
Issue No 54		19 May 2000

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The Soapbox

David Whiteley on Unions and e-commerce

The impact of e-commerce on employment and trade unions in Australia will be great. But the ACTU and Australian unions see the internet and e-commerce not just as a threat but also an opportunity.


	David Whiteley

Jobs will changes, workplaces will fragment - but the ACTU is working to develop strategies and solutions that ensure unions are a credible and relevant voice for all workling people in the new economy; and that the spectre of an information 'rich' and an information 'poor' is prevented."

Overview

The unions@work report identifies focusing on employment growth areas as one of the objectives for the union movement. Call centres and information technology are identified as growth areas. It is noted that employment in computer services has grown by 217% in five years. The growth in information technology will only become more rapid. The 'internet revolution' is upon us, with six of the ten largest US companies being IT/software companies.

e-commerce (the exchange of goods and services on the internet) is part of the internet revolution, and may well become the most important part for trade unions and their members. Consider the expected growth:

- By 2003 it is expected 9% of all US trade will be done over the internet ;

- By 2003 it is expected 36% of all US shopping will be done over the web;

- Abbey National (a UK bank) is to set up a full service clearing bank on the internet. The bank is expected to employ just 50 people; and

- A recent survey found 72% of employers in Australia intend to move up to 10% of their business online this year.

Why bother with e-commerce and the internet?

Three years ago an organiser at a white collar union was upbraided for organising in a call centre. She was told she should have been focussing on the branch network of the employer, for that was 'where the members are'.

Three years later unions are struggling to organise workers in call centres, which have become an employment growth phenomenon. E-commerce is not as tangible as call centres. But its impact on jobs and workers may be more dramatic - e-commerce will effect every sector in some way, changing the skills and qualifications needed for jobs.

By beginning to address the issues of e-commerce and the internet now, we will not only save ourselves a lot of catching up, but will also present ourselves as contemporary and relevant. Lets lead the debate!

Introduction

In this report I will briefly:

- Introduce e-commerce and explain what it is;

- Look at some of the broad economic and business trends and expectations resulting from e-commerce;

- Evaluate what overseas unions have done so far; and

- Make some proposals for potential next steps.

For the ACTU the objective is to provide practical and accessible information and advice to unions who are seeking to organise in growth areas.

Sources of information

There is one obvious place to go for information about e-commerce. The web. The following sources have been used:

- The US Department of Commerce web site : http://www.ecommerce.gov/

- The National Officer for the Information Economy (Australian Govt) : http://www.noie.gov.au/

- UK Government Central IT Unit : http://citu.gov.uk

- Anderson Consulting : http://www.ac.com/

- Forrester Research (online journal): http://www.forrester.com/

- e-commerce today (online journal) : http://www.ecommercetoday.com.au/

- Financial Times Online (London) : http://www.ft.com

- New York Times Online : http://www.nytimes.com

- Financial Review : http://www.afr.com.au

- ABS : http://www.abs.gov.au

- SEIU web site : http://www.seiu.org

- The Economist (London) : http://www.economist.com

- Morgan and Banks http://www.morganandbanks.com.au

Defining e-commerce

e-commerce is the exchange of goods and services electronically - specifically over the internet. Some commentators include the phone and fax, and EDI - but it is these forms of 'electronic commerce' which internet based commerce is likely to replace.

Currently e-commerce is predominant at the business to business (b2b) level, rather than the business to consumer.

Defining e-business

Whilst some firms are using the internet to communicate with customers and suppliers etc, others are using the internet to radically change how they do business and lowering costs across their value chain. Commentators talk of 'new business models'. In particular is the talk of disintermediation - where a firm removes partners from their value chain to trade directly with their customers. Reintermediation is the adding of new partners.

This may sound like a lot of consultant-speak, and to some extent it is, but consider:

A manufacturer might decide to cut out the wholesaler and retailer from the value chain, but add in a network provider to link producer and consumer; a financial services provider to manage the secure payment of goods or services; and transport companies to deliver the goods and services. Such a decision would have a significant impact on its existing value chain. That would mean job changes.

