Category: economy

Airtasker and the future of work

Micro task service Airtasker looks to reinvent employment in a partnership with the CareerOne job site.

Tim Fung, the co-founder of Airtasker, has been previously been interviewed on this blog about micro tasking service’s mission to change the workplace.

With the news that that Airtasker had gone into a partnership with employment site CareerOne it seemed Tim might be a good guest to kick off the first video for the Decoding the New Economy YouTube channel.

During the interview Tim describes the motivations behind starting Airtasker, how he sees the relationship with CareerOne evolving and the benefits of operating out of a co-working space.

The Tank Stream Labs working space is an interesting setup – based at the bottom of Pitt Street in the heart of Sydney’s financial centre, it’s not in the more edgy areas on the city fringes where the rest of the town’s workspace are located.

Being away from the hipsters and grunge doesn’t seem to have hurt Tank Stream Labs as the space has now expanded to a second floor of the ten storey office block. The roll call of tenants is quite impressive too.

For Tim being in the workspace has been a great benefit for Airtasker.

There’s always the thing about sharing knowledge and more obviously there’s a lot of great contacts that everyone shares.

Airtasker’s relationship with employment site CareerOne is an interesting development that sees the joint venture between News Limited and Monster move into the crowdsourcing field. It also gives job hunters an opportunity to find short term work while looking for a more permanent role.

People are looking for more hours of work but equally businesses were coming to CareerOne and saying ‘hey, all you do is full time work’ and that’s only one piece of the employment puzzle.’

For CareerOne it really allows them to build up the full spectrum – all the way from tasks to part time to full time and be a one stop shop for employment.

How that works for CareerOne remains to be seen, but for Airtasker and Tim it validates their business model along with exposing their service to a wider audience.

With the workforce evolving and the trend to informal, casualised employment; services like Airtasker and the US Task Rabbit will take a more prominent role in workers’ careers. While it’s debatable on how desirable or stable such employment is, it’s the reality of a process that started in the 1970s.

Tim takes a more sanguine view of the challenges facing workers in an informal employment market.

What I’m sharing on Airtasker is my free time. Currently we have this pool of literally tens of thousands of hours of people sitting around saying ‘I’d love to have a job’ and that’s an underutilised resource.

Airtasker in many ways is one of the new breed of middlemen creating markets where one didn’t exist before. The service is an example of how new ways to communicate create opportunities to connect buyers and sellers.

Services like Airtasker are part of the future that’s very different to the world we or our parents grew up. It’s going to be interesting to see how society and governments evolve around the realities of today’s workplace.

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Can governments save declining cities?

Detroit’s decline illustrates the limits of government powers in the face of economic and historic forces.

Following yesterday’s post on comparing the relative problems of Detroit and the Chinese ghost city of Ordos, The Fiscal Times has a somewhat wistful description of Motor City’s decline by one of the city’s sons, Eric Pianin.

Pianin’s story charts the various attempts to revitalise the city following the disastrous 1967 riots that triggered the middle class and white flight from downtown.

As last week’s events show none of these efforts worked, which begs the question of what governments can do to save cities and regions facing structural decline.

Every city has an economic reason for existing — it could be transport links, natural resources or an industrial cluster. When that reason fades the population moves on.

For Detroit, the high point was the late 1960s as the US motor industry reached its zenith. Through the 1970s the sector languished and was then displaced by smarter, better Japanese competitors.

In the face of this there was little local, state or Federal governments could do. Detroit’s importance, wealth and population were destined to decline as industry left regardless of how much money was spent on grand schemes to revitalise the town.

Perhaps sometimes we just have to accept there are limits to government power and the predicaments of cities like Detroit are the natural course of history.

Over time, it may be Detroit manages to reinvent itself however the city will almost be very different, and smaller, city that it was in its heyday.

View of Detroit Central Terminal Station by Jason Mrachina through Flickr.

