Proceedings of 8th European Assembly on telework (Telework2001)

162(b) The virtual labour markets that are beginning to develop do not, however, resemble spotmarkets, but rather a complex network <strong>of</strong> relationships between workers who market their servicesthrough the channels <strong>of</strong> personal and institutionalised contact networks, but seldom on openplatforms such as freelance exchanges.(c) Open-market coordination puts great demands on the ability <strong>of</strong> freelancers to market theirservices. The capability to build trust relationships with potential clients is crucial as trust isessential to create the willingness to take the risk <strong>of</strong> starting a collaboration. This risk is perceivedas being especially high in the trade <strong>of</strong> services where the end product cannot be completelyspecified in advance and when value is not easily measured. For this reason, long-term relationshipsto clients and collaborators are sought. Temporary relationships/networks are mostly confined tomarginal activities.(d) Available technologies such as those <strong>of</strong>fered by online work exchanges are not yet beingconsidered sufficient to support trust-building. Substantial efforts on the part <strong>of</strong> website operatorsare necessary to improve the performance <strong>of</strong> work exchanges in this regard.To find out whether these opinions voiced by (potential) users accurately reflect the quality <strong>of</strong> theservices <strong>of</strong>fered, we decided to analyse existent online work exchanges in depth. In particular, wewere interested in whether online work exchanges can act, through their function as virtual labourmarketplaces, as the backbone <strong>of</strong> the development <strong>of</strong> an eLancing economy.3 Matching Supply and Demand for Labour on the InternetUsing a rational, economic logic based on transaction cost and job search theory it can be shownthat a growing use <strong>of</strong> the Internet can lead to an increase in the efficiency <strong>of</strong> the matchingprocess on labour markets. A better match between worker and employer requirements andcapabilities may lead to faster ‘job-clearing’ on the labour market and thereby to lower frictionalunemployment rates, more freedom from time and space constraints traditionally affecting labourmarket participants, and less costly recruitment. Efficiency gains in this area might also result in ahigher share <strong>of</strong> worker/employer-transactions being executed on the open market instead <strong>of</strong> inside<strong>of</strong> permanent employment relationships.Work exchanges on the Internet are indeed beginning to play a major role as intermediaries in thelabour market by <strong>of</strong>fering innovative and/or high-performance services to recruiters as well as jobseekers.Through our research, which included a website content analysis <strong>of</strong> all work exchanges infour <strong>European</strong> countries (Germany, the U.K., Austria and Switzerland), we explored in what waysthe services <strong>of</strong> these specialised sites differ from traditional intermediaries in the labour market andto what extent the different segments <strong>of</strong> the labour market transaction process are supported. Wefound that the number <strong>of</strong> job listings in online work exchanges is already very high (see Table 1)and that essential turnover is generated by private-sector job site operators (Leonard 2000).