The past 11 months have seen deep disruption worldwide, with Covid-19 wreaking havoc on a social, political and economic scale. The global economy is heading for a recession with overall GDP growth projected to decline by 4.5% in 2020, according to the OECD. As numerous regions enter into second lockdowns, and with others not yet exiting their first, the future of work, and workforces, is uncertain.
As some sectors suffer and struggle to remain profitable, newly unemployed workers may be looking to retrain and upskill – an opportunity governments, businesses and greenfield investors could turn to their advantage.
Will the unemployed find themselves redeployed?
Unemployment in OECD countries hit 7.7% in July 2020, a slight improvement from 8% the month before. Notably, unemployment has hit young people – aged 15-24 – the hardest, sitting at an unemployment rate of 16.78% of the total labour force in July 2020; for comparison, the 25 and over age bracket had an unemployment rate of 6.91%. This could be because the younger age group is more likely to have jobs within the retail, travel and tourism sectors that have been badly hit by the Covid-19 pandemic.
The data also showed that women were marginally more impacted by unemployment than men, by a difference of 0.6%. This could be down to childcare issues to some degree, however. In the US, nearly ten million mothers of young children were part of the country’s labour force in 2019. If childcare services have become insufficient or non-existent due to Covid-19, these mothers may have had to leave the workforce or take on reduced hours to assume parenting responsibilities. This would cost the US economy approximately $64.5bn per year in lost wages and economic activity, according to a report from the Center for American Progress.
With young workers closed off from their career paths and parents facing potential barriers to their career development, the opportunity to reskill, invest in inclusive workspaces and create a new loyal workforce is stark. However, can countries create useful and appealing retraining programmes when they are in the midst of navigating economic crisis? And what should multinational corporations be doing to repurpose their workforces to unlock value that could be crucial to their survival?
How Covid-19 is affecting the UK construction industry
On October 30 2020, the CITB called on the UK government to take action to protect the sector’s workforce. Alongside other calls to action, the CITB asked for a reform of the ‘apprenticeship levy’ in a bid to free up funds for smaller companies in the supply chain. The hope here was that such moves could make a quicker recovery more likely for sectors such as the construction industry, and protect their workforces and profitability.
Of course, calls such as that to ease restrictions around the apprenticeship levy are not restricted to the construction sector. Although the scheme has seen varying degrees of success since its conception in 2017, more than £400m in funds had been returned to the government between May and December 2019, according to a BBC Freedom of Information request.
The end of the office?
Covid-19 has caused an unprecedented shift for office workers, with the majority having to adapt to more time (if not all of their working hours) spent at home. As a result, a split workforce of remote and on-site workers is expected to emerge as the ‘new normal’ in a post-pandemic world, creating new HR issues and investment budget needs.
The increase in remote working could create access to a new group of workers for some companies. This has been the case with financial services company Fidelity, which has been bucking the trend of downsizing, increasing its overall workforce by 15% in 2020. The majority of the companies’ employees (nearly 90% of 5,300 in New Hampshire) have worked from home during the Covid crisis. The company has detailed plans to hire 4,000 new remote ‘client-facing’ roles in the US alone. The onboarding and training will span across an employee’s first 12 months and is being hailed as a ‘digital experience’ that includes a ‘peer buddy’.
Although Fidelity is making big strides in its embracement of remote workers, a survey of HR leaders by Oxford Economics, the Society of Human Resources Management and SAP SE across 10 countries (Australia, Brazil, Canada, China, Germany, India, Mexico, Spain, the UK and the US) raises some concerns. Some 60% of the report’s non-US respondents voiced concerns over maintaining productivity while staff worked remotely.
The survey also highlights that not all companies are taking Fidelity’s proactive approach to work during the pandemic. Despite employees being eager to reskill, this was shown to not be a priority among company leaders. Only 38% of non-US respondents planned to invest in reskilling programmes within the next 12 months, with the number falling to 22% for US respondents.
More positively, however, the survey does show that organisations globally agree that remote work can act as a talent magnet, with many of the respondents viewing it as a long-term investment. There were reservations in China, Germany, India, Mexico and Spain over employees having the correct technology and/or environment to work effectively.
As the presence of advanced technology increases in the workplace, so too does the need for specifically trained workers. The challenge for organisations will be ensuring their workforces are ready to adapt to the technology on offer. According to the World Economic Forum, by 2022 54% of all employees will require significant upskilling due to the increase in automation and artificial intelligence.
With a large portion of the global workforce looking to retrain, governments and large companies may want to consider working together to come up with innovative plans to make this happen. A skilled workforce could prove a more valuable chip on the table than ever before once the world emerges from the Covid crisis.
For more articles on how cities are confronting Covid-19 and other challenges, please visit our sister site City Monitor.
Join Our Newsletter
Want more FDI insights?
Sign up to Investment Monitor's weekly newsletter, Eye on FDI, to receive a round-up of the most important stories.