Author: Piotr Lewandowski
The COVID-19 pandemic created a dual challenge of containing the spread of the virus, and preserving jobs and livelihoods as countries all over the world adopted restrictions in economic activity and mobility of people. At the Jobs and Development Conference 2020, we convened a special session that included studies of the multifaceted and heterogenous impacts of the pandemic on employment outcomes and wellbeing.
Research presented at the conference suggests that there may be no one-size-fits-all model of a lockdown, and countries should tailor restrictions and policy responses to specific features of their labor markets. However, universal and responsive safety nets are critical to prevent hardship, as working from home is an option easily available for only a relatively privileged segment of the global workforce.
Working from home: Who has the advantage?
Working from home (WfH), especially online, has been promoted as a way to keep economies going when social distancing is implemented. It is indeed true, but we need to keep in mind that WfH also tends to exacerbate pre-existing inequalities, both within and between countries. This conclusion was reached by several studies presented at the conference. Maho Hatayama of the World Bank showed that workers with relatively weaker position in a labor market — less educated, self-employed, and informal workers — perform jobs that are less amenable to WfH.
Moreover, jobs that involve information and communication technologies (ICT) can be performed from home only if people have suitable internet connection at home. Again, there are substantial cross-country differences in internet penetration, with less developed countries lagging behind the more developed countries.
Mariana Viollaz of CEDLAS-UNLP estimated that, globally, 1 in 5 jobs can be performed at home. However, as is often the case, there is a huge heterogeneity behind that average.[bctt tweet=”In high-income countries as many as a third of jobs can be performed at home, but in low-income countries that share is almost 10 times lower.” via=”no”]
Occupational exposure to COVID-19
To understand the functioning of various labor markets during the pandemic, we need to remember that the nature of work differs between low-, middle- and high-income countries, as well as between workers in seemingly comparable similar occupations. In my own research, I have quantified the differences in occupational contact with diseases and in the intensity of social contacts in European countries, using a unique dataset which measures social interactions related to work. I found that [bctt tweet=”workers in countries such as the UK, the Southern European countries, and Nordic countries, exhibit the highest occupational exposure to contagion, while Central and Eastern European countries exhibit the lowest exposure.” via=”no”]. Workers in richer countries tend to have more social contacts because of more complex business networks and larger personal services sectors typical for urban settings. These differences in exposure to contagion predicted the spread of COVID-19 in Europe during the first pandemic wave.
The shape of lockdown policies
Paradoxically, less sophisticated economic structures may simplify the policy response to the pandemic. Compared to high-income countries, low- and middle-income countries record a higher value-added share in sectors that usually are deemed essential, such as agriculture or retail trade, and are not subject to lockdown restrictions. For this reason, according to the findings of Charles Gottlieb from the University of St. Gallen, the cost of lockdown policies is U-shaped. It is the lowest in middle-income countries, which have higher employment in essential sectors than high-income countries, but are also better equipped for WfH in the non-essential sectors than low-income countries. The primary sectors can also act as an employer of last resort. Radhicka Kapoor of ICRIER showed that India, which has a limited safety net and has seen a rise in informality and precarity contributing to hardship.
The consequence of inadequate safety nets is also visible in Latin American countries which have been hit hard by the pandemic, especially in urban areas. Stay-at-home orders and mobility restrictions have unequal impacts in these countries. Oscar Mitnik of IADB estimated that people travelled more in areas dominated by small firms and self-employment, which is likely related to weak ability of these firms and people to work from home.
And finally, unequal effects of lockdowns go beyond employment outcomes. Pieter Serneels of University of East Anglia found that in Colombia, populations in fragile and conflict affected areas are a higher risk of deterioration in mental health, and less educated people are more susceptible to increased anxiety, depression and stress.
This is the seventeenth blog on ways to protect workers and jobs in the COVID-19 (Coronavirus) crisis, based on a special session on COVID-19 at the 2020 Jobs and Development Conference ‘Better Jobs for Development’. The 2020 Jobs and Development Conference ‘Better Jobs for Development’ was organized by the World Bank, IZA – Institute of Labor Economics, the Network for Jobs and Development, and UNU-WIDER. The event was held in a virtual format from September 1-4 2020.