The COVID-19 pandemic has been subject to shaking up the global economy. It seems as though news about supply chain shocks, high rates of inflation, as well as possible lockdowns, are becoming the norm for all of us.
But one effect that COVID-19 has had on the general populous that might be a bit more personal is that the current pandemic has seemingly changed how and why individuals work. Working from home has become the norm in certain professions, such as finance and banking, which, is a great step forward as prior to the COVID pandemic, employers were against such measures as they believed individuals would be less productive outside the workplace.
Yet, it turned out that there is no significant decrease in productivity when working from home, partly due to the fact that individuals tend to actually want to do extra work at home as office life becomes blurred with home life. In other words, employees now tend to work overtime to finish certain projects so that they can spend more time with family.
Such a trend will likely give better opportunities for women as traditionally, the debate in economics has been how we can get women into the workplace as women tend to take more time off due to childcaring duties. Yet, the pandemic has shown us that in fact, we should have been trying to find out how to bring the workplace to women instead, which, has been one of the greatest discoveries we have made as doing so will allow for more policies to be introduced to empower women economically as doing so has significant benefits. For example, it is estimated that if women were to have the same global labour participation rate as men, then world GDP will rise by an additional $1.5 trillion.
Aside from working from home being the norm in certain sectors, the pandemic has shown that people are now more likely to work for themselves as in the first year of the pandemic, those registering for businesses rose by approximately 14%. This wave of enterprise led to a total of 726,000 new UK startups opening in 2020, illustrating that the pandemic itself has in a sense given some people the feeling that they have the freedom to pursue what they would truly like to - and rightfully so.
This is partly due to the introduction of the Furlough Scheme, which, before its end in September, paid 80% of a workers wages. As such, with over 700,000 being protected by the scheme, it is bound to have an effect on the perceived opportunity cost that individuals have between pay, hours, and work. What we mean by this is that, when individuals are Furloughed, they receive pay despite not having to come to work, which, allowed many to start up their own businesses and pursue what they find meaningful. In short, COVID has changed what people look for in a job as it has explicitly shown individuals who have been Furloughed what they could be doing instead - there’s no wonder that people are now looking to find employment in sectors with flexibility, or, are becoming their own bosses.
This change in attitudes towards work is also having massive effects on the UK’s labour market as labour shortages in certain sectors are in full swing. The BBC reports that freshly graduated lawyers are now making up to £150,000 starting salaries as firms are fighting for staff. Alan Bannatyne, chief financial officer at Robert Walters, told the BBC people in many UK industries were quitting for better-paid jobs amid soaring demand.
"15% is the minimum pay rise we're seeing, but some are increasing their salaries by up to 50%," he said.
And it is not just highly skilled sectors that are paying more, large supermarkets in the UK, with the most recent addition being Sainsbuires are now paying their staff a rate of £10 per hour as the scarce supply of labour is driving wages up as fewer people want to work in these sectors.
And, no wonder, the pandemic has taught individuals that they can in fact do what they want to a certain logical extent, of course, there have also been losers, who, due to the fallout of recent times, have lost careers, and, have had to potentially change careers.
Even so, the BBC finds that those who used to work in hospitality or other industries that had suffered greatly during the pandemic managed to find employment as they saw that their skills were more transferable than they first thought, an idea that props up an interesting debate between one's actual occupational mobility and what they think their occupational mobility actually is. The same article also showed that in fact, people have learnt to instead pursue what they find meaningful, rather than what they see as a necessity, which, although may have negative effects on an economy through a reduction in output, may actually yield gains in happiness, a measure which for some economists is more important to pursue than continuous growth.
Written by Hubert Kucharski