This article discusses the surprising vulnerability of white-collar jobs in the age of zoom and the potential role of AI in disruption. Half a million job cuts could be just the start (Oct 2022 – March 2023), according to an article in the Economic Times. This topic is important for the IAS exam economy segment.
Vulnerability of White-Collar Jobs
Trend of widespread job cuts across the world:
- Since October 2022, there have been more than 500,000 job cuts announced the world over, mainly dominated by white-collar firms. What had begun as a wave of layoffs in big tech companies is spreading across the world.
- Many companies (for example: KPMG, McKinsey) are downsizing themselves
- Some are cutting middle management and bureaucracy (for example: FedEx Corp., Boeing Co.)
- Weak banks are facing a financial crisis (for example: Credit Suisse Group AG)
- As everything is now snapping back to pre-pandemic reality (such as corporate takeover activity, interest rates, etc.), it is not surprising to see companies trying to restructure their operations in order to adapt to the changing conditions.
- Businesses are trying to adjust to the post-pandemic world by changing their strategies, processes, and possibly even their organizational structures.
Source: Bloomberg
Contrast between the job markets for white-collar and blue-collar jobs:
- While unemployment rates for white-collar jobs are still relatively low, there has been a recent trend of job losses affecting white-collar workers, particularly those who work remotely (referred to as “Zoomocrats”).
- The term ‘Zoomocrats’ refers to white-collar professionals who are able to work remotely using video conferencing tools like Zoom.
- This is surprising given the expectation that the digital age would lead to increased demand for digital skills and potentially leave older, less digitally-literate workers behind. In contrast, the job market for blue-collar jobs has remained tight due to a declining supply of older workers.
- Given the recent lower trends in productivity and increasing trends in automation, this series of layoffs could be just the beginning.
Source: Bureau of Labour Statistics
Effects of the COVID-19 pandemic on the shift to digital and remote work:
- While the transition to digital work during the pandemic was life-saving, productivity trends have returned to pre-pandemic levels or slightly below.
- As per an IMF discussion paper, while the pandemic led to a catch-up in adopting essential technologies, there was not a boost for investments in anything more revolutionary.
- Additionally, there was no evidence of increased demand for digital skills within occupations.
- In fact, there is evidence of “down-skilling” rather than up-skilling as employers relaxed job requirements to cope with the labour-supply crunch.
- The digital rush during the pandemic opened up a deluge of short-term business opportunities, but these opportunities have ebbed away in the post-pandemic world.
Source: Bloomberg
Impact of technology on white-collar work:
- While the introduction of Zoom has not led to significant productivity gains, it has made white-collar work more vulnerable to disruption.Â
- Increasing automation of cognitive tasks through AI technology could lead to further disruption and job loss in the white-collar sector.
The potential impact of technology (particularly AI) on the job market:
- While technology like Zoom has made remote work more accessible, it has also made white-collar work more vulnerable to disruption, as many jobs can be automated with Artificial Intelligence.
- The potential of AI to automate cognitive and creative tasks could lead to significant job losses in certain industries.
- Despite the potential benefits of AI, there are limits to what it can do.
- It’s important to be cautious in our use of AI and to recognize that it is not a panacea for all of our problems.
Vulnerability of White-Collar Jobs in the Age of Zoom:- Download PDF Here
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