COVID-19 and the future of work, the economy and technology

Some thinking on the glimpse into the future provided by COVID-19

The once-in-a-century crisis  we all find ourselves confronted with by COVID-19 will end up exacting both a horrific toll in terms of loss of life  but also short and medium term economic damage  .

It is also likely to usher in longer term structural changes, as well as offering us a glimpse into the future on three levels in particular.

The first is the long-term unemployment caused by technological upheaval and what it means for the jobs many of us rely on to earn a living, in addition to how governments will be forced to respond to this. The second is a partial unwinding of the economic integration achieved through decades of globalization. The third is our evolving relationship to different technologies, particularly those that rely on online connectivity, and how this will subtly alter our approach to social interactions as well as how (and where) we go about our work.

Technology-Induced Job-Losses

Technological trends like automation, artificial intelligence and the cross-border supply of services have long been gathering momentum in our economies, bringing us slowly but unavoidably towards a world where factories are staffed by robots taxis  and Ubers  – in fact all cars and trucks  – are driven by autonomous systems, food and retail outlets become of secondary importance to online consumption models , and where the vast majority of white-collar jobs  in banks, insurance companies, accounting firms, you-name-it, are performed by bots.

Until we all adapt to what this means, develop skills and find jobs that allow us to earn a living leveraging those aspects of our humanity that cannot be replicated by computer code or mathematical algorithms, many of us may become dependent on some form of universal basic income . This is what is already happening now, albeit on a temporary basis due to government responses to the labour-market upheaval wrought by COVID-19.

The current crisis has given us a glimpse of long-term trends and outcomes, in that it has shown us what a future without work for many of us may look like, as well as demonstrating the need for governments to make massive and sweeping monetary interventions to prop up entire economic sectors, stave off poverty for individuals and keep societies from being torn apart.

Unwinding Globalization

Another way COVID-19 has brought us closer to the future is through the accelerated unwinding of international economic integration and the rapid reconfiguration of supply chains . Globalization was already starting to push up against the limits of what electorates in democratic societies would tolerate , given the labour-market disruption  it is perceived to have caused in advanced industrialized countries. This is in addition to the fissures that rivalry between the US and China had started to wreak on the rules-based multilateral trading system .

Companies across different sectors have for several years now been taking such steps as they could to minimize location risk  and re-shore production . Governments have likewise for several years now started to perceive a number of benefits (both real and imagined) to greater self-reliance in a number of strategic sectors, including food  semiconductors  and rare earth minerals , although different governments came to this conclusion for different reasons. COVID-19 is accelerating is accelerating the unwinding of decades of international economic integration.

The degree to which this takes place will depend on how export restrictions  and drastic government interventions in domestic production decisions  play out over the next few months. Globalization isn’t over, but it will be rolled-back somewhat, as was already starting to happen with the technological decoupling  already underway between China and the United States.

Digital Connectivity the New Normal

Finally, the current crisis and the economic changes it has wrought has already and will continue to accelerate our reliance upon technology, particularly those technologies that harness online connectivity. This is abundantly clear for those of us now working at home  and holding meetings via online videoconferencing  platforms.

But it is also becoming increasingly clear for the global entertainment industry, with video-streaming services experiencing higher demand  as cinemas and theatres have been forced to close . Other sectors where online service delivery was slowly gaining traction, such as education  and telemedicine , are already starting to see accelerated moves further in this direction.

Any inhibitions we may have had previously to online video interactions with friends and family will finally be swept away in the next weeks and months, as travel restrictions and other isolating measures give us no alternative but to resort to these technologies simply to stay in touch with each other. Accordingly, recent weeks have seen a considerable uptick  in downloads of apps such as Zoom and Houseparty. In this way, COVID-19 is forcing us all to embrace our inner Millennial .

Of course, any statements on how permanent these changes will be is necessarily speculative at this stage. But it is easy to see that we are headed towards a world where governments’ reluctance to provide a universal basic income to broad swathes of society becomes more difficult to defend.

In the same way companies can be expected to no longer proudly extoll the size of their global footprints, but rather dedicate more PR resources to emphasizing the economic benefits they account for in their home countries and communities. Finally, many of us can likely look forward to embracing a future where we can spend a few more days a week working from home instead of subjecting ourselves to the week-in week-out, day-to-day grind of slaving away at the office.

Originally published as am opinion piece on 3 April 2020 at the Institute for International Trade.