Speaker 1: I have a friend who laughed so much when he said,
Speaker 1: but where did you call to me? The love nowhere
Speaker 1: in And I said, look have a little shop store
Speaker 1: where I can buy my groceries. I have this little
Speaker 1: bank and they have a pharmacy. And there are two birds.
Speaker 1: And then he said, why do you have a pharmacy?
Speaker 1: Where do you need a pharmacy if you have to borrow? Hello,
Speaker 1: and welcome to Stephanomics, the podcast that brings the global
Speaker 1: economy to you. And that was Lowly Garthia, one of
Speaker 1: many who has used the pandemic as a chance to
Speaker 1: escape city life. Where we work, how we work, what
Speaker 1: we're wearing when we work. Is that all really going
Speaker 1: to change forever? More? In a year or two is
Speaker 1: time where we wake up find we're all pretty much
Speaker 1: doing what we were doing before COVID ninety. It's a
Speaker 1: question we keep coming back to you on this show
Speaker 1: because if work changes, the entire shape of our economy
Speaker 1: might change too. Cities could shrink, a lot of low
Speaker 1: skilled jobs in those cities could disappear, and governments could
Speaker 1: find themselves having to completely rethink how they try to
Speaker 1: tackle poverty and stimulate growth. In a minute, you'll hear
Speaker 1: me talk about all of that to Spend Smith, one
Speaker 1: of the co authors of a series of important reports
Speaker 1: on the future of work and the global economy post COVID.
Speaker 1: We'll also here why the Irish government is so keen
Speaker 1: to keep people from going back to work in their
Speaker 1: city offices. They're even going to encourage them to work
Speaker 1: in their local pub. But first, here's our Spanish economy
Speaker 1: reporter Jeanette Newman in Madrid and a quiet corner of
Speaker 1: northeast Spain. I'm walking through some outeror dining spats in
Speaker 1: the west. That's neighborhood in the center of Madrid. This
Speaker 1: neighborhood history centuries ago. The author of Don Quixote and
Speaker 1: other legendary writers lived here and as beautiful plus as
Speaker 1: with fountains and great tapas bars, many of which are open.
Speaker 1: Despite these charms, apparently not many people want to live here.
Speaker 1: To my left, there's an apartment for rent. To my
Speaker 1: right another there are several dozen apartments for rent just
Speaker 1: a few minutes from where I'm walking. So many empty
Speaker 1: apartments is pushing down rental prices. They fell around ten
Speaker 1: percent at the beginning of this year in Madrid compared
Speaker 1: to last in major cities around the world. The story
Speaker 1: is the same. In some central parts of Sydney, London,
Speaker 1: New York, and Chicago, prices are falling. The decline shows
Speaker 1: one way the pandemic has changed US. Urban centers have
Speaker 1: become less appealing. Let's push some city dwellers to move out.
Speaker 1: At the same time, it's slow the number of people
Speaker 1: who would normally move in. This ditching and dodging has
Speaker 1: major implications for rental prices, inflation, the cost of housing,
Speaker 1: and inequality. Let's go to the tiny town of Oust
Speaker 1: in northeast Spain. I traveled there to speak with recent
Speaker 1: city transplants about their new rural life and their post
Speaker 1: pandemic plans. I wanted to find out how permanent this
Speaker 1: global shift away from cities might be. A century ago,
Speaker 1: nearly fred people lived the new said, now they're two hundred.
Speaker 1: The town is located in an area of Spain that
Speaker 1: has an average of around seven inhabitants per square kilometer.
