Why the world of work is changing
“Companies are quickly being divided into thrivers and survivors. CEOs must seize this opportunity to transform and leap ahead.”
Many are predicting that the 2020s will bring in a new age akin to the roaring 1920s. While this can seem like a lazy prediction, there are many similarities, particularly when we look at the labour force. Much like the 1920s, today’s labour force is set for a shift of epic proportions. The change in the labour force was twofold: the technological advancements of the era and the second being the political landscape. Today, we see similar changes, while it might seem premature to predict a wonderful world of work only a year on from a labour-market catastrophe. While the pandemic has decimated the labour market, there is evidence that a bounce-back is on the cards.
“America is showing how rapidly jobs can come back as the virus recedes. In the spring of 2020, the country’s unemployment rate was nearly 15%. It is already just 6% after a year containing five of the ten best months for hiring in history.”
Drivers of Change
As the labour market recovers, two more profound shifts are unfolding in politics and technology.
Politics
The pandemic has rocked the global political environment. An early sign of change was the surge in governments approach to mass unemployment and labour market shifts. Unlike the crash of 2008, we have seen significant investments in social welfare and the introduction of protective legislation for workers. Central banks are worrying ever more about jobs and less about inflation. It was not a prank when on April 1st, the IMF, once famed for its austerity, floated the idea of one-off solidarity taxes on the rich and companies. In Europe, there have been significant legislation changes with the particular focus on a previously unregulated sector, the gig economy.
In a significant departure for JP Morgan, their CEO Jamie Dimon has called for a living wage to be introduced across the US.
Training and development for those who have lost their jobs over the last 18 months have been the main focus for governments such as Ireland who have added significant funding to training programs such as Skillsnet and SOLAS. A sector that was essentially defunded in the great recession.
This switch from business-focused economies to worker focussed has been a change many could not have anticipated. A golden age for workers is welcome. It is suitable to judge economic progress by the purchasing power of median wages, not profits or share prices. It will be interesting to see if these policies continue once economies have recovered from the turmoil of the pandemic.
Technology
The second big shift in the labour market is technological. The pandemic has highlighted the widespread ability of the labour force to work from home or away from the office.
The long-term future of work has changed for the better this year because it has become more digitised. Improved broadband worldwide and improved IT systems have made the shift remote much more accessible than if COVID-19 had struck 20 years ago. However, there was an apparent lack of investment in these technologies pre-covid; at the end of 2020, American firms spent 25% more on computers, in real terms, than a year earlier as they tried to patch up gaps in technology investment.
From a worker’s perspective, those working from home have reported higher happiness and productivity levels, with 79% of tech-works in the UK looking to stay working remotely permanently. Even pessimists like Robert Gordon, an economist, expect this burst of technological investment to bring about faster productivity growth, which means higher wages.
The technology is available and widespread for workers to work remotely. However, it will take time to see if the promise of a genuinely remote workforce will come to fruition. Only 13% of Irish CEOs said they anticipate a more secluded and distributed workforce having a significant impact on their company. Ultimately it accesses to talent will be that main driver. If workers reject the move back to the office, many companies will have no choice but to move to a more remote workplace post-pandemic.
This article references the following reports:
https://www.economist.com/leaders/2021/04/10/riding-high-in-a-workers-world
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