The outbreak of the coronavirus pandemic has changed working habits of many people. In addition, it became obvious which jobs must be done in the workplace and which activities can be carried out anywhere thanks to new technologies. It will be interesting to see how these developments influence the future of work and wages.
After the outbreak of the Covid-19 pandemic and the adoption of measures to contain it, many people switched to work from home. In other sectors (such as in the health care sector, in the production and distribution of everyday goods, in public transport and many other sectors), employees still had and have to appear physically at work and cannot work from home. It is quite possible that these people can expect higher wages compared to other employees who can work from home. However, we will probably see rapid technological change in the coming years, at least in some of these sectors. In the medical sector, for example, the current trend could continue and robots or software applications could take over some of the work or make work easier. Telemedicine will probably get more important. The trend towards automation could also continue in supermarkets. But even with increasing automation, the people who work, for instance, as doctors or nurses will undoubtedly still be very important. Especially the current coronavirus outbreak shows us that a well-organized health care system with motivated workers is crucial.
However, activities where work from home is possible, are also central to the functioning of our society and economy. It is not only in an exceptional situation important that banks and insurance companies, educational institutions or the public administration function as well as possible. Technological change is making it easier for many of the activities in these services to continue to function and to be carried out by working from home or other places. Modern technology is thus a great help in cushioning the negative social and economic effects of a pandemic. In this context, however, a number of companies or administrations that had previously maintained a strong culture of presence now realize that this is at least partly superfluous. Of course, personal contact will remain important in the future. But a still frequently encountered culture, which links physical presence too strongly with performance, will decline.
The fast switch to work from home has gone remarkably well for many firms. I strongly believe that many of the current practices will persist even after the Covid-19 pandemic. More flexible work schedules and work from home options are important. However, not everything is fine when people work from home. Personal meetings, chats over a coffee or a beer are important elements that contribute to building trust and enabling informal exchange of views. Many of these daily routines are gone at the moment for those people who work from home. Workers currently still use what one may call organizational and social capital that was developed in the past. In the future, it is important to maintain these types of intangible capital that are important for organizations. Even when work from home persists, occasional meetings and encounters in the office space (or somewhere else) will continue to be important. One should also note that at least some people are likely to experience home office in a negative context at present. Some would probably be happy if they could better separate work and leisure and go back to the office. The future of work for office workers should combine a mix of flexible work schedules, work at home or in co-working spaces, and still regular meetings with colleagues at work. At the same time, however, the question arises as to whether activities that can be performed in the home office will be increasingly associated with a loss of pay compared with those activities where personal presence is compulsory. When remote work is possible, more people from different places might compete for the same job. Thus, there might be more flexibility in these jobs, but it is plausible to assume that wage developments will on average be subdued. The trend towards more remote work can also be expected to make big cities somewhat less crowded and less expensive. Rural areas may get more attractive.
The long-term impact of current developments against the background of the coronavirus outbreak remains speculative for the time being. Not everything will change. But I do believe that the pace of change towards more flexibility at work and work from home will accelerate.
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