The guiding principle of any marketplace is supply and demand. The guiding principle of any online marketplace focused on short-term work — known, of course, as the gig economy — is to match supply and demand with speed and efficiency to get workers in place for the jobs that need doing.
To that end, U.K. marketplace Labour Xchange, launched in February, is “trying to turn the entire market on its head,” according to Co-founder and CEO Jonathan Key in the latest PYMNTS Matchmakers podcast. One wrinkle: In a world where venture capitalists (VCs) and funding rounds dominate startup headlines, Labour Xchange has some financial backing from Community, a U.K. trade union, and has committed to make sure workers are paid a living wage.
Key said the traditional job-seeking model is one where a business has a need for staff, filling that need with employees culled through, say, advertising or a recruiter. Similarly, those workers must be in the process of applying or among the pool of candidates at the recruiters’ disposal.
In the U.K., though, Key told Karen Webster, there are “millions and millions of people excluded from the labor market. They can only work certain hours each week.”
Consider the part-time supermarket employee who works 15 hours a week, as mandated by a unionized labor contract. Yet, depending on the supermarket’s needs, that 15 hours can be scheduled in a somewhat erratic fashion, changing from week to week. The desire to supplement that 15-hour supermarket job with other jobs is thrown into disarray amid scheduling conflicts that can arise at the last minute.
As a result, said Key, “that worker must go on some sort of benefit from the government, but they desperately need more work.” The same might be said for parents or caregivers who look after the elderly, and who may be frequently tethered to close-to-home commitments, as well as have unpredictable demands that can and do intrude upon traditional work schedules. The demands of those family commitments mean that geographic constraints can limit employment options.
“These people are genuinely excluded from most [employment] platforms and most recruiters,” he said. “I have seen how devastating the effects of underemployment can be.”
The Platform Model
The Labour Xchange model, offered via app and now operating in London, he said, focuses on the supply side of the equation: the “ad hoc” workers who need only show they are employable in the U.K., select the hours they desire to work in an upcoming week and state the skills they possess. Through the app, they can specify where they live, what type of work they want, and the days and times they would like to work.
On the employer side, Labour Xchange combines all the work available across a range of businesses and verticals within that time span — effectively matching supply and demand for 24/7 shift coverage. The employees pay nothing to use the service, and the cost is borne by the firms seeking to fill positions.
He told Webster that the Labour Xchange model lends itself well to the needs of smaller businesses in the U.K., where 66 percent of those firms won’t use recruitment agencies or other types of platform offerings. He said, “We are actually bypassing that trust deficit because the business can choose the people they like. What we’re finding is a lot of small businesses select someone for two hours, just to see what they’re like, and they’ve lost virtually nothing.”
Matching businesses with the labor they need — and matching those who want to work with jobs, for the hours they want — can make a local economy markedly more efficient, said Key. He added that, ideally, Labour Xchange can “expand between four to 10 times the number of people in the labor market by reaching those who are excluded.”
The Mechanics Of The Model
Offering an example of the site’s mechanics, Key noted a commercial cleaning company that may have a 20 percent to 30 percent “no turn up” rate due to illness or other events.
“It’s hard to find someone who will show up for two hours on a Friday night to clean an office,” he said. In the event that the same commercial cleaning company can find a worker for that two-hour shift, the upfront cost may run in the hundreds of pounds to sign them up, say, through an agency.
Addressing the Labour Xchange platform, Key explained, “Here, within three clicks, they can book a member to be on staff” for that short-term gig. The individual has already confirmed they can do the job because they have advertised their availability and skills. Conversely, the employer is assured of filling its immediate need, as the platform automatically reaches out to three people for any one job — and the first one to accept gets the slot. He noted that the platform’s “uptake” ratio stands at about 99 percent.
When asked about the payment process, he said that smaller firms pay Labour Xchange up front via credit card, and the platform holds the money in an escrow account. When the engagement is finished, the funds are paid out to the individual.
He added that the firm’s platform offers Pathways, a program through which workers can gain expertise in other verticals via some online training. Picture, then, the pizza delivery person who moves into caregiving in a home setting.
The Union Effect
According to Key, Labour Xchange wrote to every trade union in Britain and linked up with one: Community, which offers training and guidance to workers. Employers commit to paying a living wage, which, in the U.K. is one level higher than minimum wage. The partnership with Community — which reportedly invested about £40,000 ($52,338 USD) in the app — offers support and guidance, and, over the longer term, will be critical to Labour Xchange, as the firm aims to be nationwide by the end of the year, he said.
There’s another impact here — one that leads to the possibility of even steadier work and income.
When an employer taps the same individual through Labour Xchange to fill its need several times, the marketplace steps in and “we say, ‘That’s fine, but you’ve got to move them on to a worker contract because the platform is not geared to getting around employment law.’ …We’ve been amazed by the number businesses that do actually offer a full contract to the workers … we charge such a small fee for it. We charge £150 to take someone permanently.”
In these instances, he noted, businesses, in fact, change their work practices to fit in the worker.
“We are making work more local, more relevant or more convenient for people,” he told Webster.