For many, COVID-19 has changed the world of work for good

The upheaval in global labor markets triggered by the coronavirus pandemic will transform the working lives of millions of employees for good, policymakers and business leaders told a Reuters virtual forum on Tuesday.

Nearly a year after governments first imposed lockdowns to contain the virus, there is a growing consensus that more staff will in future be hired remotely, work from home and have an entirely different set of expectations of their managers.

Yet such changes are also likely to be the preserve of white-collar workers, with new labor market entrants and the less well-educated set to face post-COVID-19 economies where most jobs growth is in low-wage sectors.

"I think it would be a fallacy to think we will go back to where we were before," Philippines central bank Governor Benjamin Diokno told the Reuters Next forum.

"We were already geared towards the digital, contactless, industries … That will define the new normal."

The pandemic, which according to a Reuters tally has so far infected at least 90.5 million people and killed around 1.9 million worldwide, has up-ended industries and workers across the globe.

Hospitality and tourism are among those sectors worst-hit by stringent social-distancing rules and travel bans, while sectors that support the work-from-home economy are adding jobs, albeit often in low-wage roles.

"Driving, warehouse, construction - they're actually ahead of where they were last year," Chris Hyams, CEO of the global jobs listings website Indeed, said in an interview to be aired at the forum later on Tuesday.

Hyams said job searches on Indeed last year showed that office workers - who before the pandemic would typically flood the website on Monday mornings looking for a change in job - were now more interested in stability in their working life.

"What we saw for the first six months of pandemic was that employees were much less likely to be looking for something new," he said, adding those workers had now got used to home-working and were above all keen on retaining such flexibility.

But while he said there were already signs that some sectors were now ready to allow up to 70% of their workforces to operate remotely all the time, such benefits would often be reserved for better-educated white-collar workers.

"We believe equity and inclusion will be the next frontier," he warned. "Disparities that already exist in society are going to be heightened and exposed."

THE NEW-LOOK MANAGER

Some of those sectors most badly hit by the pandemic now face a long haul back to anything like their former health.

Australian Competition and Consumer Commission Chairman (ACCC) Rod Sims was pessimistic about the outlook for the aviation industry, seeing no return to normal international travel to and from Australia throughout 2021.

"I think free international travel between Australia and overseas will be a long time away, unfortunately," Sims told Reuters Next, noting how the virus has made a resurgence in Australia after being virtually stamped out late last year.

Other changes are more subtle, but will start to transform the way workers are hired and managed.

Indeed's Hyams said the job interview by Zoom had proven its worth and predicted a "secular shift" towards such practices.

"Employers and job-seekers found it safe, more convenient and much faster ... The future of hiring is going to very much start with remote and video interviewing," he said.

Observers of the workplace also expect the pandemic to fundamentally alter the way managers operate - not least because the current uncertainties mean they must remain open to change.

"It's no longer the role of the CEO to have all the answers," said Laura Storm, founder of Regenerators, a collective formed to spur new thinking about products, services and organizations. "The role of the CEO is to be a chief ecosystem officer or a facilitator."

Hephzi Pemberton, CEO of Equality Group, a consultancy and executive search firm, agreed.

"My hope is that our leadership will look and feel very different," she said, calling for companies to use the moment to fund genuinely long-term diversity and inclusion plans.

-reuters

Japan's debt mountain: How is it sustainable?

Already the global leader in accumulating debt, Japan is adding nearly $2 trillion to its mountain this fiscal year with record stimulus packages to cushion the impact of coronavirus.

With debt levels around two and a half times the size of its economy, Japan manages to keep government bond yields ultra low and investor confidence high that it can avoid default.

- How did we get here? -

Whichever way you look at it, Japan's debt is unfathomably large. According to the Bank of Japan (BoJ), at the end of 2019, it stood at 1,328,000,000,000,000 yen.

This is equivalent to around $12.2 trillion, just over half the total amount of US debt in absolute terms but by far the biggest pile when measured against the size of even Japan's mighty economy (around 240 percent of gross domestic product).

Japan's debt began to swell in the 1990s when its finance and real estate bubble burst to disastrous effect.

With stimulus packages and a rapidly ageing population that pushes up healthcare and social security costs, Japan's debt first breached the 100-percent-of-GDP mark at the end of the 1990s.

It hit 200 percent in 2010 and is now around 240 percent of GDP, according to the International Monetary Fund.

On Wednesday, Japan's parliament agreed anti-coronavirus measures worth 117 trillion yen -- which is likely to push the GDP ratio well above 250 percent.

- Isn't this a problem? -

To finance this debt, the Japanese government issues bonds known as JGBs.

These are snapped up in enormous volumes by the BoJ, the country's central bank that is officially independent but in practice closely co-ordinates economic policy with the government.

As part of anti-virus measures, the bank has removed its self-imposed ceiling on buying JGBs, giving itself unlimited purchasing firepower. It holds more than half of all JGBs.

These purchases support the price of the JGBs in the debt market and keep the yield on the bonds low (prices and yields move in opposite directions).

This means that in effect, the government is being financed by the central bank at an ultra-low (or even negative) interest rate, making it more sustainable.

"The ultra-low rate conditions created by very much accommodative monetary policy by BoJ can be one of the reasons" that Japan's mountain is less problematic than for other high-debt countries around the world, said Takashi Miwa, an economist at Nomura bank.

- Who else buys Japan's debt? -

Risk-averse private and institutional investors also have a healthy appetite for JGBs because they see them as a safe place to put their money, burned by a history of stock market bubbles.

"A large portion of wealth is held by seniors who lack financial literacy and prioritise stability rather than return," said Shigeto Nagai, from Oxford Economics.

"With limited investment and lending opportunities domestically, banks, insurance companies and pension funds still need the JGB to place their vast amount of excess savings," Nagai told AFP.

The bonds are denominated in yen, still seen as a safe haven in troubled economic times and the proportion held by foreign institutions is very low -- making Japan less vulnerable to external pressure.

In fact, 90 percent of the debt is held by Japanese investors.

Another thing that keeps market confidence high: Japan is the world's biggest creditor, holding more than $3 trillion in net assets in foreign currency reserves and direct investment abroad.

- How high can you go? -

The growing mountain of debt means that, even with ultra-low interest rates, the amount Japan's government pays for repayments is its second-largest budget line.

The only way to avoid adding to the pile is to reduce budget deficits by boosting taxes or cutting public spending -- but this threatens to throttle growth in Japan's already recession-hit economy.

One drastic step could be to write off the debt held by the BoJ -- a step that would be an "accounting trick" with "no consequence" on the real economy, said Frederic Burguiere, an economist specialising in Asia.

"But this does not take into account the moral dimension of economic mechanisms... if we allow states not to repay their debts, what becomes the rules for private investors and the state itself?" asked Burguiere.

Agence France-Presse