How COVID-19 has impacted the job market: the good and the bad
Needless to say, Covid-19 had an effect in everyone’s life in a way or another.
Other than being a terrible disease, the effects of the pandemic reached far beyond the medical world.
The job market is currently being severely impacted by the indirect repercussions of the disease: working from home is now an established norm even for those companies who never considered it before.
After the initial outbreak of COVID-19 most counties and companies had no choice other than implementing new policies for the labor market, at an unprecedented pace.
In this article I will analyze how Coronavirus has affected the job market, both in negative and positive ways.
The disruption that Covid-19 brought to the economy caused many businesses to close temporarily or indefinitely. The best case scenario for many businesses (especially small ones) was to sell their inventory online or ask for a loan to pay for overheads such as rent, employees salaries etc..
However, in many cases where banks and states could not accommodate the overflowing loan and monetary aid requests from small business owners, the only possible solution for companies was to cut their cost by letting employees go or permanently shutting their doors.
As a result, many people lost their job and unemployment rose at an unprecedented rate.
According to the OECD (Organization for Economic Co-operation and Development), the unemployment rate in the 37 member states rose by almost 200% since the start of 2020 (as shown in the graph below).
While if we look at the whole world rate of unemployment, the results are not much better (see graph below, courtesy of the World Bank)
The crisis was particularly severe for certain groups within society: particularly newly graduates and the young generation in low-income countries.
A research conducted by the ILO (International Labor Organization) shows that 1 out of 6 graduates (age between 18 to 24) who were employed before the pandemic, have now lost their job.
Among the graduates who kept their job, 42% of them reported a reduction in their salary.
Women’s jobs were also impacted more severely by the coronavirus pandemic compared to other social categories: Canadian studies show that since the start of the lockdowns in February, the percentage of Men who were able to recover their jobs is 92,3%, while for women it’s 89,2%.
Furthermore in Europe, over one-fourth (26.5%) of women employees are in precarious jobs, compared to 15.1% of men.
These differences may not be huge, however it is enough to show that in times of crisis, certain groups of people suffer more than others.
However bad the impact of COVID-19 was in the healthcare industry and consequently in any other industry of our international economy, the labor market is currently adapting to this new reality.
Forecasts show that over the next five years, the global workforce will be able to absorb millions of new jobs in the technology sector.
The jobs with most growing potential are in the field of Software Development, Data Analysis, Cyber Security, Privacy Protection and Sustainability, in total accounting for 149 million new jobs worldwide by the year 2025 (as graph below).
In terms of development, we are already experiencing an accelerated digital transformation that is said to impact every industry in the world in the near future.
“Thanks” to COVID-19, many countries and multinational companies have realized the importance of a strong healthcare system and around 2 million new digital jobs are planned to be born in the next few years in the healthcare sector, comparing to 300’000 new jobs in the food production sector and 6 million new jobs in the automotive industry. (source)
If we consider the way we work, coronavirus has definitely had a huge impact.
Lockdowns all over the world forced people, employees to stay at home, changing the way we used to work since decades.
Shifting to a work-from-home model certainly had its challenges at the beginning, however many people and institutions now realized its benefits.
From an employee point of view, working from home can be beneficial to productivity. A study reported by BBC before covid-19 on employees working from home 1 day per week, found that working remotely boosted output by 13%.
While according to Forbes, research on work-from-home productivity in May of 2020, showed an increase of 47%.
Working from home has other perks from an employee point of view: it eliminates the daily commute, therefore saving time and money. Employees can have more time with their families, boosting their overall morale and therefore productivity.
This also brings an sense of relaxation to the work environment: with the implementation of online meetings and video conferences, employers and coworkers gain a direct insight into employees’ personal life and their realities.
The traditional rules of professional presentation are becoming slowly more irrelevant in a remote work environment and the workplace is heading towards a more flexible and humane path.
A survey carried out by Catalyst discovered that employees are facing the changes brought by the virus with an overall positive attitude, and recognize a few perks about the new work environment, mainly in a healthier work-life balance, and increased control over their schedule, as shown in the graph below:
Remote working can have a positive impact on organizations too, not only employees. Just think about the enormous costs that companies have to undertake to secure office rent, renovations, meals etc… With these costs gone, companies could focus their efforts in growing faster and increasing employee pays and benefits.
A few countries are already thinking about this: in the Netherlands authorities are creating a plan that sees employees working from home receiving a yearly 363 euro remuneration for expenses related to the remote work environment. (source)
This initiative comes from a research from NIBUD which calculated the daily cost for coffee, snacks and other recreational expenses that companies offered in the workplace "pre-covid". With the new work-from-home system, these expenses fall on the employee, which is why countries are adapting to these new needs.
To Sum Up
Every coin has two faces, likewise whenever a crisis comes up, we can try to look at a few positive outcomes, while acknowledging the negative ones.
Surely the COVID-19 outbreak was - and it still is - a catastrophe for many aspects of our lives and economy. Leaving the health and medical aspect aside, the job market has never suffered from similar levels of unemployment in such a short time span. Industries like hospitality and tourism have suffered enormously from the pandemic’s restrictions and thousands of small businesses have closed their doors.
Coronavirus has forced us to make an imminent change in the way we live our lives, and in the workplace, some of these changes have had a positive impact on people’s lives.
Working from home has given the chance to employees to achieve a better work-life balance; the work environment has become more flexible and humane.
The slow economic recovery will see new industries growing significantly over the next 5 years: new job opportunities will be found in the technology and healthcare section - according to forecasts.
There is no way to know for sure what effect this pandemic will have in the long term for the job market, however we can only hope that governments and institutions will learn their lesson and understand the importance of providing more equal opportunities to business owners and employees, especially in terms of healthcare.