Reducing Frictional Unemployment

When we built the internet, there were high hopes surrounding this superior and extensively collaborative network. Economists saw that as a pathway to the holy grail – Perfect Information. The internet has been around for two decades, we have moved to Web 2.0. More importantly we’ve seen more than 2 billion people go online. Singapore has 90+% of its households using the internet. Excellent statistics but how has this translated in reducing frictional unemployment?

Better Matching - More can be done

Better Matching - More can be done

Frictional unemployment is unemployment caused primarily due to the lack of information about available jobs. Thus, the prospective employee and employer are unmatched even though they are ‘made for each other’. With the incidence of the internet, we expected this portion of unemployment to fall, drastically. But things have not changed.

Current Inadequacies 

Sure there are many online job portals but these are not much more than a glorified recruit page found at the back of the newspaper. The only thing online job portals have done is to make search slightly faster (rather than scanning a newspaper with your eyes) and the ability to submit CVs online. These 2 functions are very marginal improvements. CV databases have been utilized by many employment agencies for the past century. Newspaper backpages have done an excellent job with categorizing to improve search speeds.

But here is what the internet is capable off 

Eliminating the middle man: A fully automated site with specific search parameters. This reduces the need for human input in initial filtering. All applicants do is to ensure they fit the specific requirements before being forwarded to the hiring firm’s HR team. There is absolutely no need for someone sitting a desk and scrolling through applicants before picking some.

MOM: Has a large role to play

MOM: Has a large role to play

Building a more comprehensive yet flexible database: In order to match the specific search parameters above, we’ll need matching data. The incentive of being quickly forwarded to the hiring firm (or being rejected) should be able to outweigh the costs of coming clean with one’s background. This portion should be initiated by a public serving ministry. The Ministry of Manpower comes to mind here. With the ability to draw academic, domestic and even criminal records, this database can credit the claims made by applicants in their applications. For example, if I claim to be a scholar with a certain school with no criminal background, the database would be able to verify that claim. There will be a massive cut down of repeated form filling and document submissions. There is sufficient incentive for job applicants to populate the database as densely as possible. There is already technology that filter both text and images (photos) to determine how well an applicant fits the job requirements. If I am looking to hire an air steward/stewardess, the database can verify age, weight, height and even facial requirements. In short, this database can and will work. It will be a massive treasure trove of information that companies can tap into. Due to the sensitivity of the data, a public ministry should be in charge of it.

The Roll Out 

Obviously a database and filtering service of that size is ridiculously ambitious. But if it helps to cut down on wasted resources – why not? The manner in which this is rolled out is key. Obviously, jobs that are easier to define should be used first. Such jobs have both narrower parameters and require checks that ministries already have records of. So we’re looking at white collar professional jobs that have digital records of certification. When this pilot test is successful, more firms and people will be willing to join in. Industries involved can thus be expanded.

This solution can also solve underemployment

This solution can also solve underemployment

It seems rather wasteful that we do not harness the strengths of the internet to its full capability. Maybe its the lack of awareness or the drive to be more efficient, maybe it is fear or traditional mindsets that prefer a level of human interaction in head hunting. Whichever the case, our local economy which is solely dependent on its workforce needs to make the most of it. Our employment figures maybe good but this system can weed out the dreaded underemployment problem as well. Underemployment is a situation where you are overqualified for your job and thus your capabilities underutilized.

We should give this a shot, it doesn’t hurt. A better run labor system is a hallmark of a well run economy.



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