Startups Like Uber and Airbnb Will Continue To Disrupt Jobs. Here's What We Can Do About It

09/05/2014 03:23 pm ET | Updated Feb 09, 2015

"We are in a political campaign," says Travis Kalanick, founder of Uber, referring to his battle with regulators in American and European cities. He has no shortage of opponents. Regulated taxi drivers around the world have taken to the streets in protest at his company. Just this week, Germany banned Uber altogether.

Uber's vision is that anyone with a smartphone and a serviceable car can go through some vetting and then enter Uber's market as a minicab driver at whatever times suit the individual. Buyers book through the Uber app rather than hailing a cab. Uber then adds 20 percent markup to each journey and appears to have bypassed the tax regime in some countries.

Uber is one of many services emerging in the current Great Fragmentation of work and services. You can see why it's happening. Consumer economies demand ever-increasing responsiveness, convenience and cheapness. Meanwhile, traditional jobs are offering less pay, security, certainty of hours and progression than ever before.

Hospitality is another impacted sector. Hundreds of thousands of citizens now rent a sofa or spare room to tourists. AirBnB, which became the dominant site for peer-to-peer overnight accommodation, charges 10 to 15 percent for putting buyer in touch with seller.

Uber and AirBnB are in Silicon Valley's "eleven digit club;" they have been valued by investors at over $10bn. They too are facing clampdowns in jurisdictions around the world after howls from taxed, regulated, job-creating businesses.

These conflicts are likely to get worse. Forums for services as diverse as petcare, local deliveries, tutoring and hiring toys are all building momentum at the expense of existing businesses. Forbes estimate this "sharing economy" is growing at 25 percent a year.

POLITICAL REACTION

Politicians have been slow to confront campaigns waged by the fragmenters. When they do so, they will find there is a third way between clamping down on popular informal transactions or abandoning regulation to permit a free for all.

British government bodies have invested millions in the core of a technology platform that would underpin all sorts of irregular work transactions in the legitimate economy. I oversaw its design and multiple pilots around the UK. We know it can work. Now we need to unleash scale.

The platform, called CEDAH (Central Database of Available Hours), allows anyone to list precise times when they, or a resource they own, is available for hire. They then specify the sectors in which they want to sell, the terms on which they will accept bookings and the rules by which the system is to construct their rate for bookings.

chart 1 redux

CEDAH would function across thousands of fragmenting sectors: local journeys and overnight accommodation of course, but also babysitting, collecting neighbors' shopping, working odd hours during peaks in a shop, contact center or café, homecare, hiring a video games console or renting out a bike.

This system would deduct tax from each transaction and enforce regulation. To counter that, it has to be cheaper, easier to use, less risky and offer more opportunity than the ever-evolving array of sites coming out of Silicon Valley.

Government's pivotal role at this level of the economy could be the key to scale. The public sector is a huge potential buyer of piecemeal labor. Policymakers control identity, licensing, dispute resolution and economic development channels that are far superior to anything even the most bullish start-ups can engineer.

MAKING NEW MARKETS HAPPEN

Governments should not fund, design or operate a system this ambitious. But, at city, state or national level, they could align official spending and facilities to attract fragmented work opportunities into the mainstream economy on what should be a vast scale.

Private sector operators then run the official markets, taking a regulated small mark-up and complying with obligations on privacy and service levels, in return. CEDAH could sit within any other website as a channel for legitimate transactions, as credit card processing systems do now.

chart 2

The centralization may seem worrying. But governments, including the U.K. and U.S., have already initiated authoritative databases of available jobs in competition with the recruitment industry. The job market is deemed too important to only be accessible among dissipated channels.

A NEW MODEL

By creating equal underpinning for fragmented work, policymakers could shape a new model for this sort of employment. A system like CEDAH could output granular data about local patterns in demand, supply and pricing for home cleaning, ad hoc security work, rental of a barbecue, car valeting or any of its sectors.

Someone currently at the mercy of, say, the market for carpet layers might find a dozen other sectors in which their reliable track record created immediate appeal to buyers. CEDAH could help them constantly align with their most profitable options.

chart 3

Anyone should be free to build apps that sit on top of CEDAH. I anticipate competitive financial services for irregular workers, perhaps crunching their official data on reliability and hours booked to project future earnings.

Community banking, parallel economies, training and volunteering could all adapt to this new infrastructure. This would allow a record of reliable unstructured trading in CEDAH to create avenues for progression that barely exist at present. Imagine investors being able to fund training to upskill workers with over supplied skills in return for an automatically deducted percentage of higher earnings for the following six months.

The prize is huge. Fragmented activity from small sellers could add around 5 percent to GDP of a developed country if fully enticed into the legitimate economy. Creating a comprehensive official platform for this sort of activity would not resolve all conflicts with existing businesses. If I run a guesthouse, I probably still wouldn't want anyone renting out sofas in the vicinity.

But doing everything possible to ensure the new market entrants were taxed and abided by regulations would at least create a level playing field. Allowing anyone - individual or business -- to sell on the platform and benefit from its official facilities, data, enforced low overheads, neutrality and stability could spawn a welcome expansion in small, flexible bookings for everyone's benefit.

So, what's the barrier? An experienced senior government minister put it like this to me last month. "We know we should be doing something like this. But the minute we embrace it, we'll be hit with cries of 'casualization.' We can't do anything that could threaten jobs."

It's possible that in the 21st century, jobs will be one part of a spectrum of work that should be made as accessible, empowering and profitable as possible. Travis Kalanick's combative vision for personalized working will prevail if politicians don't come above the parapet and acknowledge that fragmentation of employment may now be unstoppable. It needs to be tempted into the mainstream economy.

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