The trend is undeniable: remote work is here to stay. Not only has technological progress made it simpler and smoother, but the COVID-19 pandemic has accelerated a process that was already underway, albeit in a much slow and gradual way. Companies, especially in the service industry, have been realizing for quite some time that there was little sense, from an economic point of view, of maintaining the cost of facilities with the sole purpose of gathering workers side by side. Like any major change, however, the mass adoption of remote work will occur more quickly for some people than for others. And in Latin America, this difference will be even more evident.
A recent study by researchers Isaure Delaporte and Werner Peña at the Global Labor Organization (GLO) found that countries in the so-called Southern Cone of the region are relatively well-positioned for the transition. In these economies, more than a quarter of all jobs could adopt the home office.
It has been estimated that 31% of occupations can be performed remotely in Argentina, a similar rate to those seen in Chile (27%), Brazil (27%), and Uruguay (26%). It is a somewhat distant reality from countries like Luxembourg, Switzerland, the United Kingdom, or the United States, where over 40% of jobs can be performed remotely, but one that is close to middle-income economies in Europe, such as Spain, Greece, and Slovakia.
Geraldo Góes, a researcher at the Institute of Applied Economic Research (Ipea), an agency linked to the Brazilian Ministry of Economy, explains that studies point to a strong correlation between per capita income and the potential for teleworking.
The researcher, along with colleagues Felipe Martins and José Antonio Nascimento, adopted the same methodology to measure disparities among Brazil’s regions.
The composition of each economy, be it national or regional, influences the ability to migrate the workforce to a permanent home office situation. At one extreme, there are IT services, at the other, industrial plants, or even agricultural and extractive activities, in which the adoption of teleworking is not viable.
Informality is a setback for remote work
It is also estimated that the percentage of informal workers who would be unable to continue working from home is higher than the proportion of formal workers. If a country depends more on the latter or on manufacturing, its professionals will continue to have to commute daily to earn their daily bread.
In Latin America, countries such as Guatemala, Nicaragua, Bolivia and Ecuador have lower potential for remote work, with rates between 14% and 19% of the total professions that can adopt it.
“Identifying which jobs cannot be performed from home is useful as policymakers try to target social insurance payments to those that most need them”, explained to LABS Jonathan Dingel, a professor of economics who co-authored the methodology to classify the feasibility of working at home for the U.S. National Bureau of Economic Research. “However, it is not straightforward to use these values to estimate the share of output that would be produced under stringent stay-at-home policies.”
These aspects bring us to the huge challenges Latin American countries face to adapt to the new forms of work. While working remotely, or teleworking, is an option for many workers, not all countries have the appropriate technology infrastructure. According to the Economic Commission for Latin America and the Caribbean (ECLAC), a United Nations body, although 67% of the region’s population is using the Internet, there are significant disparities both between and within countries depending on factors such as socioeconomic status and geographical location.
While more than 80% of the population had a mobile Internet connection in Chile, Brazil, Costa Rica, and Uruguay by 2017, the figure dropped to 30% in Guatemala, Haiti, Honduras, and Nicaragua.
In countries where remote work was already regulated, its use is being encouraged and standards have been issued to facilitate implementation. This also means that this mode of work has lost its usually voluntary nature. In Brazil, implementation of telework has been simplified, shortening the period of advance notice to the employee to 48 hours. Chile, Panama, and Costa Rica, among others, are also examples of countries where proper regulation exists, says ECLAC – fostering the trend of home office implementation.
But it interesting to note that, even in places where such rules are inexistent, the sanitary crisis provided the opportunity to pass ad hoc provisions that will probably be kept in a post-pandemic scenario. Such is the case of Paraguay and Ecuador, for instance.
Cultural traits will influence in teleworking adoption
Cultural aspects are a key factor in the adoption of changes in work habits and patterns. Microsoft’s latest Work Trade Index, based on a Harris Poll survey of over 2,000 remote workers conducted in six countries (U.S., U.K., Germany, Italy, China, and Mexico) hints at that.
Mexicans are the ones finding the most difficult balancing household demands while working from home. This burden was felt most heavily by millennials as well as new entrants to the workforce, Generation Z. “This may be because this group is more likely tasked with caring for younger children or sharing workspaces with roommates while managing a full-time job”, explains the report. European respondents tend not to struggle that much with the issue.
So, yes, Silicon Valley giants such as Facebook, Google, and Twitter may be the firms that most easily transitioned to the new standard mode of work. Nevertheless, it is remarkable how quickly companies from diverse sectors across Latin America have adapted. And it is comprehensible. Where it can be carried out, the home office presents numerous advantages and economic benefits.
Economic advantages and benefits
For many jobs working remotely is just as productive, if not more so, than working in the office. “Remote workers were found to be more productive than their co-located peers in experimental and quasi-experimental studies”, cited Matthew Clancy, a researcher on the economics of innovation at Iowa State University.
According to him, that are at least three other reasons to be optimistic about remote work, wherever it is implemented: first, the easier it makes to match workers and employers who are physically distant from each other; second, it erases the cost of commuting and living near productive firms; and lastly, better communication technology facilitates the access of knowledge, without the need of clustering in big, congested and polluted cities.
“Once remote productivity is good enough, and once the advantages of physical proximity to colleagues and peers decline enough, the advantages of a larger labor market and the ability to attract workers at a lower cost may be decisive”, writes Clancy.
The adoption of remote work, teleworking or home office, however we decide to call it, came suddenly. Much faster, actually, than the rising of factories and big offices, after the Industrial Revolution. Latin America is no exception to this phenomenon. And make no mistake: it introduced a new age in the way firms, particularly in the service field, organize themselves.