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Ordos and Detroit – A tale of two cities and two economies

The problems of Detroit and Ordos tell us much about the differences between the US and Chinese economies

This week bought news that that two cities, one in China and one in the US, had fallen into deep financial trouble.

While the bankruptcy of Detroit is very different to the developers of the Ordos new city failing, there is a strange symmetry between the two stories.

Detroit is the biggest US city ever to enter bankruptcy with an estimated $20 billion in debts, dwarfing the previous record of Alabama’s Jefferson Country’s $4 billion default in 2011.

The fall of Detroit wasn’t unexpected as the New York Times tells.

Detroit expanded at a stunning rate in the first half of the 20th century with the arrival of the automobile industry, and then shrank away in recent decades at a similarly remarkable pace. A city of 1.8 million in 1950, it is now home to 700,000 people, as well as to tens of thousands of abandoned buildings, vacant lots and unlit streets.

Like most industrial hubs, Detroit grew became the centre of the US motor industry due to geographic and commercial advantages along with a few historical accidents but as the economy changed, the city’s importance faded.

It’s sad for the people of Detroit but it isn’t the first industrial hub to fade away; Ironbridge, once the cradle of the English industrial revolution, is today an open air museum and a charming rural spot.

Ordos on the other hand is an example of 21st Century government planning with the Inner Mongolian provincial leaders building the city of the basis of build it and they will come.

They haven’t.

The collapse of Ordos is going to be an interesting test of the Chinese economic model. Many of the country’s local and provincial governments – like Australia’s – have become dependent on the revenues from property sales. Now the market is  drying up, local councils are having trouble paying their bills as Bloomberg reports.

Some Ordos district governments had to borrow money from companies to pay municipal employees’ salaries, Economy & Nation Weekly, published by the official Xinhua News Agency, said in a July 5 report on its website.

So while Detroit illustrates the stresses in the US system, so too does Ordos tell us about the problems facing Chinese governments.

The tale of these two cities also shows the difference between the US’ industrialisation of the early Twentieth Century and today’s economic development in the PRC and reminds why the results of ‘Capitalism With Chinese Characteristics’ may be very different to the modern American consumerist economy.

For Detroit, at least there’s good news as one US city manages to works its way out of bankruptcy. For the developers of Ordos though, things must be looking very grim.

Ordos image courtesy of Bert van Dijk through Flickr.

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Google and Microsoft show how online business is changing

Google and Microsoft’s quarterly reports show how all businesses are vulnerable in times of change.

Both Microsoft and Google yesterday reported their second quarter earnings for 2013 and both missed the targets expected analysts. Does this really mean anything?

Microsoft’s earnings were particularly notable as they included a $900 million dollar write off on Surface RT inventories, this almost certainly means a key part of the company’s tablet strategy has failed.

What’s striking in Microsoft’s earnings report is the terrible performance of the Windows Division which saw sales increase 10% year-on-year to 4.4 billion dollars, but earnings collapse by over 50%. Excluding the Surface RT write off, the division would still have seen a ten percent fall.

The company’s statement emphasised how the division is struggling with increasing costs.

Windows Division operating income decreased $1.3 billion, primarily due to higher cost of revenue and sales and marketing expenses, offset in part by revenue growth. Cost of revenue increased $1.2 billion primarily reflecting product costs associated with Surface and Windows 8, including the charge for Surface RT inventory adjustments of approximately $900 million. Sales and marketing expenses increased $344 million, reflecting advertising costs associated with Windows 8 and Surface.

At Google, the company’s 2nd Quarter report show trend is still upwards but the core business of online advertising is showing some cracks as the total number of paid clicks grows, but the value of each falls. At the same time traffic aquisition costs are rising at the same rate as revenues.

This could indicate that advertisers’ appetite for online links is fading. For smaller businesses, the cost of adwords campaigns has been escalating to the point where the old days of newspaper classifieds and Yellow Pages listings start to look cheap.

Couple the cost of advertising with the inevitable ‘ad blindness’ that web surfers have developed and a worrying trend for Google starts to appear. Overall Google’s net profit margin was 26%, down from 31% a year earlier.

