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The post-Covid economic paradigm: the future of work and business

Digital format, 19/10/2021, Aspenia

Aspenia 94 (in Italian), entitled “I nuovi dopoguerra”, analyzes the many complexities of the international economic picture. It is possible that the post-Covid era will open up scenarios similar to those of the 1970s, or even something resembling the “roaring Twenties” and its tragic epilogue, the Great Depression of 1929.

While history may not repeat itself to the letter, the current moment has some upsides and downsides that merit going over. On the one hand, Italy is making a solid recovery, and not merely on the rebound, which borne out by some excellent economic data. Far from accidental, these are rather the result of a steady and gradual boost to important sectors such as exports, manufacturing, services and tourism. Europe itself is undeniably showing signs of success as well. The decision to set a precise course of action by investing in the energy and digital transitions contributes to fueling a positive outlook, giving direction to government funding and major global corporate strategies and bringing stability to the many variables at play. A concrete example of this is the European Green Deal, an existing pathway to a sustainable energy transition that now includes the Biden administration’s return of the United States to fold of the Paris Accord. It will be the task of the Glasgow COP26 – under the dual presidency of Italy and England – to steer other, previously reluctant international powers in the same direction as Europe and the United States.

Downsides are in no short supply, however, due partly to a series of energy supply problems coupled with spiking gas prices, and partly to difficulties in the logistics sector and transport in general. Not to mention all the other unknowns: mushrooming government debt, scarce correlation between supply and demand and China’s recent slowdown. The social costs of the two transitions are also cause for concern, not least in consideration of the imminent obsolescence of some kinds of jobs that necessitates the re-skilling of workers for new ones. These factors combine to create no small amount of uncertainty on a non-homogeneous international stage.

The digital transition, which remains the underlying matrix of all transitions, is going to have a considerable impact on work. The pandemic has changed models of work organization with the exponential expansion of teleworking. The months lived in “lockdown” – but even once the restrictions were relaxed – produced unique conditions in companies that were suddenly compelled to reorganize in response to the emergency.

Teleworking presupposes assessment of workers’ autonomy and responsibility; indeed, it is not a solution for everyone. Its widespread use is not indispensable, but there should be a rational examination of when and where this modality is useful. It is unlikely, for example, that teleworking will become the norm in the manufacturing sector. Not least because there is no evidence, so far, that teleworking ensures adequate productivity. Neither should new approaches to work organization neglect the need to close the gender gap in job hierarchies. More female employment will not only help raise GDP but will also have a positive influence on productivity.

Consideration should be given to several negative externalities that could result from the widespread use of this work model. One emblematic example: the entire chain of services that revolve around “lunch hour” that include cafes, restaurants, hotels, public transportation and real estate. It has been calculated that widespread teleworking could take no less than 40 million cars off the road, which would wield a heavy blow to the automotive sector. At the same time, however, this would naturally lower CO2 emissions levels, as happened during the first hard lockdown of the pandemic period. Moreover, it was pointed out, traffic is not the only cause of urban pollution since much is also due to obsolete home heating systems.

Another negative externality, this time in the social realm, could be a rise in inequality between distance and in-person workers. Therefore, caution and balance must prevail over impromptu solutions that could trigger a sudden social backlash. Underscored at the same time was the need to be mindful of the many benefits of teleworking, such as lowering company overhead by reducing the need for office space. The transformation needs careful guidance, but it is certainly impossible to turn back now after the major digital leap forward spurred by the pandemic. On the contrary, some participants believed that a work organization paradigm shift in which roles and hierarchies give way to autonomy and a sense of belonging is not far off: in other words, from headquarters to “hubquarters”.