions, often those promoted by multi-level marketing or "get rich quick" schemes; and often asking the would-be home worker to "send money". This is not the kind of "work" most people are looking for.

European Telework Online has started assessing "work finding" web sites, listing and commenting on them, and inviting comments from teleworkers who have had experience - good or bad - of particular services. We found far too many to list then all, but not many that are worth listing! A majority are adding little or no value for either companies or job-seekers. However all is not doom and gloom - there is light perceptible at the end of the tunnel.

• presents a "reality check" for potential "experts" by requiring them to take and pass an online test that would at least weed out people who clearly don't have the skills to work in particular task areas
• restricts the range of work types to those that can most readily be done "at a distance" and for which there is thought to be a significant demand
• provides a payment service whereby client funds are held in escrow by a trusted third party and released to the expert on satisfactory completion of a project
• provides tracking that creates a case file on each project, for reference in the event of dispute
• provides a dispute resolution procedure
• Encourages clients and experts to evaluate each other at the completion of a project, so that as the projects database grows, clients will have additional evidence regarding the experts and vice versa

The process of assigning projects to experts is through open bidding. The client may (or may not) suggest a price at which they would be happy to contract the project and all the experts can see the number and prices of bids made by other experts. Although this might - in the case of superficial or relatively trivial projects - be thought to lead to a price war, the limited evidence to date is that clients go for the expert they think most likely to deliver good results rather than the cheapest bid. To date the early projects have all been small in terms of both time and value - from an hour or two to a few days worth of work, but this is to be expected, as clients will inevitably test any such system with relatively less critical tasks before going further.

Particularly encouraging is the fact that smarterwork.com is not a USA offshoot but an entirely European venture. The main founders are of Belgian nationality, the management and staff represent most European nationalities and languages, and the company has attracted substantial venture capital funding. Operationally based in London and currently an English Language service, they expect to roll out a service in Germany soon, followed by other EU countries. They aim to provide a pan-European platform for the "New Market for Work".

As with all "dot.com" ventures there are questions about how this new market will develop. In this case the key question is whether smarterwork.com (and other competitors who will no doubt emerge) can get their message out to the companies that have problems skilling and resourcing their growth and persuade managers in such companies to try out and persevere with this novel approach to getting things done. What's needed is early success stories from satisfied clients that can encourage the doubtful to join in. As might be expected the "quiet launch" of Smarterwork.com in the UK market during February and March 2000 has confirmed the availability of people with in-demand skills who are ready to work on a self-managing freelance project basis. With a hundred and fifty completed projects the elements to develop an environment of confidence and trust are coming into place. Their marketing and promotional budget is much larger than previous, underfunded initiatives in this field and - in my judgement - the timing is right. It will be good news for Europe if this and more like it succeed!

How do these market developments relate to eEurope and the Strategy for Jobs? What policy, programme or regulatory actions are needed to optimise the benefits for enterprises and individuals from a New Market for Work? Short term, the main answer is through awareness and education actions. Medium and longer term, we need regulatory developments that recognise and respond to the needs and aspirations of self-employed workers.

Reports from European Telework Development and Eurofound confirm that a high and increasing proportion of European individuals are interested in telework and in working on a self-employed basis. A 1999 Eurofound study reports that

Perhaps more surprisingly, the report also found that among unemployed people there was also a growing proportion who would prefer - as opposed to accept - self employment. It also confirmed that

So there is no shortage of skilled people who would like to be self-employed and who would also like to work at home for distant customers. The supply side of the market is there. The demand side continues to present a different picture. Reports from ETD and other sources have consistently confirmed that the main barrier to distance working is the attitude of managers, and this is the case for both employed and self-employed relationships. Although services like that provided by smarterwork.com address some of the practical constraints of contracting freelance workers at a distance, there is still a big job to be done in overcoming the innate conservatism of managers in Europe. While commercial investment by market actors will do some of the required awareness raising and education, the Commission and national governments have a clear role and responsibility to contribute to this as part of the Strategy for Jobs.

On the regulatory front, freedom of movement has successfully addressed the problems facing people who want to or are prepared to live and work in another member state in order to enjoy better work, learning or social opportunities, though most people still prefer to remain close to their roots or at least in their own country, language and culture. Relatively little has been done to address the problems of enterprises, employees and self-employed people when the company is in one country and the worker is in another. While some individuals and companies simply disregard the regulatory complexities and treat the relationship as a business-to-business transaction, many other companies and workers are dissuaded from hiring or contracting across national boundaries. This issue is particularly a problem for small firms with only one or two managerial or executive staffs, since such firms feel they have enough problems understanding and complying with local requirements. The market has started responding, through intermediaries on the model of smarterwork.com, who broker the relationship between the hiring company and the contracting worker, assuming responsibitilites on behalf of both. However, this does not remove the urgent need for action to to simplify and streamline the processes of trans-national employment and contracting.

