Future of Work – Post pandemic Indian economy

The impact of COVID‑19 on work, the workforce, and the workplace will persist after the health crisis has subsided. McKinsey research examines how the trends accelerated by the pandemic may reshape work in the long term.

The pandemic has, for the first time, elevated the importance of the physical dimension of work. Jobs in work arenas with higher levels of proximity are likely to see greater transformation after the pandemic, triggering knock-on effects in other work arenas as business models shift in response

COVID‑19 accelerated three groups of consumer and business trends that are likely to persist:

1.      Remote work and virtual interactions

2.     E-commerce and digital transactions

3.     Deployment of automation and AI

Disruptions to work sparked by COVID‑19 will be larger than estimated in the pre-pandemic research, especially for the lowest-paid, least educated, and most vulnerable workers. It is estimated that more than 100 million workers in the eight countries we studied may need to switch occupations.

Workers will face even greater gaps in skill requirements.

Job growth may concentrate more in high-wage jobs while middle- and low-wage jobs decline.

Scenarios in different arenas

Retail Stores, Banks, And Post Offices

The on-site customer interaction arena includes frontline workers who interact with customers in retail stores, banks, and post offices, among other places. Work in this arena is defined by frequent interaction with strangers and requires on-site presence. Many venues in this work arena were shuttered during the pandemic. Some work migrated to e-commerce and ordering online, a behavioral change that is likely to stick.

Leisure And Travel Arena

The leisure and travel arena is home to customer-facing workers in hotels, restaurants, airports, and entertainment venues. Workers in this arena interact daily with crowds of new people. COVID‑19 forced most leisure venues to close in 2020 and airports and airlines to operate on a severely limited basis. In the longer term, the shift to remote work and reduction in business travel, as well as automation of some occupations, such as food service roles, may curtail demand for work in this arena.

Computer based office work

The computer-based office work arena includes offices of all sizes, corporate headquarters, and administrative workspaces in hospitals, courts, and factories. Work in this arena requires only moderate physical proximity to others and a moderate number of human interactions. A distinguishing feature of this work arena is that much of the work can be done remotely because it does not involve special equipment or in-person customer interactions. This is the largest work arena in advanced economies, accounting for roughly one-third of employment. Nearly all potential remote work is within this arena.

Construction sites, Farms

The outdoor production and maintenance arena includes construction sites, farms, residential and commercial grounds, and other outdoor spaces. Work here requires low proximity and few interactions with others, and it takes place fully outdoors. Given these characteristics, COVID‑19 had a limited impact on work in this work arena. This is the largest arena in China and India, accounting for 35 to 55 percent of their workforces, while in advanced economies less than 15 percent of the workforce is engaged in it.

E-commerce has grown two to five times faster than before the pandemic in every country.

The finance, management, professional services, and information sectors have the highest potential for remote work.

Videoconferencing has become the norm and will likely replace some business travel even after the pandemic

Companies rapidly integrated Zoom, Microsoft Teams, DingTalk, and other virtual platforms into their operations to facilitate communications and interactions with employees, customers, suppliers, and service providers. In a global survey of business executives in July 2020, 85 percent of respondents said their company had increased adoption of virtual communication and collaboration tools since the start of the pandemic. Salespeople who may once have doubted their ability to close a deal over videoconference have found they can.

Although developing new client relationships will still benefit from in-person connections, some routine B2B meetings are likely to continue virtually.

As a result, even after a vaccine is widely available and air travel resumes, some business travel may never return.

Building a brighter future of work

Focusing on skills rather than academic degrees when listing jobs and recruiting can ease occupational transitions

Before the pandemic, it was found that nearly all low-wage workers who lost jobs could move into other low-wage occupations; for instance, a data entry worker could shift into retail or home healthcare. But given the trends accelerated by COVID‑19, it is now estimated that to remain employed, more than half of the low-wage workers currently in declining occupations would need to shift to occupations in higher wage brackets that require different skills.

India

India experienced short-term work disruptions during the pandemic, but it faces the most long-term labor market disruption of any of our countries. Long-term trends such as population growth, rising incomes, and increasing urbanization will far outweigh the impact of trends influenced by COVID-19.

India’s labor force is projected to increase by 14 percent over the next decade, and nearly all categories of jobs are forecast to grow (with the exception of agriculture). It is estimated that India will see growth in both middle- and high-wage jobs, unlike other countries, although the share of low-wage jobs is expected to decline.

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