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Oxford Business Group

Oxford Business Group

Oxford Business Group (OBG) is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of the Middle East, Africa, Asia…

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COVID-19 Has Upended The Global Labor Market

From lockdowns to remote work and widespread job losses, the Covid-19 pandemic has dramatically changed the way people work. These interruptions are likely to have a significant impact on the global labour market well into the future.

The initial outbreak of Covid-19 created widespread disruption for workers. Lockdowns prevented many from travelling to their workplaces, while the economic fallout of the pandemic resulted in layoffs, restructuring and pay cuts.

While the pandemic is global in nature, the effects have been felt particularly sharply in emerging markets. In a briefing released last June, the UN said that many emerging markets were experiencing a “full-blown unemployment crisis” that was exacerbating existing economic disparities.

Rise of remote work

One of the most prominent changes to come out of the pandemic is the marked shift towards remote work.

Although much of the employment in emerging markets is either informal or in-person, and as such not facilitating remote work, there were still significant portions of the workforce who shifted to work-from-home models.

Before the outbreak it was estimated that around 10% of the global workforce worked remotely, with the figure rising to as much as two-thirds in some regions during the pandemic.

Related: Why Bank Of America Thinks Oil Prices Are Heading To $100 While remote work was initially necessary to comply with government health measures, the loosening of restrictions raised important questions for companies and staff alike.

Many employees experienced the benefits of flexible work arrangements, particularly with regards to shorter or eliminated commute times, the ability to meet family commitments and general lifestyle factors.

Although some companies have sought to bring their staff back into traditional office settings, others have been looking to implement alternative models on a permanent basis.

For example, in June global consultancy Deloitte gave its UK workforce the option to work from home permanently, while multinational tech giants like Twitter and Spotify have announced “work from anywhere” policies in the wake of the pandemic. Others – like Ford, Google and Microsoft – have begun implementing hybrid models featuring a combination of office-based and remote work.

While such options are popular in highly developed economies, there are specific challenges to working from home in emerging markets. In countries like Oman, for example, where an average household consists of eight people, many may not have access to adequate workspace in their homes, while others have to deal with infrastructure challenges that make working outside traditional office settings difficult.

While fixed broadband internet speeds in Thailand, at 216.16 Mbps, are the fourth fastest in the world, the comparative figures are far lower in other emerging markets like Nigeria (16.85 Mbps), Papua New Guinea (15.33 Mbps) and Algeria (9.38 Mbps), according to Ookla’s Speedtest Global Index, posing challenges to work-from-home arrangements.

Related: Saudi Forces Thwart Houthi Attack On Oil City

As OBG has noted, suburban co-working spaces have emerged as a suitable alternative, both for employees searching for a functional workspace, and employers looking to decentralise operations and achieve cost savings.

“The pandemic sparked a new trend in the Philippines – one towards working not from home, but near home,” Jet Yu, founder and CEO of commercial real estate consultancy PRIME Philippines, told OBG last October. “Co-working spaces are perfectly positioned to fit this market sentiment.”

Employee experience becomes a priority

The ongoing shift in employees’ priorities is visible in other areas of work, as well.

For many workers, the pandemic – along with its associated lockdowns, financial strains and health risks – changed their approach to work and life more broadly.

Many people saw the benefits of working less or relocating to be closer to family, while others took the opportunity to retire or change careers.

In a sign of this shift, companies are subsequently turning towards more “social” models of work as part of broader moves towards environmental, social and governance (ESG) goals within their organisations.

According to a survey of 91 companies in the Philippines by UK advisory company Willis Towers Watson released in August, 95% of respondents said that enhancing the employee experience was a priority over the next three years, up from 65% who considered it important before the pandemic.

In particular, the disruptions of the past 18 months underlined how a positive employee experience is a key driver of engagement, productivity and overall business performance.

Employers are increasingly looking to change their work models, prioritise well-being and align rewards to meet more diverse employee needs. In the Willis Towers Watson survey, 87% of respondents said they recognised that the new realities of the post-pandemic world require a hybrid model for many different roles.

Labour market paradox

While the pandemic initially led to a sharp rise in unemployment, with an estimated 255m full-time job losses around the world last year, according to the International Labour Organisation, the shifting demands and preferences of employees has had some unexpected consequences.

The labour market paradox – whereby businesses and industries suffer labour shortages despite persistently high unemployment – has been particularly prominent in wealthier countries, especially in sectors like tourism and hospitality. In the US there are reports of flights being cancelled and services discontinued due to lack of staff.

A survey of 380 North American companies undertaken by Willis Towers Watson in August found that 73% of respondents were having problems attracting employees, three times the level recorded the previous year (26%), while 61% said they were experiencing challenges in retaining staff, up from 15% in 2020.

A variety of factors are likely at play. Some workers may prefer to depend on stimulus payments or unemployment benefits instead of returning to work, while others have concerns about the health risks of Covid-19. For in-demand digital industries, high wage expectations may be playing a role, as are work-from-anywhere policies and their impact on competition for talent.

To secure adequate labour some 30% of respondents in the North American survey said they have increased their salary budgets, 43% have raised starting salaries, 39% were looking to improve the employee experience and 33% had sought to enhance workplace flexibility.

Generational changes

Amid these considerable changes in work culture, questions remain as to whether they will be permanent. Some have suggested that we are currently experiencing a post-pandemic rut, and that a sense of normality will return in the short to medium term.

Others, however, point out that while the pandemic was the catalyst for these changes, underlying social and generational factors are more important elements that are likely to sustain change in the long term.

“Every generation has different priorities, and these priorities can translate into workplace changes,” Daniel Ross, chief investment officer and head of su­stainability at Thailand’s BTS Group, told OBG. “Thailand, for example, has an ageing population and a shrinking workforce, so businesses and prospective employers have to change to attract Generation Z. In some cases, this helps to accelerate the transition towards ESG.”

By Oxford Business Group

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