Speaker 1: There are few other places in Europe that are so
Speaker 1: sparsely populated, except the Scottish Highlands and Lapland. That's right,
Speaker 1: villains Subarctic wilderness for decades. Then, who said has been
Speaker 1: a place where people generally didn't want to live. The
Speaker 1: pandemic has changed that. New residents like Lowi Garcia are
Speaker 1: moving in. I have a friend who laughed so much
Speaker 1: when he said, but where did you go to? Middle
Speaker 1: of nowhere in And I said, Luke, half a little
Speaker 1: shop store where I can buy my groceries. I have
Speaker 1: this little bank that it already stole my car. When
Speaker 1: I went to take somebody out. Half a church and
Speaker 1: they have a pharmacy and there are two bars. And
Speaker 1: then he said, why do you have a pharmacy. Why
Speaker 1: do you need a pharmacy if you have two bars.
Speaker 1: Lowly is thirty nine years old. She works in education
Speaker 1: and is studying to become a kindergarten teacher. In September,
Speaker 1: she left her rental apartment in Madrid and moved to
Speaker 1: said with her kids. She wanted space and to be
Speaker 1: near nature and family. Lowly has deep ties too, said
Speaker 1: she spent much of the pandemic in the home that
Speaker 1: belonged to her great grandmother. Lowly enrolled her two boys
Speaker 1: in the town school, boosting the total number of pupils
Speaker 1: to nine. For small towns, like you said, a local
Speaker 1: school is an existential bell Weather when we came like people.
Speaker 1: You can feel that people only love me because I
Speaker 1: have two kids. And a town official called Lowly because
Speaker 1: she didn enrolled two kids in school. She had the
Speaker 1: right to two plots of municipal farmland, hold over from
Speaker 1: an earlier era when the town administered common lands for villagers.
Speaker 1: She didn't want the farmland, but she says the town
Speaker 1: has given her something less tangible and more profound. And
Speaker 1: the thing that I like very much of said is
Speaker 1: the fact of nature and freedom is the fact of time.
Speaker 1: It seems like you have time again to leave something
Speaker 1: that in the cities, no matter how much you try
Speaker 1: to have time, sometimes you always feel running after it.
Speaker 1: I don't know yet if I I'm going to be
Speaker 1: a rural woman for the rest of my life, but
Speaker 1: maybe for two or three more years. It's a fact.
Speaker 1: If Lowly and others stay, it would slow the exodus
Speaker 1: that Alberto Sanchez has seemed diminished his hometown. Alberto is
Speaker 1: thirty three years old and an historic preservation architect. He
Speaker 1: counts the cost of depopulation and who SAIDs abandoned buildings.
Speaker 1: Alberto bought one several years ago. He was supposed to
Speaker 1: spend part of Madrid doing research for his dissertation. Instead,
Speaker 1: he spent much of the pandemic restoring the property. I
Speaker 1: think that this project comes out of both my brain
Speaker 1: gain in a depopulating town, seeing the population firsthand as
Speaker 1: a kid. Even during my lifetime, my town loves about
Speaker 1: half of its population. When I was a kid, we
Speaker 1: had around four hundred people, and now we have around
Speaker 1: two hundred. He shows me around his property, a seventeenth
Speaker 1: century manor house. There's a coat of arms on the facade,
Speaker 1: basking in the sharp Spanish sunlight. The house is regal,
Speaker 1: despite the collapsed ceilings and piles of rubble. I thought
Speaker 1: that I needed to sur buy it in order to
Speaker 1: save it from other destinies that will have awaited her,
Speaker 1: including the militian, which was perhaps the most likely one.
Speaker 1: Alberto bought the house from a family who lived here
Speaker 1: until nineteen at the time tens of thousands of Spaniards
Speaker 1: were to camping to cities in search of better opportunities.
Speaker 1: The house is as the family left. It dishes in
Speaker 1: the pantry, covered in a thick layer of dust, old
Speaker 1: paintings in the attic. Alberto says the family planned to
Speaker 1: return but never did. And look at all the pots
Speaker 1: hanging there. It's beautiful. But again it's like they left
Speaker 1: and then we'll come back, we'll come back, and then
Speaker 1: they never came, and they never came back. For Alberto,
Speaker 1: the house is a time capsule. It tells a story
Speaker 1: about who said and rural life in Spain. Despite the challenges,
Speaker 1: Alberto has become more optimistic about that story during the pandemic.
