What COVID-19 means for remote working

Over the past few months there's been a lot of debate about the future of work following the big switch to remote as a result of COVID-19. What’s certain is that we won’t be going back to the way things were, but just how much of this change is permanent, and what should we all be mindful of when we eventually reemerge from this global pandemic?

Remote work is for the few, not the many

The first thing this discussion needs is context. Remote working is an option for the few, not the many. Thanks to COVID-19, we now have a really good picture of how many people in the workforce can successfully transition to a 'work-from-home' setup. This post will talk about Ireland specifically, but the percentages for Ireland hold up pretty well in any western economy.

With Ireland entering lockdown in March/April of this year, the month of May gave us a really clear picture on how various sections of the labour market weathered the changes. We saw that the workforce broke into 4 major categories:

1. Workers made redundant: The first group of workers impacted are those that lost jobs immediately - 28% of all workers were placed on unemployment payments as a result of the shutdown.

2. Workers on reduced hours: The second group of workers were those that saw their work hours severely reduced - more than 18% of workers were placed on the ‘Temporary Wage Subsidy Scheme’ due to reduced business activity.

3. Workers deemed essential: The third group are the essential workers. These include health and social care roles, all of whom were allowed to remain in their workplace during the pandemic - 22% of workers fell into this category.

4. Workers unaffected: Our fourth and final group, workers who were able to transition to remote working, without seeing their hours reduced - 32% of all workers fell into this category.

So when we talk about the future of remote working, we’re talking about 1 in 3 workers. Put it another way, 2 in 3 workers today have no prospect of transitioning to work from home, so keep that in mind when we talk about the future of work.

The unintended consequences of remote work

Just how many of these workers will remain remote after COVID-19 is unclear, but what is clear is that we are going to see an increase in the number of job postings advertised as 'remote'. We've also already seen a number of employers offer their workers the ability to continue working remotely forever. All of this means more choice for workers, which is obviously a good thing, but these changes will also have a number of unintended consequences that we need to keep in mind:

1. Wages: Existing employees who choose to continue working from home can expect to have their salaries reviewed. Employers have always tied compensation packages to location, and if workers aren't based in traditional urban settings those workers can expect to see their pay reduced to reflect the reduced cost of living.

2. Indirect Jobs: Any reduction in the number of people working in office setups will have a knock-on effect to local businesses and their employees. Just think about the coffee shop, newsagent, or deli-counter that you might have used in or around your workplace before COVID-19. All of these businesses and their employees depend on the footfall from larger employers in their area. Recent data from the US shows that some of the biggest job losses have happened in the areas with the highest share of remote workers e.g. retail jobs dropped 24% in high 'work-from-home' population areas, compared to a 4% drop in all other areas

3. Infrastructure: An increase in the number of workers naturally means more residents in traditionally suburban or rural areas. This redistribution of the population will require a redistribution of infrastructure investment by the state. Everything from broadband, to schools, to public transport will need to align with the increase in workers able to work from home.

Just like globalisation, a pivot to remote working is not without its challenges. The sooner we identify these risks, and plan for them, the better we'll be able to adjust to the more permanent changes we can expect to see in the labour market once this pandemic is behind us.

Preparing the workforce for the future of work

Despite all the challenges, the swing towards remote working is something COVID-19 has accelerated rather than created. Since the last recession, we've seen a steady increase in the number of roles that require significant levels of digital literacy. In other words, the correlation between educational attainment and employability is truer today than it's ever been.

Contrary to what most people would think, a 2016 study in the Netherlands showed that highly-skilled workers were more likely to leave their jobs as a result of automation when compared to low-skill workers. However, the same study showed that low-skill workers struggled to recover as well as their more educated colleagues, spending longer in unemployment as a result which in turn had a knock-on effect to their overall earnings.

This difference in employability has been seen during the pandemic as well. Research from the Bureau of Labor Statistics showed that those with third-level qualifications in the US had a 54% chance of remaining in employment throughout the COVID-19 crisis, compared to an 11% rate for those with secondary qualifications or lower. All of this underscores the need for governments around the world to boost levels of educational attainment to better prepare their workforce to compete in the jobs market of the future.

In the short-term, governments should focus their workforce development efforts on building foundational skillsets amongst the unemployed and underemployed. Bridging the digital divide that exists between certain segments of the Irish labour force will be key to improving the outcomes of those currently searching for a job, and those who are worried about the security of their jobs in what will inevitably be an unpredictable 12-18 months.