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Teleworking is widening the income gap around the world

Karen Ho

Teleworking is widening income inequality all over the world, according to a new study from the International Monetary Fund.

The ability to work remotely has become a make-or-break factor for many workers during the coronavirus pandemic. Unless their jobs are deemed essential, people who can’t telework face a much higher possibility of cutbacks in hours or pay, temporary furloughs, or permanent layoffs.

IMF economists looked at workers’ ability to telework in 35 countries and estimated about 100 million of them would find it hard to do so either because they work in a field that requires face-to-face interaction or because they don’t have access to the internet. They represent 15% of the workforce in those places.

The workers least likely to be able to work from home were the youngest, between 15 and 29 years old. Young workers, especially those without college educations and women, were already suffering from unfavorable labor market conditions prior to the pandemic.

Women are also disproportionately represented in sectors that don’t lend themselves to remote work, such as food service, hospitality, as well as wholesale and retail trade. The IMF analysis found approximately 20 million workers in those areas were at a high risk of losing their jobs.

The ability to telework varied dramatically from country to country, even within the same occupation. “More than half the households in most emerging and developing countries don’t even have a computer at home,” authors Mariya Brussevich, Era Dabla-Norris, and Salma Khalid wrote.

The economists also found large disparities between the workers at the top salary brackets and those who earned the least in those countries. “These results demonstrate how in the absence of supportive policies both during the lockdown period and in its aftermath, the economic fallout of the pandemic could widen existing income inequality across societies,” the authors wrote.

To help workers who can’t telework deal with losses in income and employment, they suggest that governments broaden social insurance and other programs such as wage subsidies, education, and skills training. The authors also call for investments in digital infrastructure to expand computer and internet access.

 

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