Speaker 1: What I know is that four houses were built last year,
Speaker 1: and the top four your houses, which is a lot
Speaker 1: for a town this size, and many people are realizing
Speaker 1: that it's much cheaper to live in a town like
Speaker 1: this than to live in a city, especially in large
Speaker 1: capitals like Madrid and Barcelona, where housing is becoming and
Speaker 1: possibly expensive. Some people, though, are worried the charms of
Speaker 1: small town living will wear off once the pandemic fades.
Speaker 1: I traveled deeper into what's known as Las Spanavacia, Empty
Speaker 1: Spain to hear about the challenges in the town of Ourea.
Speaker 1: I spoke to Manuel Marco. He's fifty one years old.
Speaker 1: He and his wife moved to this town of around
Speaker 1: two hundred people just before COVID nineteen hit. During the pandemic.
Speaker 1: He's been happy to see more than a dozen new
Speaker 1: residents come to Aurea, but he's worried they won't stay
Speaker 1: and that others will continue to stay away. The reason
Speaker 1: slow internet. The Spanish government has pledged to spend billions
Speaker 1: of euros and EU pandemic recovery funds to ensure fast
Speaker 1: internet for all, but Manuel doesn't want to wait, so
Speaker 1: he's hatched a plan to tap the fiber optic tables
Speaker 1: have a nearby power plant and extend them to Area
Speaker 1: and several other small towns. He walks me down to
Speaker 1: Area's main street and shows me where he would install
Speaker 1: the cables from that entrance to the town over there,
Speaker 1: all along this road, straight down to the end. Didn't
Speaker 1: My decision to try to install telecommunications in these towns
Speaker 1: is about my intention to help these towns repopulate, so
Speaker 1: people can invest, so people can work, and so that
Speaker 1: the young people don't leave in these towns, don't die out. Okay,
Speaker 1: what does all this mean for the economy? I spoke
Speaker 1: to HSBC Global economist James Pomeroy. So you've ended up
Speaker 1: getting is a big dropping rental demand and a big
Speaker 1: dropping rental prices. And big cities, And you're seeing this
Speaker 1: in pretty much everywhere we can get data BID in
Speaker 1: the US, BID and Europe, BIT and Asia, my rental
Speaker 1: prices and big cities of Plumberton, and that really matters
Speaker 1: for inflation, particularly in the US when rents make up
Speaker 1: about a third of the inflation basket. Cheaper apartments are
Speaker 1: good news for young renters in big cities, but James
Speaker 1: points out there's a flip side. The problem you've got
Speaker 1: if you're one of those young people is, at the
Speaker 1: same time as this rental dynamic is happening, house prices
Speaker 1: are going through the roof because you've got this weird
Speaker 1: environment where all the people who are geographically mobile, who
Speaker 1: have kept their jobs during the pandemic because of being
Speaker 1: able to remote work, have saved a load of money.
Speaker 1: And I've got almost zero interest rates or historically low
Speaker 1: interest rates. And what's that. What that's meant is that
Speaker 1: house prices pretty much everywhere in the world I saw
Speaker 1: the pandemic in that sense has exacerbated income inequality because
Speaker 1: you're taking that home ownership even further out of reach
Speaker 1: of a younger generation who already was going to struggle
Speaker 1: to become home That's why some young people have seized
Speaker 1: on the pandemic to seek out places where home prices
Speaker 1: haven't gone up. People like Manuel are trying to invest
Speaker 1: in infrastructure to make sure they stay. I think about
Speaker 1: the people who left you Said and other small Spanish
Speaker 1: towns decades ago, streaming into cities like Madrid and Barcelona.
