Impact of Internet and E-Commerce on the Labour Market

Author(s): Sumanjeet Singh

Source: Indian Journal of Industrial Relations, Vol. 43, No. 4 (Apr., 2008), pp. 633-644
Published by: Shri Ram Centre for Industrial Relations and Human Resources
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 IJIR, Vol. 43,No. 4,April 2008 COMMUNICATION

IMPACT OF INTERNET AND E-COMMERCE ON THE

LABOUR MARKET

Sumanjeet Singh

INTRODUCTION

The emergence and growth of information and communication

technologies (ICTs), in theirdiverse form (especially internetand

e-commerce1), are the world of work, how
revolutionising
function, change and evolve and the nature of
organisations
roles and careers. have
leadership, managerial professional They
become integral elements of business, industry and commerce, thus

driving the growth of modern economy. In fact, business and

economy are inextricably linked with the development and
implementation of new technology. Impact of computers and ICTs
on business and economic growth and productivity in
industrialised, and to a limited extent, in less industrialised
countries, has been extensively discussed (Brynjolfsson and Hitt,
1998; Castells, 1996; ILO, 2001; Knights andWillmort 1988; Forster,
2006; Mitter and Rowborham, 1995; Sumanjeet, 2007; Pailwar,
2001; UNCTAD, 2005). While some of these studies have shown
that internet and e-commerce has
especially technology2 positive
impact on thebusiness sector (see Table 1), doubts have been raised
about its impact on macroeconomic and on the labour
growth,
market in particular. There are very few studies which have
focused on the impact of internet and e-commerce on the labour
market. In fact, this domain of Internet activity has received

Dr. is Senior Lecturer, Omkarananda Institute of Management

Sumanjeet Singh
and Technology, Rishikesh. The author wishes to thank his supervisor Prof. L. N.
Dahiya for reading the earlier versions of this paper and making a number of
comments and constructive criticisms.
helpful

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 634 The Indian Journalof IndustrialRelations

relatively little attention. Therefore, ithas become pertinent to

analyse the implications of e-commerce and interneton the labour
market. of internet and e-commerce on the different
Impact
segments of labour market is given as under.

IMPACT OF E-COMMERCE ON EMPLOYMENT

Internet3 and e-commerce have as

long been recognised having
an on work, workers, and the workplace. It can
important impact
contribute to better employment opportunities in especially
developing countries both through improved labour facilitation
and direct employment. Studies revealed that E-Commerce
activities, in general, will spur employment needs forworkers
involved in e-commerce systems and organisations and website

design. According to a Worldcom studymore than two-thirds of

Americans have engaged invirtualwork (Nancy, 2003). Vera, 2002
studied the impact of e-commerce on B2C e-commerce on

Philippine workers and revealed that e-commerce can

generate
almost 20 per cent additional e-commerce
jobs. Thus, economy
has a huge potential to generate employment (Table 2).

More are needed to set up, maintain,

computers workers and
oversee the additional hardware and software that e
systems
commerce the workers needed are and
require. Among computers
information system managers, computer system analysts, computer
engineers, computer support specialists, database administrators,
computer scientists and computer programmers (Kuhn, 2000;
Hecker, 2001; Borenstein and Saloner, 2001; Autor, 2001). E
Commerce activities also require more commercial artists,
designers,writers and [Link] to this,theglobal information
revolution, which is largely driven by internet technologies, is
making possible many service related jobs to be outsourced to the
developing countries new forms ofwork outside the traditional
office and new opportunities for self employment and
entrepreneurs.

On the flip side, ithas also been feared that the reduction in
the number of intermediaries4 and sales persons due to the
reduction in the number of supermarkets and showroom would
reduce world over. The worst affected are expected
employment

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Communication 635
to be the unskilled manpower. It is true that unskilled labour is
in a in the e-commerce Internet
getting displaced big way economy.
and e-commerce by facilitating firms to
employ home-workers
on
a contractual basis are seen to promote insecure employment
In India, as well as in the other low-income
opportunities.
economies, the potential of e-commerce is seen for employment
from the formal sector to small firms in the unorganised sector
where employment is not protected by any legislation. Further, if
this feature of e-commerce encourages the formation of small firms
thatare narrowly specialised, italso implies that there is less room
for employee mobility within the firms transforming the careers
paths of employees (Francis, 1986). It is also important to note
that the rise of Internet and E-Commerce has led to an increase in
women's presence in paid employment, the reproduction of gender
based discrimination within these segments notwithstanding
(Mitter and Rowbotham, 1995).