A further issue - and one which very clearly falls to the Commission, the Council and member states' governments to address - is that of inequality of treatment as between employed and self employed citizens. Our labour and social laws and culture are the result of a long process of development focused round the needs of the industrial era, in which the overwhelming preponderance of work was a relationship between a dominant employer and a relatively powerless employee. The very language of employment discussion reflects this, with its emphasis on "worker protection", while our approach to new forms of work is deeply conditioned by the assumption that the employer has all the power and most of the responsibility. One illuminating example of this is the framing of "Labour inspection" regulations, where the assumption is that the employer controls what work is done in what ways, in what places and at what times. Another underlies our assumptions about occupational health and safety, which places all or most of the responsibility on an employer, and has little to say about either the self-managing employee or the self employed worker. Surveys consistently tell us that most teleworkers want to be self-managing. People who seek self-employment are by definition self-managing. Since self-management is both popular and increasing, urgent attention is needed to better understand both the workplace and the labour market from the standpoint of home-based self employed workers; this appears to call for a Task Force approach within the context of the Strategy for Employment.

Although there has been very little active promotion of the smarterwork.com service during a deliberately "quiet launch", and although that promotion has focused within the UK because the initial service is "English language only", some 50% of the early projects have involved either clients or experts outside the UK. At European Telework Online we observe the same trend. Despite clear and strong labelling as a "European" service, half of our site visitors and community of subscribers and users are from outside Europe. In the first quarter of 2000 we have responded to requests for information and advice from around 100 countries. People in Europe seeking work are equally prepared to contract with a company in America as in Austria; people in Africa or India actively seek telework opportunities in the developed economies. In Europe, discussion of this phenomenon during the late Twentieth Century has been mainly preoccupied with this as a perceived threat. Emotive terms such as "social dumping" have typified a response that has perhaps been rather understandable in a Europe with its own unemployment problems and profound uncertainty about all aspects of the so-called "Information Society".

As we start the Twenty-first Century an important aspect of the Strategy for Employment will be to see and understand the New Market for Work much more clearly. We need to put aside the emotion and our infamous European tendency to regard all change as threatenting and bog ourselves down in vain attempts to protect the past against the future. We must evaluate the opportunities alongside the threats, exploring and mapping this new market "in the round", from the perspective of enterprise as well as the perspective of workers. One thing is clear. Unless we very quickly and with brutal determination build a wall between Europe and the rest of the global networked economy, a global New Marker for Jobs is a reality not a conjecture. Whether such a defensive wall is now feasible is open to serious doubt, but there are still voices raised in favour of building it. Whether it is desirable is as much - probably more - a matter of philosophy and belief as of rational evaluation. As soon as we step outside the political and philosophical debate, the practical market approach to this is to ask, "What outcome is most likely?" and to act on the basis of actively pursuing desirable outcomes rather than agonising about possibilities.

Pragmatic assessment tells us that a global New Market for Work has already started and that commercial innovation in delivering services to facilitate that market will increasingly make the running. If they are to compete at all, today's dot.com entrepreneurs have to act rather than agonise. The slow processes of labour market development among policy makers and the social partners will struggle to keep up with - let alone influence - the pace of change. The Commission, the Council, the Parliament and the Courts have both a responsibility and a need to continue the social dialogue and to maintain a balance between employers and workers in the diminishing conventional labour market. But they also have a responsibility to understand and respond to the realities of the New (and rapidly growing) Market. In a sense, the new entrepreneurs of the dot.com start ups and the workers who actively prefer self employment have already opted out of the old labour market. They have a low propensity to join employer or worker representative organisations and no time to spare to get involved in committee processes or multi-layer negotiations. Policy makers have a duty to recognise and respond to this in positive ways. The social partner organisations may - or may not - choose to invest effort to try to engage with, enroll and support the new enterprises and workers. If they do so they will find it more rewarding to emphasise support for New Ways of Working rather than defence of custom and practice. Custom and practice are exactly what the new enterprises and the new self-employed and teleworkers are innovating against.

For eEurope the conclusion is clear. A defensive response to the New Global Market for Work will simply erode our commercial opportunities and our work opportunities. History abounds with examples showing how efforts to defend "old work" against either new technology or changed economic patterns have damaged rather than protected local economies. Fortunately there is a powerful upside to the New Global Market for Work; it presents excellent opportunities for Europe and for Europeans. Central to capturing those opportunities are two critical factors:

1. Europe must find and support its share of the innovation and investment that will determine the location of the main epicentres of the new economy and the new markets - for work, for business, and for education, health and the other market growth areas
2. Europe must become and remain a very attractive place for innovators and investors whose focus is the global networked economy
3. Europe must seek out and dismantle barriers that prevent or inhibit companies and workers from actively "doing business across the networks"

Many would say that this is a one-sided case. And so it is. It misses out the risks and hazards - erosion of worker protection; price competition from lower cost economies for work and jobs, products and services; the chance that in pursuing new opportunities we may lose some precious aspects of yesterday's society. All this is true. However it is equally true that while we continue to take our time studying, discussing and agonising about the exact nature of the changes taking place, others are already occupying the high ground of the new networked economy. It is no coincidence that the USA, which spends twice as much per capita on ICTs compared with Europe, also has enjoyed since the onset of the Internet era almost twice the rate of economic growth. That the USA, with a population only seven tenths that of the EU, now has almost the same total gross domestic product as Europe. Nor is it a coincidence that for a company anywhere in Europe it is now cheaper to phone a business partner in the USA than it is to phone one in any European country.

Neither the new global market for trade nor the New Market for Work are options we can choose or decline. The time for debate is past. It is time for positive action.

Newbury, March 2000