Is the pandemic making us more productive?

A big-picture, easy-to-read article just in from the antipodes, published in the Australian ‘Financial Review’ and written by Nathan Sheets, chief economist and head of global macroeconomic research at PGIM Fixed Income – essentially, he agrees with our view that the pandemic, when eventually over, will be seen to have ushered in a sea-change in the way working lives are structured and digital tools used


To reap the full benefits of newly-found virtual tools, it’s vital to find ways to establish boundaries between work and other parts of our lives. Consider the factors in play

First is the ongoing pandemic – with case counts spiking in many parts of the world, the grim realities of the virus and the steps required to fight it continue to create challenges and shape our lives.

It has changed the way we work, socialise, educate our children, and do business. We have converted in-person events into virtual events, face-to-face meetings into video calls and crowded lecture halls into virtual classrooms.

In the process, we have learned that our virtual tools are surprisingly powerful. We have been able to complete our tasks while sparing the time, stress and expense of commuting. We have avoided the wear and tear of business travel and the sometimes interminable jet lag that came with it. In parallel, employers have beefed up their connectivity and virtual communication platforms.

The reality is that through the pandemic, workers around the world have put in the time and effort to learn new virtual tools. We have found ways to do business differently and, in some cases, even better than before.

In a recent survey of 1,200 chief information officers by Enterprise Technology, nearly half judged that productivity has improved since workers went home, with less than 30 % reporting a decline.

Of course, as the virus recedes, we are likely to return to the office and get back on airplanes, trains and subways. The virtual world will not fully supplant the physical. This episode has underscored that face-to-face contact is both a critical human need and necessary for some industries and occupations.

But a portion of these adjustments are likely to be permanent. Some business trips or meetings will be converted into virtual events, and some conferences will be done online.

Similarly, many workers will have split schedules – spending several days a week in the office but also working part of the week at home. The same survey of chief information officers found that remote work is likely to be twice as frequent as it was before the pandemic.

Perhaps in anticipation, workers have sharply increased their outlays on home improvement projects.

The economic implications are significant. These virtual technologies have the capacity to drive lasting “process innovation” and higher levels of productivity.

For example, if they enable us to convert just two hours a week from lost commuting or other transportation time into productive work time (which may be an underestimate for some), this would translate into a hefty 5 % productivity gain on a 40-hour work week.

These efficiency gains could also have effects on our lives more broadly. They may allow us to spend more time with family, relaxing, exercising or even sleeping – with benefits for our physical and mental health and overall happiness. A reduction in travel could bring benefits for the environment as well.

We see higher productivity as a potential legacy of the pandemic. This higher productivity, in turn, would expand the size of the overall economic pie – raising wages, profits and global GDP. Indeed, for economists, stronger productivity is as close as it gets to a free lunch.

But this admittedly optimistic assessment should be tempered by several offsetting concerns.

The first is the consequences for employment.

It’s not clear whether the winning sectors will be able to absorb the workers shed by the losing sectors, which include travel and transportation, hotels and bricks-and-mortar retailers.

The losing sectors tend to be labour-intensive, and the skills of these workers may not be a good fit for other parts of the economy. The upshot could be a slower-than-expected return to full employment.

Second, to the extent that these tools benefit higher-paid workers more than lower-paid workers, they may widen inequalities in income and wealth.

Sophisticated professional services, which involve the exchange of ideas, are likely to translate more naturally into the virtual world than lower-paid jobs in food preparation and personal services. There is no virtual application that allows food to be cooked or that provides daily care to the elderly and infirm.

Third, these technologies have the capacity to make us more efficient – but there is a potential downside for our personal lives. This risk is best captured by the quip: “Are we working from home or living at work?”

If left unfettered, these virtual tools could make work omnipresent and inescapable. To reap the full benefits of these tools, we must find ways to establish boundaries between work and other parts of our lives.

In summary, one surprising side effect of the pandemic has been the coordinated adoption and diffusion of powerful technologies.

These technologies hold the promise of higher levels of productivity and more balanced lifestyles. For this to happen, however, we must remain firmly in control of these technologies – and not allow them to control us.

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