IMPACT ON PRODUCTIVITY

Various studies5 have showed that e-commerce has a

positive
impact on labour productivity. Atrostic and Nguyen (2002)
discussed the nature of the pervading influence of e-commerce
on and revealed that e-commerce and internet have
productivity
strong implications for labour productivity. At the theoretical
level, since e-commerce reduces the coordination costs between
differentwork processes, they facilitate firms to fragment tasks
to enable them to improve the labour productivity. At the same
time, when the routine tasks can be automated, e-commerce
reduces unskilled work. Autor (2001) argued that the internet
and e-commerce are to change how some workers deliver
likely
labour services. For example, falling telecommunications traffic

regardless ofwhere itoriginates (Call Centre, 1997 and Uchitelle,

2000). Improvements in communication and control technology
mean that people who monitor or other workers can
equipment
their task at greater physical remove. Remote access to
perform
e-mail and company documents will enable them to perform some
or all of their work from home or elsewhere. One potential source
of efficiency from delivering services remotely is that the
gain
hours spent in unproductive commuting may be replaced by
rapid online delivery.

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 636 The Indian Journalof IndustrialRelations

Further in a recent study, Atrostic and Nguyen (2004)

considered the impact of computer networks on labour
productivity in the US sector, micro data
manufacturing using
predominantly for 1999. They found a positive and significant
of computer networks on level labour
impact plant productivity,
and suggested that networks increase labour productivity by
around 7.5 per [Link] (2001) provides evidence for the
positive impact of different information networks on labour
productivity in Japan. In the UK, a recent study by Criscuolo
and Waldron (2003) based on Annual Business Inquiry shows
thatbuying online positively affects the labour and total factors
of productivity, while selling online has a negative impact on
productivity.

IMPACTON JOBSEARCH

on the labour market

Perhaps the larger impact of e-commerce
can be seen in the form of online job search. In terms of formal
information and services, there would be advantages in the

development of more interactive job search sites, allowing job

seekers to store search and user profiles, and to follow
preferences
through identified vacancies by making online applications. The
internet has become an invaluable tool for sourcing and recruiting
qualified staff. The ease of posting employment openings, the
relatively low cost of advertising and the speed of candidates
response has many hiring managers more time than ever
devoting
before to recruiting online. However, very little is known about
the importance of online job applications or direct employer
initiated contractswith thepotential candidates. Even then,online
job posting has grown spectacularly (Autor,2001). Estimates place
thenumber of online job boards6 at over 3000, thenumber of active
resumes online at over 7million, and thenumber of job postings
over at 29million (Boyle et al, 1999; Computer Economics, 2000).
Kuhn and Skuterud (2000) reported that 7 per cent of employed
workers regularly used web to search for a new job in 1998. The
leading job board7, [Link] offered 3.9million resumes and
4, 30,000 jobs inAugust 2000 (Nakamura and Pugh, 2000).

As with other tools, the internet is not without limitations as

a means of candidates. For
attracting qualified example,

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Communication 637

companies listing opportunities on major job boards may receive

from a much wider and
applications geographic region-
sometimes less qualified applicants-requiring additional sorting
and review. Firms are also that some candidates who post
noting
their resumes online may be more passive job seekers; they
want
to "test the waters" and wait for the results, versus proactively
applying foropen positions.

SKILLS REQUIREMENT

The last decade has witnessed a pronounced shift in labour

demand towards high-skilled workers. The changing trends in
labour demand are not primarily driven by shifts in economic
between towards more skill-intensive activities,
activity industry
rather theyhave arisenwithin most industries,bothmanufacturing
and non-manufacturing industries. What is clearer is the fact that
electronic commercewill cause changes in themix of skills required,
driving demand forinformationtechnology (IT) professionals. This
may exacerbate a supply shortage, which has received great
attention in theUnited States, although it is not peculiar to that
country. For electronic commerce, IT expertise also needs to be

coupled with strong business applications skills, and therefore

a flexible, multiskilled work force. Apart from contingent
requires
skills needed to support electronic commerce transactions and
there will be a more structural and long-term shift in
applications,
the skills required to perform economic activities on line. In general,
e-commerce is likely toaccelerate existing upskilling/multi-skilling
trends in theOECD work force (Taylor et al, 2004). These skill
requirements place new demands on schools and vocational
facilities. can be a
training Becoming computer-literate significant
additional cost, one which is likely to vary as a function of age
and educational A system of education that
background.
familiarises young students with the technology of the Internet
can greatly reduce skills acquisition costs and decrease differences
in participation rates in electronic commerce in the various

segments of a society's population. These changes in the labour

force caused e-commerce
underscore the need for flexible labour
by
markets and active labour
policies that help workers to adjust to
in these markets. This will be particularly important for
changes
those service sector jobs, such as those in retailing, that have not

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 638 The Indian Journalof IndustrialRelations

yet been exposed to significant technological change 01

international competition.

