THE pandemic will affect some parts of the labor market more severely, worsening conditions for the low and medium-skill segments just as employers are embarking on their digital transformations, the Asian Development Bank (ADB) said.
In a policy brief, the bank said the pandemic will polarize the labor market, pushing workers into lower-paying jobs, with the exception of those at the very top of the skills ladder.
“Without conscious effort and effective policies, therefore, the unequal impact of COVID-19 on jobs will hit the most vulnerable individuals and communities. They will continue to face greater risks of unemployment, financial losses, and health hazards, exacerbating socioeconomic inequalities and undermining inclusive growth efforts,” the ADB said.
While job polarization is widespread in advanced economies due to the automation of routine work, the ADB said developing countries should also prepare for disruptions as they too start automating while job offshoring activity slows.
Post-COVID-19, it said the digital transformation of the workplace will likely accelerate after offices encountered work-from-home by necessity and learn to integrate it into their operations.
“However, as digital transformation accelerates, job polarization and displacement of middle-skill workers are raising concerns about income polarization, inequality, and inadequate social protection,” it said.
It said there could be a “significant reallocation of jobs” in the coming years, highlighting the need for more training programs and better labor policy as the trends favor the more highly-skilled.
In low- and middle-income countries, automation and increased reshoring of jobs may put those working in the service sector at risk, it said.
Meanwhile, less-skilled workers are at “greater risk” as more companies are projected to increase their reliance on robots and other technologies.
The ADB said “informal workers are at particular risk” especially those employed in the sectors hardest hit by the pandemic such as manufacturing, wholesale and retail trade, transportation and storage, and accommodation and food service.
It also said most women, youth and rural workers have it worse as they account for a large percentage of the informal economy, some have less education, receive lower wages, and “are also often overrepresented in low-skill services.”
Aside from the unequal starting points for various sectors, the ADB said the digital divide in developing countries may also widen between rich and poor, urban and rural, young and old, and men and women.
“The gap in digital readiness and various forms of the digital divide can have longer-term and lasting impact on inequality among individuals and in social groupings and countries,” it said. — Beatrice M. Laforga