The airline industry is a good example. Travel agents and perhaps airline call centre staff may be removed from the value chain, whilst a secure web site and payments systems providers are added.

m-commerce

m-commerce relates to the use of wireless technology and mobile phones. Vodafone and Commonwealth bank are already advertising a service where your mobile phone can be used to transfer funds.

e-commerce trends

The hype surrounding e-commerce makes it difficult to assess just how much of an impact it will have on the Australian economy and employment. There are broad trends however:

- At the end of 1998 there were 1.7 million Australians using the internet at least once a week. This is predicted to grow to 5.7 million regular users by 2003. Including more casual users the total is 10.9 million.

- A recent survey found 72% of employers in Australia intend to move up to 10% of the business online this year;

- The Federal Government plans to use e-commerce for 90% of their trading activities with suppliers by the end of 2001 ;

- E-spending is expected to triple by 2003 in Europe

- Yahoo could buy News Corp

- In December 1999, Commonwealth Bank processed over 1000 credit card applications online

- Tesco (a UK Supermarket) recently employed 300 extra staff to cope with its online sales

- In the US, the finance sector is investing the equivalent of USD$13,628 per employee on e-commerce

These trends indicate that change is occurring. Talk in the business press about the 'new economy' and the 'old economy'; and the 'internet revolution' all indicate that the nature of business is changing quickly. Bill Gates talks of 'internet years' as being just three months.

Industry convergence:Some convergence between industries and sectors is predicted. Banking and retail; and banking and telecommunications are already occurring in some part (ANZ has recently announced it may become an ISP).

Broad economic trends

The NOIE Report

The National Office for the Information Economy (NOIE) has conducted a pilot study to assess the impact of e-commerce on the Australian economy. The research by NOIE takes a free-market approach to analysing the impact of e-commerce, suggesting that any positive outcomes e-commerce has to offer the economy and employment are reliant on further de-regulation of capital, product and labour markets.

NOIE predicts e-commerce will:

- Increase employment;

- Increase productivity;

- Reduce prices;

- Reduce inflation;

- Increase real wages;

- Increase GDP by 2.7%

- Benefit regional Australia; and

- Benefit urban Australia.

To achieve this governments and business will need to :

- Provide ongoing commitment to maintaining competitive product markets;

- Enhance the efficiency of capital markets; and

- Increase the flexibility of the labour market.

We need to decide whether we want to influence how the outcomes predicted by NOIE are achieved.

Broad industry trends

The US is leading the way, both in development of technology and take-up rates of internet commerce. The rise and rise of the NASDAQ indicating where institutional investors are putting their money (despite the more recent hiccup). Similarly in the UK and Europe companies are responding. Firms such as Amazon.com have shown that physical location does not restrict market reach. eBay is now the largest auction house, recently replacing Sothebys (USD turnover).

The reality for most businesses is that if they are not online within the next five years or so they run the risk of being destroyed by competitors who are.

One of the key changes will be the lowered cost in b2b transactions, where paper will become less prevalent as will postal services. Companies are beginning to insist that their suppliers and customers deal online, or not at all. This trend is bound to continue.

Ford, GM and Chrysler deal: The big three are to set up a global e-exchange linking tens of thousands of suppliers. By 2002 it is expected that 17% of their purchasing will be done on-line, that would equate to USD$28,500 billion. That would change the nature of their business.

Sectoral analysis

Which sectors are most likely to be effected by e-commerce? NOIE report that there are likely to be two clusters -industries/sectors directed effected, and those indirectly effected.

How to assess whether a sector is likely to be directly impacted by e-commerce

NOIE have applied four criteria:

- Is there a high reliance on information in the sector?

- Is the product or service easily virtualised?

- Is the product more important than its location?

- How extensive is the existing information infrastructure in the sector?

