Blockchain and the Future of Work

Richard Horne, International Labour Organization

Blockchain has the potential to improve the functionality of labour markets and address some of the major challenges in the world of work. Blockchain is to Bitcoin what the internet is to emails, that is, Bitcoin is just one outcome made possible by the existence of Blockchain technology. But there are so many more. 

Blockchain technology has the potential to transform how we work, consume, pay taxes and an endless list of other things, and it’s already being used around the world.

In Estonia, for instance, Blockchain technology has been used since 2007 to develop a national digital identity scheme. The scheme takes advantage of Blockchain’s ledger qualities (its fuller name is “distributed ledger technology”), which allows multiple fragments of information to be strung together into a single strand, creating an unalterable record of a single identity.

Other uses are well within our sights. In particular, Blockchain has the potential to transform the world of work. This includes, how we hire and fire, how we do work, and how work is governed. It also provides a means of addressing some of the worst forms of labour in our societies, such as child labour and forced labour.

Some thoughts on the potential for Blockchain and the future of work are explored below:


Hiring and firing to be revolutionised

As mentioned in a previous post, Blockchain will likely go hand in hand with an Internet of Things. Our online presence and use of smart devices — both personal and public — are providing big data that can build a digital extension of ourselves in a manner that eliminates the need of many of the human resource processes.

For instance, our internet presence already provides a wealth of information about habits, preferences, skills and interests. Blockchain can bring all these together to compile a comprehensive digital dossier about a person’s hiring potential.

As a result, assessments such as language proficiency tests will likely become redundant, while your digital footprint may provide a far more telling picture than any ‘give me an example’ question.

Similarly, information asymmetries will be reduced and time-consuming tasks such as navigating the internet for jobs, filling in forms and transferring CVs to online templates will become a thing of the past. Instead, with your digital CV verified and cemented into Blockchain it will be available for those hiring, thus enabling employers to find the best match more easily.

This is not a million miles away with applications like Linkedin, and as this develops, Blockchain will allow the incorporation of additional measures, such as soft-skills extracted from our online presence.

Blockchain will facilitate ‘verified’ measures of cognitive ability and more comprehensive overviews of talent and hirability.


Equal pay and equal opportunities at work

Women are paid around 23 per cent less than men, on average around the world.

Part of this can be attributed to factors such as the higher tendency to work part-time, or temporary maternity absences, which may not always be accounted for in the measurement. However, it also reflects endemic discrimination in the labour market.

As measurements of productivity and performance at work become more quantifiable with the Internet of Things, it may become easier to better align pay with performance.

On top of this, the open ledger qualities of Blockchain technology can also lead to greater transparency in wages, salaries and bonuses. Leaving less room to justify small and extreme differences in remuneration. Ultimately, this can result in a fairer and more equal opportunities.


Smoother payments for cross-border gig-work

Labour markets and the relationship between the employer and employee are being redefined across the globe. As new types of casual jobs and non-standard employment emerge in the form of short-term engagements and independent gig-economy contractors, the location of work becomes less important.

Already these workers suffer from wage penalties, lack of job and income security, but payment itself is also problematic, in which the worker themselves often bears the fees for cross-currency payments.

The transfer of payment can be made free of any such fees, and internationalized to any currency, through Blockchain-based cryptocurrency transfer. This is made possible by Blockchain’s instant verification qualities.

An example is Bitwage, through which the money is transferred from say, US dollars into cryptocurrency, passes through a handler, and is almost instantaneously deposited in a new currency, thus avoiding any changes in the cryptocurrency’s value, and avoiding currency transfer fees.

It was also recently demonstrated in a pilot scheme between Thailand and Myanmar, that with Blockchain technology it is possible to transfer remittance money between currencies without the transaction fees.

Such transaction fees can be as much as 7 per cent or more, which for $500bn of global remittances, is a huge amount. Moreover, it was shown to be almost instantaneous, thus with the potential to be highly valuable in times of urgent need.


Welfare, social protection and taxes to be streamlined

The UK is one example where the use of Blockchain is being explored for its potential in streamlining a more efficient welfare system. This is relevant for all countries worldwide. In the case of the UK, welfare costs amount to around £166 billion per year, of which £.12 billion is lost through fraud, £1.5 billion to claimant error and £0.7 billion to other official errors.

Assuming Blockchain would eliminate information gaps that result in these losses, the implementation costs would likely ameliorate relatively quickly. Additionally, welfare systems could be enhanced. For instance, no more visits to the job centre to prove you’ve been looking for work, as they would be informed already.

At the same time, Blockchain may eliminate the need for filling out time consuming tax forms, would reduce over and under payment, allowing for a more efficient tax system.

Similarly, information gaps would be closed as your eligibilities for different benefits (e.g. housing benefit, if the country provides it) would be clearly stated. Your tax burden (e.g. inheritance tax) would be calculated based on the value of your belongings. Insurance and suchlike would be easier to calculate and value.


Greater supply chain transparency

For many of us, little thought goes into the item we purchase at the supermarket. However, this item, regardless of what it is, is the end result of a large network of companies and workers specializing in details down to a microscopic level.

Understandably, it does not take long for end-product companies (e.g. providers of a chocolate bar) to lose track of those in their supply chain (e.g. the small-scale farmer in Cote d’Ivoire).

This can come back to bite the company when it transpires that a major chocolate manufacturer has child labour in their supply chain, for example. At the same time, for the consumer, it can be difficult to digest the thought that your lunchtime sandwich contains shrimps caught by slaves aboard a Thai fishing vessel.

As has been shown by the use of Blockchain to create a ledger of diamonds, in an attempt to keep blood diamonds from infiltrating regularized channels, Blockchain can also provide a means of tracking every single item as well as which farmer or factory worker produced it.

With the greater transparency facilitated by Blockchain, companies can be more accountable of those in their supply chains and we can be more aware of our consumption impacts.

Moreover, it may also provide a means of fairer compensation to different layers of the value chain. Small-scale farmers, or sweatshop factory workers may be entitled to a higher share of the final product price.


The discussion of technology and the future of work has been dominated by the notion of robots taking jobs, and more generally, what occupations and types of work are going to become obsolete as a result of technological advancement. However, new technologies such as Blockchain, its potential role in the creation of a decentralized internet as well as the Internet of Things may have far impacts on the labour market (particularly positive impacts) than the technology and jobs discussion suggests today.

Source: Medium

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