Speaker 1: Their exodus helped to concentrate economic and political power in
Speaker 1: urban areas. It drained many parts of the Spanish countryside
Speaker 1: of fatality. Many of those who left you Said decades
Speaker 1: ago thought they would eventually return to small town life,
Speaker 1: and they never did. Maybe this time some of those
Speaker 1: who have left the city to live in the country
Speaker 1: will be the ones who never go back. Jeanette Newman,
Speaker 1: Bloomberg News Now. One of the questions raised by Jeanette's
Speaker 1: pieces should governments be doing anything differently as a result
Speaker 1: of these changes in behavior? And it turns out the
Speaker 1: Irish government thinks they should not only be adapting their policies,
Speaker 1: but actively encouraging these developments as part of their strategy
Speaker 1: to boost rural areas. Dara Doyle is Bloomberg's bureau chief
Speaker 1: in Dublin. Dara, when I Readinette script. I sort of
Speaker 1: dimly remembered I'd read something about Ireland wanting to do this,
Speaker 1: but what exactly is the strategy. Yeah, so back in
Speaker 1: the spring the government launched this new sort of world
Speaker 1: development strategy that one involved and encourage people to, you know,
Speaker 1: continue to work from home where many people have moved
Speaker 1: back and moved out of Dublin over to the west
Speaker 1: of Ireland, the Midlands, that kind of place. So it's
Speaker 1: an idea where you can kind of keep people in
Speaker 1: those areas. And how are they going to do it?
Speaker 1: A number of ways. There's a couple of kind of
Speaker 1: key points that they've talked about. So one thing, for example,
Speaker 1: is they want to develop a whole network of remote
Speaker 1: working homes. I guess the country you know we work
Speaker 1: scenario possibly if you can imagine that pubs. I thought
Speaker 1: that was going to be in old pubs. Yeah, pubs
Speaker 1: have been mentioned. Will say, if you have ever been
Speaker 1: in a Dublin pub or an Irish pub at Leven
Speaker 1: Name in the morning, I'm not particularly sure it's the
Speaker 1: nicest environment to work. In my own experience, it's not
Speaker 1: somewhere I want to be at Leven Name the morning
Speaker 1: after a busy Thursday night in Limerick or something. So yeah,
Speaker 1: so absolutely and these remote hopes including possibly pubs and
Speaker 1: one idea another idea is you know, possibly tax breaks
Speaker 1: to keep people, you know, in a rural environment, although
Speaker 1: again I don't think very significant. Look, it's hard to
Speaker 1: know how significant things are going to be. I mean,
Speaker 1: I thought it was ironic that the tarnished our Deputy
Speaker 1: Prime Minister Leo Rodker when the when the announcing part
Speaker 1: of the strategy actually called us to a press conference
Speaker 1: rather than do Rather than do the launch over Zoom
Speaker 1: did a press conference in Duldt, which I thought was
Speaker 1: kind of ironically. We couldn't work from home while he
Speaker 1: was launching the strategy. So none of the measures have
Speaker 1: been costed. They're all very aspirational and it's you know,
Speaker 1: it's it's a nice idea, but I think we're gonna
Speaker 1: have to wait and see about how effective they're going
Speaker 1: to be. I mean, it's quite interesting for people listening
Speaker 1: from elsewhere in the world because we've tended to think
Speaker 1: that governments will be broadly encouraging people back to work
Speaker 1: because they're so worried about those jobs and businesses and
Speaker 1: city centers that we rely on so much. So, so
Speaker 1: why is it that the Ireland is not worried about
Speaker 1: that so much? So? I think there's one key factor.
Speaker 1: I mean, possibly more than any other country Europe, Ireland
Speaker 1: is incredibly lobside around. Population is crammed into Dublin and
Speaker 1: pushing property prices incredibly high. Such a small, you know,
Speaker 1: European city person on the edge of Europe, you'd expect
Speaker 1: housing prices to be kind of reasonable. That's not the case.
