At the beginning of the year, it seemed that the global economy could breathe a sigh of relief – the ambiguity associated with the trade wars and Brexit had diminished. However, a new factor has emerged that is slowing economic growth and leading to very serious uncertainty – COVID-19.
The situation with the coronavirus has had a significant impact on the labor market around the world. The processes that are natural for our modern economy have accelerated significantly. These are the development of remote work, delivery services, and the digitalization of production.
Also, among the trends in the labor market, there are:
- the transfer of work processes to automatic mode,
- the transition to remote work,
- registration of the self-employed status,
- and opening remote offices in other countries by BridgeTeams. This will require people to change their skills, first of all, to prepare psychologically for remote work and new challenges.
Job loss
According to the International Labour Organisation Monitor, for all countries, the situation has worsened significantly. Compared to pre-crisis levels, there are 11.8% loss of working hours in Europe and Central Asia, 12.4% in the Americas, and over 9.5% in the rest of the world.
The economic crisis caused by the pandemic led to a drop of 70% in the income of European workers, 81% of Africans and Americans, and 21.6% of the workers from Asia and the Pacific. These employees will have no means to survive if they do not find any alternative income sources. Out of a global workforce of 3.3 billion informal economy workers, 1.6 billion of them had problems with earning a living.
Despite the lifting of most of the restrictive measures caused by the spread of coronavirus infection, many companies continue to maintain remote work. There are several factors: partial cost savings, optimization, reducing the risk of employee’s infection, as well as a new principle of work that was formed during isolation.
Remote work
The number of employees of IT companies who have switched to remote work has increased almost six times. Before the lockdown, only 11% of employees could work remotely. After the restrictions started, up to 60% of employees switched to remote work. However, most of them will return to offices next year.
Among the areas which did not suffer that much are: grocery retail, logistics, online stores, agricultural holdings, pharmaceuticals, and, of course, the IT sector, which requires a large number of new employees. Companies have realized the need for remote customer service and online promotion.
According to experts, the most in-demand specialists will be processed digitalization experts, IT specialists, SMM, and content managers. There will be many vacancies in connecting links between clients and companies – online stores employees, call center consultants, as well as couriers in conjunction with drivers and delivery dispatchers.
Remote offices
In 2018, companies in the US saved an estimated $ 5 billion on remote employees, and this only counted those with part-time jobs! In 2020, the figure is expected to grow by order of magnitude. Companies can reduce the cost of renting offices, preparing meals, maintaining managers, and so on. In general, one remote employee saves up to $ 10,000 per year in the United States.
However, even if the remote work format partially retains its relevance, it will not become the main one. The reason is that some tasks, such as interaction with clients or maintaining a corporate culture, cannot be transferred online.
If a company does not want to close their offices, BridgeTeams can help save even more by opening remote R&D offices in Mexico, Argentina, or Ukraine. Even after rent costs in the Bay Area dropped by 15%, according to rental-listings platform Zumper, it is still cheaper to rent an office in Eastern European or Latin American countries.
On bridgeteams.com, you can run the numbers and compare the costs of having an office with full-time employees in the Bay Area and Ukraine. Usually, Ukrainian IT specialists earn three times less, having the same qualifications.
Managing a remote office is easier with the BridgeTeams software development, which allows reviewing candidates and setting interviews, managing the office, and trekking all the expenses and work.
For the CEOs, it is not necessary to move to another country. They come to visit their remote office at any time or arrange the fly for a team. Personal connection is important, but it is possible now not to have it every day.
Conclusion
The impact of COVID-19 is multifaceted, and there is very little clarity about how it will ultimately affect the global economy. In the medium term, the coronavirus impact will depend on how long it will take until a vaccine is found, and the situation returns to normal. The same factors will determine the extent to which the labor market will suffer – how unemployment will rise and how wages will drop.
Governmental responses will be critical to the economic impact of COVID-19. Governments must communicate comprehensively, honestly, and without exaggeration. Governments and central banks need to do everything possible so that at the moment when the threat of COVID-19 recedes (and this moment will come), the national economy can resume work – so that businesses and the population can return to normal economic activity.
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