COVID-19, Technology, and Polarizing Jobs

Abstract

As the coronavirus disease (COVID-19) drives economies into recession, many jobs are at risk. The Asian Development Bank (ADB) estimates that the COVID-19 pandemic could cost the global economy from $5.8 trillion in a 3-month containment scenario to $8.8 trillion in a 6-month scenario, with Asia and the Pacific accounting for about 30% of global economic losses (ADB 2020). These estimates also suggest that the equivalent of 158 million to 242 million full-time jobs (6.0% to 9.2% of total employment) will be lost globally in the two scenarios, with job losses in Asia and the Pacific accounting for about 70%. However, not all jobs are equally affected—some sectors are thriving or even growing faster in the pandemic. Global tech giants, such as Microsoft, Apple, and Amazon, were among the top-10 stocks by market cap in mid-April, pushing their share of the S&P 500’s total value up by 25%. Other firms are also performing strongly and hiring. These are firms using innovative technologies such as online retail and food delivery with contactless delivery options, 3D printing companies for personal protective equipment, and video conferencing applications such as Zoom (Mirza 2020). Amid the rapid technological changes and increasing automation, however, job polarization and widening wage inequality among employees have occurred as these trends have put manual and routine jobs at higher risk of being displaced (Goos, Manning, and Salomons 2014; Autor 2015). Indeed, COVID-19 effects are fueling trends that had already been exposing middle-skill workers to displacement and lower working hours and incomes. As digital transformation accelerates, old skills are likely to depreciate and become obsolete faster. Aging workers risk falling into low-skilled, low-paying jobs (Lovász and Rigó 2013; Ilmakunnas and Maliranta 2016).