Speaker 1: You could pay at six seven eight hundred thousand to
Speaker 1: buy a nice vombily home in Dublin. And that's partly
Speaker 1: because some of the pressure that's the population prepert that
Speaker 1: that's in Dublin, and at the same place to infrastructure,
Speaker 1: our transport systems are crammed up. Buses are full at
Speaker 1: all points. So in a way it's an opportunity to
Speaker 1: to kind of move people away out of Dublin and
Speaker 1: releasing pressure on the capital city, which is under tremendous
Speaker 1: kind of yeah pressure, But I guess that I mean
Speaker 1: that pressure is partly as a result of Ireland's great
Speaker 1: success in recent years at attracting big international companies to Dublin,
Speaker 1: and maybe a few more financial sector jobs, recently jobs
Speaker 1: moving from London as a result of as a result
Speaker 1: of Brexit. But we've had so much talk on this
Speaker 1: podcast and elsewhere about cracking down on the sort of
Speaker 1: race to the bottom mentality on corporate taxation, and Island
Speaker 1: has built its development strategy on having the lowest tax rate,
Speaker 1: attracting those big companies partly on that basis. Do you
Speaker 1: think the government's also worried about that model long term?
Speaker 1: I mean, you know, first of all, I'm not sure
Speaker 1: I agree with the race of the bottom strategy. Yeah,
Speaker 1: definitely that you do such a term in that kind
Speaker 1: of context. And look, I think there are concerns around
Speaker 1: the model, but these aren't really to do the pandemic
Speaker 1: there to do with the changes coming internet in the
Speaker 1: international tax system. You know, I've been reporting on taxes
Speaker 1: for maybe fifteen twenty years, and this is probably the
Speaker 1: point where I see government most worried. That they're twelve
Speaker 1: point five percent rate is understraates, under pressure. And look,
Speaker 1: the argument cover from the Irish government is that, you know,
Speaker 1: there are other factors that attract companies to Ireland. If
Speaker 1: the fact that it's a relatively well well educated workforce
Speaker 1: it's a relative cheap workforce. We offer you know, access
Speaker 1: to the you know, easy access to the European market.
Speaker 1: So without sounding like a shill for the Irish government,
Speaker 1: they would argue that there are you know, other vantages
Speaker 1: above and beyond tax. But there's no doubt that that
Speaker 1: they are concerned that the model, which is you know,
Speaker 1: it's incredibly important, as you said, as I'm saying very
Speaker 1: on about one of five Irish workers are employed directly
Speaker 1: indirectly by US firmaments that are base here. So it's
Speaker 1: a huge it's a huge factor. But I think that
Speaker 1: including you, not that we'd ever say that was a motivation. No,
Speaker 1: no clear clear clearing off. But but so but I think,
Speaker 1: you know, it kind of goes back to which because
Speaker 1: about this will distract remote strategy working. To me, ultimately,
Speaker 1: there is a desire among a lot of workers to
Speaker 1: move out of Dubland to be based where they're from
Speaker 1: and you live in a nice part of the country
Speaker 1: up in the west of our and whatever. But it'll
Speaker 1: come down to what employers are prepared to kind of accept, like,
Speaker 1: you know, will Google be happy with its staff to
Speaker 1: be three miles away? You know, we'll Facebook be happy
Speaker 1: with somebody to be, you know, down in Cork or
Speaker 1: you know, do people have to be in the office
Speaker 1: to to to to attend meetings as we returned to
Speaker 1: normality over the next year or so. So ultimately, I
Speaker 1: think that just going back to your original questions, the
Speaker 1: successor or otherwise the strategy with large depend on what
Speaker 1: those kind of companies decide what the model is kind
Speaker 1: of going forward. And I know we see lots of
Speaker 1: commentary now about like hybrid working and it's all going
Speaker 1: to change, always be very different. I kind of wonder
Speaker 1: sometimes two years time this is all very different, is it.
Speaker 1: Are we all going to be in a different situation
Speaker 1: that you know, are we all going to be kind
Speaker 1: of working a half time from from home? I'm not sure.