While both companies remain insanely profitable – Google earned $14 billion this quarter and Microsoft $6 billion – both businesses are showing stresses as their markets evolve. It proves no business can afford to be complacent in these times.

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Australia’s small business crisis

A survey on Australian family owned businesses raises some disturbing questions about the nation’s economy.

The 2013 MGI Australian Family and Private Business Survey is a disturbing document describing a sector that’s aging, pessimistic and struggling with change. It bodes poorly for what should be the powerhouse of the nation’s economy.

Having been conducted over nineteen years, the MGI survey is a very good snapshot of how the sector has evolved over the last two decades and it’s notable how owners are older and not optimistic about their prospects of selling their businesses.

Another key aspect is the changed focus of Australian family businesses; in 2003 forty percent were in manufacturing, this year its half that which probably tracks the decline of the nation’s manufacturing industries.

Most striking though is the aging of the small business community with one in three proprietors being in the 60 to 69 year old bracket, up from one in five just 3 years ago.

snapshot-of-australian-businessesThat the average age of Australian small business owners is increasing shouldn’t be surprising given the nation’s increasing obsession with property. As home prices become more expensive, it becomes more difficult for younger people to pay off their mortgages or risk their equity on building a business.

Probably the most heart breaking comment from the report is that over half of Australia’s small business owners don’t see an immediate prospect of retiring and nearly two thirds don’t see any chance of an early exit.

58% of family business owner-managers see themselves working in the business beyond 65 years of age, with 65% indicating that their businesses are NOT exit or succession ready.

Part of the reason most Australian family businesses aren’t succession ready is that Generation X and Y buyers crippled by big mortgages simply can’t afford to pay what the older Baby Boomer and Lucky Generation proprietors need to retire upon.

It’s hard not to think that the grand 1980s corporatist vision of Bob Hawke and Paul Keating – that most Australians will work for one of two big corporations while being members of one of two big trade unions – has largely come true.

For Australia though this is not a good thing as the wealth of those corporations, along with that of the nation’s households, is largely tied into the domestic property market.

A discussion on the Macrobusiness website about New Zealand’s property obsession has a graph which illustrates both the Kiwi and Australian economies’ dependence upon house prices.

Housing-Wealth-to-disposable-incomeHousehold-Financial-Wealth-to-disposable-income

Those financial assets in the second graph include the value of businesses, and that statistic staying largely flat while housing wealth has gone up fifty percent over the last fifteen years illustrates how dependent the Aussie economy has become upon property speculation.

Property speculation can be fun, particularly when you’re watching people bash down walls on the latest reality TV home improvement show, but it isn’t the basis for a strong economy.

That Australia’s small business sector is aging and increasingly shifting to low value adding service industries is something that should be discussed more as the nation considers what its global role will be in the 21st Century.

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Can mobile networks build Myanmar’s economy?

Myanmar, or Burma, is emerging from being a backward economy, can mobile networks help the nation’s economic development?

Fifty years ago Myanmar, or Burma, was one of Asia’s most affluent nations, but a succession of poor governments have seen the country become one of the world’s poorest. Can mobile phone networks be part of Myanmar’s econmic recovery?

The potential economic impact of mobile communications in Myanmar is a report prepared by Deloitte Consulting for network equipment vendor Ericsson claiming that rolling out cellphone networks across the nation will create 90,000 jobs in the emerging economy.

Myanmar is starting from a low base with only 2% mobile penetration rates, compared to over 40% in Timor-Leste and Laos while the average across South-East Asia is over 100%.

Myanmar lags south east asia mobile penetration rates

To address this the Myanmar Post and Telecommunications Department is looking a splitting the existing phone monopoly into three or possibly four licenses.

Ericsson’s report looks at the economic effects of rolling out these networks and some of the opportunities for local entrepreneurs and communities.

