Employment in an era of “New Normal”

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M. Fadhil Hasan Institute for Development of Economics and Finance (INDEF)’s Senior Economist

IO – The COVID-19 pandemic has changed the social and economic order of our everyday life: how we work, study, interact, and socialize in “new normal” patterns that differ from previous times. A lot of citizens resist the idea of a new normal, but many others consider it a necessity that they hope will be more appropriate than the “old normal”. 

Those who seek to pursue the new normal see the old normal as something not good and should not be continued for having caused negative impact on everyone’s overall lives. They view the COVID-19 pandemic as a positive disruption that forces people to reevaluate their established social and economic arrangements. They hope that the new normal will be able to minimize the negative impacts of the old arrangements. However, even now we don’t know for sure how the new normal will take form. 

One of the major aspects that we expect to change is the world of employment. This is because physical distancing is a great part of the new normal: It means that physical movement, direct meeting, and open interactions between people are restricted. In economic contexts (production, distribution, and consumption), it means a new trend of rising automatization, digitization, and online transactions. Digitization has been on the rise even before the COVID-19 pandemic, in line with technological advances, which allows for the use of the internet and artificial intelligence. In fact, Jack Ma, the founder of the Alibaba group, stated in a World Economic Forum discussion that in the future, 85% of businesses will be e-commerce and 99% of trade will be made online. Furthermore, small and medium businesses will dominate the business world at 80%, and that this condition will be evident by 2030. 

COVID-19 is expected to speed up the automatization phenomenon in production process and the digitization process in payment transactions and other trade activities. The new normal is based both on physical distancing meant to prevent the spread of illnesses like COVID-19 and to increase economic and financial efficiency by replacing human workers with robots. 

Socially, using robots has relatively few negative social impacts, specifically in relations with industrial relations between business owners / management and employees. Using automation-based efficiency, they can minimize issues such as protests for higher wages. Furthermore, digitizing payment processes will eliminate many economic activities hitherto managed by humans in banking and finance. Banks will remain, but bankers may no longer be needed. Online trading, buying, and selling will eliminate the existence of physical markets as our place of sales and exchange. 

 It is true that the process is a gradual one, but the COVID-19 pandemic is accelerating the speed of the process. The main issue is, “What will happen to workers who are no longer required in the production process?” How many human workers are to be pushed aside thanks to this new normal? Will those who are dismissed because of the COVID-19 pandemic get jobs in the new normal after the pandemic ends? 

The Workers’ Fate 

The COVID-19 pandemic triggers a large increase of the openly unemployed. The Indonesian Chamber of Commerce (Kamar Dagang dan Industri – “Kadin”) records 6 million employees being sent home and / or dismissed, making the total number of openly unemployed at 13 million people or 10% of the working population. 

It is uncertain how the new normal economy can resolve unemployment amid the pandemic. There is no guarantee that dismissed workers will get their jobs back. Some business sectors cannot operate for some time because it will take a lot of time to recover, while those that can operate must implement strict health protocols that would not allow them to work in their initial capacity. There are also many companies that have suffered a heavy financial blow thanks to the plague, so that it would be difficult for them to return to previously “normal” operations – especially if the Government cannot provide them with liquidity assistance. 

When the above is combined with the continued trend towards automatization and digitizing, the fate of workers in the new normal era is open to question. True, new job opportunities are being created thanks to the new technology, but we don’t know for sure what they are and how many will be available. Under the circumstances, sustainable educational policies, programs, and training for the previously- and newly-unemployed is necessary, in order to allow them to adapt to the new normal of the workplace. Improving human resource competence and capacity in ways that are relevant to the new normal in employment will strongly determine whether our workers are going to be ready for the new era or not. Such educational and training systems must conform to the new normal, which is physical distancing. Right now, many foreign universities gradually transform their classes into fully online classrooms. Direct meetings might still be necessary, but are no longer primary. Therefore, a reliable and quality ecosystem of education and training, information technological infrastructure, and internet connection are the main prerequisite for effective and efficient job training models. 

In this context, the current Pre-Employment Card program can be part of the training model for the new normal. A training model that relies on digitized processing from beginning to end is expected to serve as a resolution for workers who require continuous competence development according to the demands of the post- COVID-19 era. 

Humans are the most important aspect of the economy and cannot – must not – be eliminated from economic activity. However, the demands of the new normal are inescapable. Human workers are simply not as much needed for some economic activities in some sectors. Therefore, humans most transform and adjust to the new normal. It is under this context that the Government must seriously and systematically implement various necessary training programs to ensure that workers are ready for the new economic normal. If we don’t do this, the people eliminated from the new normal might become an economic and social burden that endangers the very bones and marrow of our everyday lives as a nation.