- Social distancing is accelerating the digital transformation of economies, experts say, but this movement results in both opportunities and huge challenges;
- Workers will need to incorporate digital skills in order to continue in the labor market, and social programs should take this into consideration.
According to the Economic Commission for Latin America and the Caribbean (ECLAC), just 26.6% of formally employed workers in the region can do their jobs from home. Technological and social challenges involved in offering the possibility of working and consuming remotely, as well as in providing opportunities for distance learning, will surely make innovation and digitization be a key factor to the Latin American economic recovery after the pandemic.
In a webinar held by the Inter-American Dialogue, a U.S.-based think tank, to discuss the innovation and technology scenario in Latin America after the COVID-19 crisis, all the participants agreed that social distancing is accelerating the digital transformation of their economies – which results in opportunities, but also in huge trials for individuals, firms and institutions.
Acceleration is indeed a necessity. As Cármen Pagés-Serra, chief of the labor markets and social security unit at the Inter-American Development Bank (IDB), pointed out: people who are losing their jobs in the current situation are usually less prepared to meet digital demands.
“It is clear that COVID has been able to move forward the adoption of technologies in a way that probably would not have happened in the next 5, 6 or 10 years,” she said. Workers, she reckoned, will need to incorporate skills in order not only to continue in the labor market, but also to face a different economy for which they will not have the necessary abilities.
Today what we are seeing is a huge need for reinvention by the government, by companies that need to change their processes and become more adept at using technology, and by workers who need to incorporate those skills
Cármen Pagés-Serra, chief of the labor markets and social security unit at the Inter-American Development Bank (IDB)
The difficulty lies in how governments and the private sector should act as unemployment is set to rise over 15%-20% across the region and societies will likely operate within the so-called “new normal” ways in the foreseeable future.
Experts at the debate suggested providing instruments and incentives for companies to restructure, as well as an income protection that goes beyond assisting basic and urgent necessities.
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McKinsey estimates that COVID-19 related spending in Latin America could surpass the 8% of GDP, including stimulus, liquidity, health and social protection measures.
Preparing affected workers for the post-pandemic scenario
“If we are spending that amount of money and we are about to leave several generations with a lot of debt, we’d better do it wisely,” said Andrés Cadena, a senior partner at McKinsey. “We should not just spend, we must invest.” Pagés-Serra, from the IDB, added that rather than pure subsidies, this would be a good time to establish schemes to retrain workers so they acquire new skills through some type of conditional protection. Retraining and certifications should be aimed at introducing them to tasks and occupations that will be in high demand.
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Public debt will reach record levels, according to Cadena, and by borrowing from the future, governments and society should use this money thinking in long-term perspectives. “If we do it in a way in which we structure programs and opportunities for employment generation, if we do it wisely, and not only thinking in the typical way of getting out of this crisis by investing on infrastructure and social, which has to be done, but also on the digital opportunity and the data infrastructure, then we will be able to see a better future for our kids,” said Cadena.
The focus of regulation: services, not technologies
Ángel Melguizo, vice president of external and regulatory affairs at AT&T DirecTV Latin America, urged governments to quickly advance smart regulations.
If we have to pick one positive thing in this tragedy, it is digitalization. It is true that citizens, companies, governments are really moving fast. It’s time to start regulating services, and not technologies.
Ángel Melguizo, vice president of external and regulatory affairs at AT&T DirecTV Latin America
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Melguizo concluded with a plea for the setup of global multinational agreements in the digital economy. “The Internet has no borders. Unfortunately, now the world has many borders and very closed borders, but this is not a steady state. Our rules should be global, “added Melguizo.
