COVID-19, Technology, and Polarizing Jobs

Abstract

As the coronavirus disease (COVID-19) drives economies into recession, many jobs are at risk. The Asian Development Bank (ADB) estimates that the COVID-19 pandemic could cost the global economy from $5.8 trillion in a 3-month containment scenario to $8.8 trillion in a 6-month scenario, with Asia and the Pacific accounting for about 30% of global economic losses (ADB 2020). These estimates also suggest that the equivalent of 158 million to 242 million full-time jobs (6.0% to 9.2% of total employment) will be lost globally in the two scenarios, with job losses in Asia and the Pacific accounting for about 70%. 1 However, not all jobs are equally affected-some sectors are thriving or even growing faster in the pandemic. Global tech giants, such as Microsoft, Apple, and Amazon, were among the top-10 stocks by market cap in mid-April, pushing their share of the S&P 500's total value up by 25%. Other firms are also performing strongly and hiring. These are firms using innovative technologies such as online retail and food delivery with contactless delivery options, 3D printing companies for personal protective equipment, and video conferencing applications such as Zoom (Mirza 2020). Amid the rapid technological changes and increasing automation, however, job polarization and widening wage inequality among employees have occurred as these trends have put manual and routine jobs at higher risk of being displaced (Goos, Manning, and Salomons 2014; Autor 2015). Indeed, COVID-19 effects are fueling trends that had already been exposing middle-skill workers to displacement and lower working hours and incomes. As digital transformation accelerates, old skills are likely to depreciate and become obsolete faster. Aging workers risk falling into low-skilled, low-paying jobs (Lovász and Rigó 2013; Ilmakunnas and Maliranta 2016). 1 Separately, the International Labour Organization (2020) warned of the loss of 6.7% of working hours worldwide, equivalent to 195 million full-time jobs by the second quarter of 2020. The estimated job losses are sobering, compared with about 22 million full-time equivalent job losses during the Great Recession of 2008-2009 (ILO 2020a).

How Can Middle-income Countries Improve Their Skills Systems Post- COVID-19?

“…They suggest that governments need to find ways to "incentivize businesses to upskill their workers" continuously over the course of their careers. In this context strong, forward-looking skills systems are likely to be more important than ever (Park & Inocencio, 2020).…”

“…The pace of automation appears likely to have increased as a result of COVID-19. This partly reflects the fact that automation, on top of efficiency benefits, makes it easier for companies to operate whilst maintaining social distancing (Park & Inocencio, 2020). In addition, there is evidence from advanced economies that recessions accelerate trends towards automation.…”

“…This possibility is underpinned by an appreciation that individuals relying on a narrow set of skills and expertise are "unlikely to sustain long-term careers in [the] economies of the future" (World Economic Forum, 2017). If, it is argued, vocational training institutions focus on task-specific technical skills they "depreciate and become obsolete" rapidly (Park and Inocencio, 2020), whilst if they can provide transversal skills they will "stand the test of time" (Shiohira & Keevy, 2019, p.8). In practice this would mean a shift towards "learning to learn", and developing socio-emotional, critical thinking and digital skills (Shiohira & Keevy, 2019), which some also claim can be "easily taught at a distance" (OECD, 2020).…”

“…The expansion of internet services to remote areas and efforts to bring down the cost of accessing the internet will likely need to be prioritised in order to prevent the emergence of a digital divide in access to vocational training opportunities. There have also been calls for subsidies for internet data usage in order to encourage poorer workers to take advantage of training programmes available online (Park & Inocencio, 2020).…”

“…The research that has been conducted for middle-income and developing countries generally suggests that intermediate-skilled occupations are in decline, forcing many into low-skilled work and therefore exerting downwards pressure on unskilled labour(Park & Inocencio, 2020).Maloney and Molina (2016) show that intermediate-skilled occupations (intensive in routine cognitive and manual tasks) have decreased across developing countries Fleisher et al (2018). find evidence for job polarization in China from 1995 to 2013.…”