More Less
More Less
April 24, 2020

200 billion hours to spend: The Covid-19 opportunity to upskill

Opinion image

Covid-19’s impact on global labor markets is enormous. A recent ILO report suggests a decline in global working hours of 6.7%—over 200 billion hours in the second quarter of 2020 alone. The full impact of the crisis will be much larger.

Unemployment is not the only consequence of this labor demand shock. In many countries, the policy response has included employment retention strategies, such as temporary wage subsidies or short-term pay. Some firms have also chosen to cut wages or reduce working hours instead of shedding workers as a response to falling revenue. Both of these responses will help to keep more people in jobs. But many of the workers retained through these strategies will have much less to do while on the job.

Both employed and unemployed workers suddenly have more time at their disposal. What do we do with the time we have gained? In many countries, we are spending more time with children who are no longer physically at school. Some of us are doing tasks which our older relatives previously did. Watching Netflix and other streaming opportunities is also a compelling option.

From a human capital perspective, however, the crisis presents a unique economic opportunity to retrain and upskill the labor force. Economists have long observed that investment in human capital (education, skills) tends to increase during recessions, because well-paying alternatives for how to spend our time are scarce. In the current recession, the opportunities for training are even greater. Even those workers who remain employed but have little to do can use the downtime to invest in training. 

But this should not be left to individual workers. Employers, industry associations, professional associations, unions, education and training providers as well as governments all have a stake in identifying and developing the most valuable training opportunities for the post-Covid economy. 

For many firms, the lost revenue from investing staff time in skills development has never been lower. Put differently, for some employers, the opportunity cost of paid labor time is lower than usual, for some it is even zero. Training employees, however, requires not only staff time, but also the direct cost of training fees. Many employers will not have the funds required to invest in such training, even if the returns to such investments are high. Governments should consider subsidizing such training. Another option is to provide deferred-repayment loans to businesses who invest in such training. Repayments can be contingent on future revenue.

Universities globally have proven to be remarkably flexible in the crisis, refashioning most of their offerings for online learning. They and the rest of the education sector should be able to do so more broadly. A retraining program would also support the education and training sector, which has been hit hard in some countries, especially those reliant on foreign students who cannot return for study from their home countries.

Labor markets were already facing the prospect of significant transformation as a result of automation and of trade liberalization. Covid-19 will exacerbate and accelerate these sorts of challenges. Many of the workers who have been affected most have had unstable jobs. Many are relatively young. Some are in jobs vulnerable to future shocks to the labor market. Clear and comprehensive plans are needed for retraining and upskilling such workers. The most efficient strategies may be those which focus on relatively short courses, perhaps six months—while labor demand remains very low during the Covid-19 crisis, as does the opportunity cost of the workers’ time.

© Peter Siminski and Emil Temnyalov

Peter Siminski is Professor of Economics at the University of Technology Sydney (UTS), Australia
Emil Temnyalov is a Senior Lecturer (Assistant Professor) in the Economics Department at the University of Technology Sydney Business School, Australia

Read more on the coronavirus crisis:
"Coronavirus and the labor market," by Daniel S. Hamermesh
"Fighting a coronavirus recession," by Daniel S. Hamermesh
"Pandemics and the labor market—Then and now," by Karen Clay
"Pricing the lives saved by coronavirus policies," by W. Kip Viscusi
"Health effects of the coronavirus recession," by Christopher J. Ruhm
"The long-term consequences of missing a term of school," by Simon Burgess and Hans Sievertsen
"Coronavirus, telecommuting, and the labor market," by Nikos Askitas
"Expectations about Covid-19 social-distancing measures in Italy and their impact on compliance," by Guglielmo BrisceseNicola LaceteraMario Macis, and Mirco Tonin
"The coronavirus crisis and the next generation," by Bart Cockx
"Korea: A paragon of dealing with coronavirus," by Sok Chul Hong
"Economic implications of postponing the Tokyo 2020 Olympic Games," by Peter J. Sloane
"The sudden growth of employee autonomy during the coronavirus lockdown," by Elisa Gerten and Michael Beckmann
"Mitigating the work–safety trade-off," by Tito BoeriAlessandro CaiumiMarco Paccagnella
"Trading off lives for jobs," by Daniel S. Hamermesh
"Trends in Covid-19 infection: What New York City neighborhoods tell us," by George J. Borjas
"Labor markets during the Covid-19 crisis: A preliminary view," by Olivier CoibionYuriy GorodnichenkoMichael Weber
"Did California’s shelter-in-place order work? Early coronavirus-related public health effects," by Andrew FriedsenDrew McNicholsJoseph J. SabiaDhaval Dave     

Please note:
We recognize that IZA World of Labor articles may prompt discussion and possibly controversy. Opinion pieces, such as the one above, capture ideas and debates concisely, and anchor them with real-world examples. Opinions stated here do not necessarily reflect those of the IZA.