Covid: Workers’ expectations changing

By Deepanshu Mohan

There are three critical fault lines in the global – and national – economic landscape, which we continue to ignore.

Revising the parameters of positioning each nation’s economic recovery path in the new year, and amid a surging new Covid-19 variant, one could argue that currently, there are three critical fault lines in the global – and national – economic landscape. How each nation, including India, understands and responds to them using an intersectional lens in policy-tradecraft will shape their future economic trajectory.

To understand the first fault line, looking closely at the World Inequality Report 2021 data may help. The report highlights how the share of the bottom 50% of the world’s population in the total global wealth is 2%, while the share of the top 10% is 76%.

The wealth of the top 10% globally, which constitutes the middle class in rich countries and the merely rich in poor countries, is growing slower than the world average, but the top 1% captured 38% of the global increment in wealth, while the bottom 50% captured 2%. Those in the top 0.1% saw their share of wealth rising from 7% to 11% in just a year.

In the context of India, the top 1% earned more than 21.7% of the country’s total national income in 2021, while the bottom 50% made 13.1% of the money. The authors argue that the ‘deregulation and economic liberalisation’ policies pursued since the 1980s in India resulted in one of the most extreme rises in income and wealth inequality.

To understand the second and third fault lines, we need to dig deeper to study the global and national labour market landscape, particularly from the last two years’ perspective.

In a recent paper measuring German workers’ beliefs about rents and outside employment options, authored by economists Simon Jager, Christopher Roth, Nina Roussille and Benjamin Schoefer, it is found that 13% of jobs would not be viable at current wages, concentrated in the low-wage segment of the German job market.

Most remain employed in lowwage work because of being “overpessimistic about outside (work) options”, and this belief tends to give ‘monopsony power’ (undue competitive advantage) to employers in the context of low-paid workers.

The only scenario under which such low-paid workers are forced to change their “misinformed conceptions” about the external employment scenarios and look for, say, better wage opportunities (or a wage-premia), would be a big shock that would force a massive shakeup of the entire labour market.

Two years of COVID19 and its economic fallout did just that. Most economists are now calling this ‘shake-up’ in the global labour market a period of ‘The Great Resignation’.

As many as 40% of the remaining employees are also thinking of quitting, according to a recent Microsoft report. In tech, more than 72% of US-based tech employees are thinking of quitting their jobs in the next 12 months.

So, what is going on here? Under normal circumstances, an exodus of ‘job-quitters’ may point to a labour market dealing with a great shortage of jobs (a demandside problem). But the last two years haven’t been remotely normal, and the long cycle of mass resignations isn’t restricted to the US alone but is part of a global trend.

The ‘work from home’ (WFH) scenario, especially in tech and other service-based jobs, has changed workers’ beliefs and expectations about their own jobs and the outside employment scenario. The ‘misinformation’, or ‘over-pessimistic’ attitude, which many lowpaid workers earlier had, has been disruptively reoriented.

Working parents, especially those under a more taxing workfrom- home set-up and those without adequate childcare support, were forced to focus on managing ‘household chores’ and ‘kids’ together. In patriarchal settings, the adverse impact of this additional ‘care responsibility’ was evident with the number of women moving out of the workforce.

And so, broadly, the pandemic’s push to a disruptive transformation of work and the workplace – what would have taken decades in the absence of a ‘shock’ – has changed the global labour market’s status quo.

However, the larger concern remains – those responsible for taking decisions and designing policies for kickstarting an economic recovery continue to miss out on these not-so-subtle signs.

There is a need to create jobs that recognise the orientation of ‘new’ work demand, whose social security needs may not just include health insurance or pension, but also greater support for childcare while providing time for leisure. T