08, 2020 04:13 PM / by Mariva Brussevich, Era Dabla-Norris and Salma Khalid,
IMFBlog / Header Image Credit : WSJ
The COVID-19 pandemic is devastating labor markets
across the world. Tens of millions of workers lost their jobs, millions more
out of the labor force altogether, and many occupations face an uncertain
future. Social distancing measures threaten jobs requiring physical presence at
the workplace or face-to-face interactions. Those unable to work remotely,
unless deemed essential, face a significantly higher risk of reductions in
hours or pay, temporary furloughs, or permanent layoffs. What types of jobs and
workers are most at risk? Not surprisingly, the costs have fallen most heavily
on those who are least able to bear them: the poor and the young in the
In a new paper, we investigate the feasibility to work from home in a large sample of advanced and emerging market economies. We estimate that nearly 100 million workers in 35 advanced and emerging countries (out of 189 IMF members) could be at high risk because they are unable to do their jobs remotely. This is equivalent to 15 percent of their workforce, on average. But there are important differences across countries and workers.
The Nature of Jobs in Each Country
studies measuring the feasibility of working from home follow job definitions
used in the United States. But the same occupations in other countries may
differ in the face-to-face interactions required, the technology intensity of
the production process, or even access to digital infrastructure. To reflect
that, the work-from-home feasibility index that we built uses the tasks
actually performed within each country, according to surveys compiled by the
OECD for 35 countries.
significant differences across countries even for the same occupations. It is
much easier to telework in Norway and Singapore than in Turkey, Chile, Mexico,
Ecuador, and Peru, simply because more than half the households in most
emerging and developing countries don't even have a computer at home.
Who is Most Vulnerable?
Overall, workers in food and accommodation, and wholesale and retail trade, are the hardest hit for having the least â€œteleworkableâ€ jobs at all. That means more than 20 million people in our sample who work in these sectors are at the highest risk of losing their jobs. Yet some are more vulnerable than others:
The impact on low-income and precariously-employed workers could be particularly severe, amplifying long-standing 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 likely to live hand-to-mouth and have little financial buffers like savings and access to credit.
How to Protect the Most Vulnerable?
The pandemic is likely to change how work is done in many sectors. Consumers may rely more on e-commerce, to the detriment of retail jobs; and may 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 during the recovery.
To reduce inequality and give people better prospects, governments need to strengthen education and training to better prepare workers for the jobs of the future. Lifelong learning also means bolstering access to schooling and skills training to help workers displaced by economic shocks like COVID-19.
This crisis has clearly shown that being able to get online was a crucial determinant to people's ability to continue engaging in the workplace. Investing in digital infrastructure and closing the digital divide will allow disadvantaged groups to participate meaningfully in the future economy.