The biggest employment effect identified in the Ericsson/Deloitte report is through the reseller networks with 50,000 of the 90,000 jobs created by new mobile services being in the sales channel.

What’s striking about that prediction is how it doesn’t look at the broader effects of modernising the country’s phone network. The report’s authors do mention they believe the overall benefits could boost the Burmese economy by over 9% in a best case scenario but don’t fully delve into where they believe that growth will come from.

myanmar-gdp-effects-of-mobile-networks

It can be expected there’ll be many more indirect benefits as Myanmar’s communications networks jump into the 21st Century, the report itself has a chapter citing various benefits mobile networks have delivered to countries as diverse as Kenya, Chile and Bhutan.

Particularly interesting with Myanmar’s development will be the Chinese influence in rolling out these networks – the PRC is already the biggest foreign investor in the country having largely ignored western sanctions on the military regime and it can be expected players like Huawei and China Mobile will be well positioned in bidding for licenses and contracts.

For local entrepreneurs the complex Burmese language is a natural opportunity for app developers and programmers to develop localised versions of successful applications, the lack of English and Chinese language skills among the population – another terrible neglect by successive governments – will hamstring Myanmar’s digital media export opportunities.

Probably the biggest risk to Myanmar’s success though is the role of the military who are expected to get one of those mobile licenses.

Burma’s terrible economic performance over the last fifty years has been largely due to the incompetence, greed and corruption of various military rulers and, while their continued influence in the nation’s economy may be necessary to placate them and their cronies, the legacy of these people may act as a break on a really open economy or fair markets.

For Myanmar, the opening of cell phone networks is great opportunity. Hopefully the vested interests that have held this nation back for so long will resist the temptation to further damage the country’s prospects.

Burmese landscape image by ZaNuDa through sxc.hu.

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Expat workers and their fragile, guilded cage

The guilded cage for expats is a nice comfortable place to, but it can be a lot more fragile than many think.

I was sitting on the back of a motorbike grimly clutching a briefcase full of 100 baht bills when the realities of working in Thailand really dawned on me.

One of the downsides of being the contracts administrator in an Engineering company is that one gets stuck with the jobs that doesn’t fit anybody’s official duties.

This time it was going to rescue Ken – not his real name – a Kiwi Project Manager who instead of enjoying Friday afternoon in a Soi Cowboy beer bar was under siege in his site hut in suburban Bangkok.

Because of a glitch in the insanely bureaucratic payroll system our Singaporean employers used, Ken’s labourers hadn’t been paid and now they were threatening to burn down the site hut with Ken and his office staff in it.

So the story of Chip Starnes, the US businessman freed yesterday after being held hostage by former employees in his Beijing office for six days, is very familiar. It’s a story that expat workers should understand about their status and position when they take an overseas assignment.

While Chip seems to have come out of the ordeal unscathed apart from being in need of a good night’s sleep and a shower, it could have been much worse; shortly after I left Thailand an Australian accountant was gunned down over a business dispute involving a sugar mill outside Bangkok.

In Dubai, two Australian property developers find themselves mired in a legal dispute that could see them facing a decade in gaol.

The risks involved in being an expat worker are easily to overlook, particularly in places like Dubai, Hong Kong and Singapore where the life is good for western expatriate workers – the reality for Filipino maids or Pakistani labourers is another matter of course.

When things go wrong though, they go wrong badly and the reality of life in a foreign country can be a rude shock for expats who thought they were living a privileged existence.

The guilded cage for expats is a nice, comfortable place to live in but it is a lot more fragile than many think.

For Ken, he escaped being burned out of his site hut by an angry mob as we arrived before the torches were lit. Some frantic dishing out of notes to the crowd – I’m still sure many of those we gave money to didn’t actually work for us – defused the situation.

Ken still got his Friday night beers at Soi Cowboy and took the whole saga as being part of a day’s work in Thailand, but then Ken was an old Asia construction hand who had no illusions of what could befall an innocent expat. Others might not have been so relaxed.

Dubai image from SG777 through SXC.HU

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