On average in LAC countries, only 20% of jobs can be done from home—deepening concerns of macro and micro level economic resilience during COVID-19.  

 

COVID-19 containment policies are fundamentally impacting the way we work—and who is able to continue working. As social distancing and lockdown measures have closed physical workplaces, only a sub-set of jobs have had the option to move online. This is critical from a development perspective, as the extent of the availability of teleworkable jobs (this is, those that are feasible to perform at distance) may determine which economies and households will be more or less affected by the pandemic shock. Using data from two recent papers, this #GraphForThought explores the state of teleworking in LAC—both across countries (what share of jobs are teleworkable?) and within countries (how does the share of teleworkable jobs differ across the income distribution?).

In their recent paper “How Many Jobs Can be Done at Home?,” Dingel and Neimanon estimate the share of teleworkable jobs in 86 countries. To do this, they classify the feasibility of working at home for a large set of occupations (based on variables such as whether workers use email, work outdoors, need to wear specialized equipment, etc.) and merge this classification with the occupational category code from national employment surveys. The results for 13 LAC countries, reveal the average share of teleworkable jobs is 20%—ranging from 14% in Honduras to 27% in Uruguay. For comparison, the share is 41% in the United States. It seems that in general, countries with higher GDP per capita also tend to have a higher share of teleworkable jobs. Most countries with GDP per capita above US$ 30,000 also have a share of teleworkable jobs above 30%. This suggests that workers in LAC (and in other developing regions) may have a harder time continuing to work during the pandemic, increasing overall economic vulnerablility.

Not only does it matter what share of people are able to work from home, but it also matters who those people are. If there is a systematic income divide between people who work in jobs that are able to be performed from home (and thus more likely to continue receiving their income) and people who do not (and thus more likely to lose their income), we may see a situation of worsening inequality. In his recent paper “Trabajo a Distancia y con Contacto en Uruguay,” Guntin compiles data on what this looks like at the micro-level in Uruguay. Using the national labor force survey, the paper classifies which occupations can be done from home and which require close contact with others; it then compares the share of jobs in these occupations with workers’ wages. As the figure below shows, there is a positive association between jobs that can be done from home and workers’ wages, and a negative association between jobs that require close contact with others and workers’ wages. This suggests that lockdown and social distancing policies could have a disproportionately negative effect on low-income workers—as they are less likely to be able to work from home than higher-income workers. If social safety nets are unable to effectively support vulnerable workers during this time, inequality (in addition to poverty) is likely to rise.

 

Moreover, as the graph shows, low-income workers are not only more likely to not be able to work from home, but are also more likely to work in jobs that require close contact with others. This means that if they did not lose their job (due to it not being teleworkable), they may face a higher risk of exposure to COVID-19 while working. This may be the case, for example, if they continued to work during lockdowns in essential capacities (such as grocery store clerks or cleaning staff) or if they have returned to work as lockdowns ease (such as restaurant servers or retail workers). In this sense, it is critical that re-opening policies are designed carefully to protect only workers’ jobs, but also their health.

COVID-19 has led to a massive economic shock for countries—with deep effects on labor markets. Many places are facing unprecedented vulnerabilities at work. As this #GraphForThought shows, at the macro-level, relatively limited teleworking opportunities suggest that LAC countries may be hit hard during the crisis; and at the micro-level, these adverse effects may disproportionately fall on lower-income households. While in the short-term we must work to provide emergency relief, we must also look toward the future and invest in building more resilient and inclusive economies.

 

 

 

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