Remote work doesn’t work for the world’s low-income and young workers (opinion)

What kinds of jobs and workers are most in danger? Not surprisingly, the costs have fallen most heavily on those people who are least in a position to bear them: the poor and the young in the lowest-paid jobs.

In a new paper, we investigate the feasibility to work from home in a large sample of high level and emerging market economies. We estimate that not exactly 100 million workers in 35 high level and emerging countries might be at high-risk because they are struggling to do their jobs remotely. This is equivalent to 15% of these workforce, normally. But you can find important differences across countries and workers.

Most studies measuring the feasibility of working from home follow job definitions used in the United States. But the same professions in other countries may vary in the face-to-face interactions required, the technology intensity of the production process or even usage of digital infrastructure. To reflect that, the work-from-home feasibility index that people built uses the tasks actually performed within each country, based on surveys published by the Organisation for Economic Co-operation and Development (OECD) for 35 countries.

We found significant differences across countries even for the same professions. It is significantly easier to telework in Norway and Singapore than in Turkey, Chile, Mexico, Ecuador and Peru, simply because over fifty percent the house holds in most emerging and developing countries do not even have some type of computer at home. (See a chart of the countries where remote work is easier here.)

Who is most susceptible?

Overall, workers in food and accommodation, and wholesale and retail trade, are the hardest hit for having the least “teleworkable” jobs at all. That means significantly more than 20 million people within our sample who work in these sectors are at the highest danger of losing their jobs.

Yet some are far more vulnerable than others. Young workers and those without university education are even less likely to work remotely. This higher risk is in keeping with the age profiles of workers in the sectors hardest hit by lockdowns and social distancing policies. Worryingly, this suggests that the crisis could amplify intergenerational inequality.

Women could be especially hit hard, threatening to undo a number of the gains in gender equality produced in recent decades. This is basically because women are disproportionately concentrated in the hardest-hit sectors like food service and accommodation. In addition, women carry a heavier burden of son or daughter care and domestic chores, while market provision of those services has been disrupted.

Part-time workers and employees of small and medium-sized firms face greater danger of job loss. Workers in part-time work are often the first to be let it go when economic climates deteriorate, and the last to be hired when conditions improve. They will also be less likely to get access to health care and the formal insurance channels that can help them weather the crisis. In developing economies, in particular, part-time workers and those in informal work face a dramatically higher risk of falling into poverty.

The effect on low-income and precariously-employed workers could be especially severe, amplifying longstanding inequities in societies. Our finding — that workers at the bottom of the earnings distribution are least able to work remotely — is corroborated by recent unemployment data from the United States and other countries. The COVID-19 crisis will exacerbate income inequality.

To compound the effect, workers at the bottom of the income distribution are already disproportionately concentrated in the hardest-hit sectors like food and accommodation services, which are among those sectors least amenable to teleworking. Low-income workers are also more prone to live hand-to-mouth and have little financial buffers like savings and access to credit.

How to safeguard the most vulnerable?

The pandemic will probably change how work is completed in many sectors. Consumers may possibly rely more on ecommerce, to the detriment of retail jobs; and may possibly order more takeout, reducing the labor market for restaurant workers.

What can governments do? They can focus on assisting the affected workers and their families by broadening social insurance and safety nets to cushion against income and employment loss. Wage subsidies and public-works programs can help them regain their livelihoods throughout the recovery.

To reduce inequality and give people better prospects, governments need certainly to strengthen education and training to better prepare workers for the jobs of the future. Lifelong learning entails bolstering usage of schooling and skills training to help workers displaced by economic shocks like COVID-19.

This crisis has obviously shown that being able to get online was a crucial determinant to people’s ability to keep on engaging in the workplace. Investing in digital infrastructure and closing the digital divide will allow disadvantaged groups to participate meaningfully in the future economy.