In contrast to the comprehensive demand for skilled workers

in all areas of the expanding IT and multimedia industries, the
demand for commercial employees in the remaining sectors, which
has been created by thedevelopment of internet-baseddistribution
strategies, is limited to the areas of advertising and marketing,
although projectmanagement will also be affected in themidterm.
No quantitative changes appear to be on thehorizon in the areas
of sales and data
processing. Across economic sectors, the
increasing of e-commerce to a
expansion applications points
decreasing demand for specialists in the areas of procurement,

logistics, human resources, accounting, administration,

organisation and management.

ORGANISING WORKERS

Within this wider context of organisational and strategy

evolution, the emergence of the Internethas heightened thedebate
about the nature of the change and the possible role of the new
ICTs within and across union structures. The growth of the Internet
and other information communication technologies (ICTs) has led
to a new spin on the continuing debates about the role and health
of traditional representative such as trade unions
organisations
(Darlington, 2001). From the early 1990s the growth of the ICTs
has led to claims of the likelydemise of representativeorganisations
such as unions. Grossman (1995), amongst others has 'that
argued
thebig losers...[in the Internetera] are the traditional institutions
that have served as the main intermediaries between government
-
and its citizens the political labour unions, civic
parties,
associations' (Grossman, 1995). They also permit traditionalunions
to better engage and their local bases. There is a
interchange with
dynamic of relocalisation afforded by the new information
communication technologies (Shostak, 2000). The coordination
capabilities of the new
information technologies also permit new
forms of the organisation of labour at the local level -
'bootleg'
industrial action by those not in agreementwith traditional union
leadership becomes more and the advent of 'ten minute'
possible
activist funding technologies (click and donate) become thedevice

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 Communication 639

by which such action can be sustained (Green et ah, 2001). As

membership of mass trade union
organisations has fallen and their

political influence
waned, they have often been seen as in
being
inexorable decline, particularly in terms of their
representative
function and as a linkage mechanism between state and citizen
(Ward and Lusoli, 2002). This decline is all themore worrying in
an less secure industrial as unions do have a
increasingly society,
beneficial effect on wages, safety in theworkplace and working
conditions. The advent of the Internet has seen a of contrary
variety
claims about their adoption by trade unions. Some have argued
that the increasing use of the ICTswill furtherundermine the role
of the traditional representative organisations, including trade
unions, in favour of more issue-oriented groups, protest networks
and/or individualised formsof participation. Alternatively, there
has been interest in the notion of e-unions, virtual unions or
cyber
unions, where the ICTs are harnessed to reinvigorate and
modernise union practices.

CONCLUDING REMARKS

The new internet and e-commerce

technologies, especially
together with other important changes, such as the continued
increase in the educational attainment of thework force, shift of
to service sectors, increased employment opportunities
employment
forwomen and formation of online trade unions are a
producing
labourmarket thatdiffersgreatly fromthe industrial labourmarket
that characterised the 20th century. Further, increased competition,
global access and organisational change are affecting labour
markets by influencing employment demand, wages and skill
requirements. Thus, the impact of the Internet and e-commerce
on the labour market is undeniable. At many fronts, the labour
market is the gainer and at some it is the loser also. But, it is

expected that implications of these technologies will open new

a
opportunities for the labourmarket and give new shape to the
future labourmarket. To make thebest of these technologies, what
is really needed is how to convert the threats arising due to the
implications of these technologies into opportunities. In fact, it is
only the labour thatwill decide where theywant to stand. In this
digital economy only the powerful can survive. Therefore, the

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 640 The Indian Journalof IndustrialRelations

workers continuously need to develop IT skills and to be on the

alert so as to market them at every Internet and e
opportunity.
commerce technologies are just tools,what the labour market is
going to do with these toolswill decide the futureof the labour
market.

NOTES

1. Electronic Commerce called 'E-Commerce' is often used

popularly
interchangeably with the IBM's coined term 'E-Business'. In reality, the
of e-business ismuch more than e-commerce. E-Business include not
scope
e-commerce, but also Internet based communications and Internet
only
enabled business processes (for example, Enterprise Resource Planning,
and Electronic Customer Relationship Management etc.),which might not
be strictlycommerce in the sense of buying and selling. In fact,e-business is
a part ofhow you run your business and thus e-commerce is just a subset of
e-business.

2. E-Commerce is a broader that covers all types of business and

concepts
commercial transactions which are affected means
by electronic whatsoever

which, interalia, includes Telephone, Telex, Facsimile, EDI, EFT, electronic

mail, computers and [Link] specifically it iswith the Internetbecause
the Internet is themost potent way or technique to perform business or
commercial activities E-Commerce and Internet Commerce
electronically.
are used
interchangeably.