The impact on Call centres

Much of the work currently being done in call centres is a target for e-commerce. Much of the transactional work could be done electronically. German research suggests that at this stage levels of employment in call centres are unlikely to contract, but growth may slow. Certainly the role of call centres will change, as will the jobs of employees.

While the jobs within call centres may change, the existence of central customer service centres is likely to continue. For example, customers may want help while 'surfing the wen' and call centre operators may even be able to take control of the customers search to find the good/services they are looking to buy.

Call centres are likely therefore to continue to operate extended hours, and to suit internet users, it may become common practice to be operational 7 days, 24 hours.

How are unions responding overseas

Having checked out some of the web pages of the major US and UK unions, there is little work being done.

Our friends at the SEIU are however running a campaign about the outsourcing of transactional work to a firm that specialises in e-commerce.

Impact on union membership

e-commerce is likely to have a significant impact on membership levels over the next decade. Even a cursory glance would suggest that the retail and finance sectors are going to face huge changes. Other sectors are also likely to be affected. Whether e-commerce creates more jobs than it destroys will be something we will find out about over time. Certainly jobs will change.

Proposal

For unions the challenge is going to be two-fold. If the movement is to grow we have to organise emerging and growing employment sectors. That challenge is significant. If we are to halt the existing membership decline, we at least need to be retaining members.

The concern about the internet and e-commerce is that it has the potential to wipe out the jobs our members are concentrated in. For some unions, responding to e-commerce may not be a matter of expanding membership, but fighting to keep members. The changes in the finance and retail sectors spring to mind.

Further work is therefore proposed. The objectives would be to:

1. Position the ACTU as an organising and campaigning resource for unions planning to organise in growth areas;

2. Position the union movement as a credible and relevant voice for workers in the 'internet revolution';

3. Enable the union movement be in a position to lead the debate on employment conditions and rights for affected workers;

4. Develop the capability to identify and respond to new forms of work, ie telecommuting; and

5. Develop strategies to address the issues of the information 'rich' and 'poor'.

David Whiteley is the manager of the ACTU Trust

   Contact Dave Whitely

  View entire issue - print all of the articles!

  Issue 54 contents

Interview: South of the Border
Victorian Trades Hall chief Leigh Hubbard on life under Bracks, militant unionism and why more people march in Melbourne.

Politics: Jeff Shaw's Second Wave
The full text of the NSW Industrial Relations Minister's speech to Labor Council announcing the Carr Government's IR reform agenda.

Unions: Reith's Laws: Just Say NO
The ACTU has called on Labor and the Democrats to reject Workplace Relations Minister Peter Reith's anti-industry bargaining Workplace Relations 2000 Bill out right.

History: A Breed Of Their Own
Labour historian Greg Patmore explains what makes his fraternity tick - and why they're still going strong and making history.

International: Sony's Asian Showdown
The Japanese electronic giant Sony is threatening to shutdown production facilities in Indonesia - where a prolonged strike has cost it US$200milliom - and move to next door Malaysia where electronic workers are banned from forming a union.

Human Rights: Good Guys, Bad Guys
Everywhere we look -in our newspapers, on the television, in reports by business leaders, academics and politicians - advocacy of human rights seems to be on a collision course with governmental and business interests.

Review: New Workers, New Challenges
A new wave of thought is arguing that working life is changing - but this doesn't necessarily deal unions out the action.

Satire: Rain Man Withdraws Endorsement of Qantas
After the third major safety incident in the space of a year, Qantas has lost the confidence of the most famous public supporter of its once unblemished safety record, the autistic star of Rain Man, Raymond.

» Carr Moves on Casuals

» Democrats Wavering on Reith Bill

» Exit Visas for Child Care Workers

» GST Pay Claims to Target Allowances

» Tide Turns On Competitive Tendering

» Joy Takes Message To The World

» Mines Out as Rio Tinto Torps Talks

» Political Economy for Activists, 2000

» Unions March for Reconciliation

» STOP PRESS: AK-47s used in coup against union-aligned Fiji Labour Government