3. A common misconception is that the Internetand theWorld Wide Web are

the same [Link], from the technical perspective, the Internetand
theWorld Wide Web are two separate activities. The Internet is a collection
ofwires, protocols and hardware that allows us to electronic transmission
of data over TCP/IP. Any data can be transferredover this collection of
hardware and software components. include e-mail, video, voice
Examples
and webpage. On theother hand, theWorld Wide Web exists on the Internet.
The web is composed of hypertext pages viewed by a browser, which are
served from a web server over TCP/IP. Web pages always begin with
http:// or [Link] signifying their contents; while the internet is the
infrastructure,theweb can be thoughtof as an application for the Internet.
4. However, these fears may not be unfounded. In the e-commerce economy,
though it is possible to deliver a number of goods and services online, it
may not be possible to completely eliminate thephysical delivery ofmany
goods because of theirvery nature. Goods such as vegetables and grocery,
garments and shoes, toys, etc. can not be delivered online. Though
intermediaries likewholesalers and retailers can be eliminated in such
transactions, itmay not be possible to eliminate distributors and
transporters. The demand for distributors and transporters is, in fact,
to increase
expected tremendously.

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Communication 641

5. Their study isbased on companies thatuse computer mediated networks,

including the Internet,and therefore,itprovides a useful reference forour
analysis.

6. Job boards hold several over the textual

advantages counterpart, newspaper
help wanted ads. They offermore information about more jobs inmore
locations than are conceivable forpaper equipments. They are easier to
search. are more to date, because ads are more
They potentially up posted
immediately and can be edited frequently. Jobs boards can also take an
active role inmatching, rather thanwaiting on worker or firms to find one
to another, software can parse posted job listings and resumes to identify
plausible matches and notifyboth theparties.
7. Some job boards are provided on a non profit basis. For example, theUD
Department of Labour runs America's Job Bank, to be found at http://
[Link], which makes the job listing and search services of theUS
Public Employment Service broadly accessible and Canada's CareerOwl
job search facility,developed by theUniversity Faculty and volunteers and
found at search assistance for the
[Link] provides
Canadian students.

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 Communication 643
Table 1: Worldwide Growth of E-Commerce (in US $ Billion)

Countries 2004
2000

Level % Level % CAGR% % of total

sales in 2004
_2000-04
657.0
Total 100 6,789.8 100.0 58.48.6
North America 509.3 77.5 3,456.4 50.9 47.9 12.8
United States 488.7 74.4 3,189.9 47.0 46.9 13.3
Canada 17.4 2.6 160.3 2.4 55.59.2
Mexico 3.2 0.5 107.0 1.6 87.78.4
Asia Pacific 53.7 8.2 1,649.8 24.3 85.6
8.0
31.9
Japan 4.9 880.3 13.0 82.98.4
Australia 5.6 0.9 207.6 3.1 90.316.4
Korea
5.6 0.9 205.7 3.0 90.1 16.4
4.1
Taiwan 0.6 175.8 2.6 94.0 16.4
AllOther 6.5 1.0 197.1 2.9 85.3
2.7

Western Europe 87.4 13.3 1,533.3 22.6 71.6

6.0

Germany 20,6 3.1 386.5 5.7 73.3 6.5

UK 17.2 2.6 288.8 4.3 70.5 7.1
France 9.9 1.5 206.4 3.0 75.9 5.0

Italy 7.2 1.1 142.4 2.1 74.6

4.3
Netherlands 6.5 1.0 98.3 1.4 67.9
9.2
AllOther 25.9 3.9 410.8 6.1 69.1
6.0
Latin America 3.6 0.5 81.8 1.2 78.1
2.4
Rest World 3.2 0.5 68.6 1.0 76.6
2.4

Source: Forrester, 2004

Note: Total may not equal sum of rows due to rounding.

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 644 The Indian Journalof IndustrialRelations

Table 2: Likely EffectOf E-Business Activities On Employment Requirements

In Selected Occupations (In Thousands)

Occupation Likely effect Employment Likely Affect

(1998)
All Occupations 140,514

Executive, administrative, and

managerial:
Engineering, science, and computer and
information systems managers 326 Stimulates

Management Analyst 345 Stimulates

Purchasing managers, purchasing agents,

and wholesale and retail buyers 547 Dampens

Professional specialty: Artists and commercial artists 309 Stimulates

Computer systems analysts, engineers,

and scientists 1,530 Stimulates*

Designers 335 Stimulates

Writers and Editors 341 Stimulates

Technicians and related support

Computer programmers 648 Stimulates

Marketing and Sales 15,341 Stimulates

Administrative support workers,

including clerical 24,461 Dampens

Customer service representatives

(adjustment clerks) 479 Stimulates**

Note: *Except dampens forcomputer support specialists inpost sales technical

support.
**But also as more traditional duties are more self services.
dampens
Source: Hecker, 2001.

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