Speaker 1: I guess. Well, I have you sitting in Dublin and
Speaker 1: I can see there aren't very many people in the
Speaker 1: office with you right now. I should I should ask
Speaker 1: you how Aland's doing in the recovery. I mean, we've
Speaker 1: got quite a a big gap opening up between the
Speaker 1: UK and the US on the one hand, and continental
Speaker 1: Europe in the pace of recovery right now, and that's
Speaker 1: very slow pace of the rollout of vaccines and where
Speaker 1: does alim fit into that? So as everyone are and
Speaker 1: it's a it's a fairly complicated picture because we have
Speaker 1: these huge multinationals, your Googles, your facebooks, your big farmer companies.
Speaker 1: The headline numbers that aren't look really good. If I
Speaker 1: can think, really the only country in that you to
Speaker 1: actually grow last year because we had these like massive
Speaker 1: export figures. But of course that doesn't always translate into jobs.
Speaker 1: So at the same time we have that, we have
Speaker 1: unemployment because retail, bars, restaurants were closed down and that's
Speaker 1: continue to be the situation into the first quarter, in
Speaker 1: the first half of this year, and we're under very
Speaker 1: hard lockdown. Still bars, restaurant, non essential stores, bookshops, et
Speaker 1: cetera also closed right now there's no sign and when
Speaker 1: they're going to reopen. So I think it's people are
Speaker 1: still out of work and so so things at the
Speaker 1: moment are tough for people. I will say I would
Speaker 1: expect a massive rebound in the second half of this
Speaker 1: year because like the u k els where people have
Speaker 1: if you if you've been looking at to keep your job,
Speaker 1: you've a math a law savings, there's going to be
Speaker 1: a massive consumer being I think the second half of
Speaker 1: the year, and that will be married with the continued
Speaker 1: success of your of your of your export sector, your
Speaker 1: facebooks or Google's your farmer companies. So I said, so
Speaker 1: things aren't great right now, but I suspect the second
Speaker 1: half of the year I think was the bars, restaurants,
Speaker 1: non as you stories reopened maybe June early July. People
Speaker 1: will be gone on holidays again. I think we'll have
Speaker 1: a very big rebound in the second half of the
Speaker 1: this year. It will be my sense, Dara Doyle, thanks
Speaker 1: very much, Thank you, Stephanie m So We've now had
Speaker 1: two on the ground perspectives from Spain and Ireland on
Speaker 1: people working differently, maybe the other side of this pandemic,
Speaker 1: and maybe government's planning differently in response. So I thought
Speaker 1: we should get an expert take on these issues and
Speaker 1: pull some of the strands together by talking to Spend.
Speaker 1: Smith was one of the co chairs of the McKinsey
Speaker 1: Global Institute and a co author of three important reports
Speaker 1: which the Institute has put out recently on the world
Speaker 1: after COVID nineteen. Spend thanks very much for coming on Stephanomics.
Speaker 1: I mean those reports they tackle not just the changing
Speaker 1: world of work, but also changing consumer behavior and indeed
Speaker 1: whether we're going to see more innovation and growth coming
Speaker 1: out of this crisis. But let's focus just for now
Speaker 1: on the changing world of work. Peace Ash. You start,
Speaker 1: I guess by asking, does your research support the idea
Speaker 1: that the work is going to be more widely distributed
Speaker 1: in a geographical sense, less concentrated in cities as a
Speaker 1: result of the pandemic. So Stephanie, thanks for having me.
Speaker 1: I think it does support that. You know, the future
Speaker 1: of work has been a conversation that was already their
Speaker 1: pre COVID, and it used to say that fifty of
Speaker 1: tasks could be automated with a lable technology. But the
Speaker 1: good news was that there would be equal amount of
Speaker 1: jobs gained that's lost roughly even it was so that
Speaker 1: the net gain was actually slightly positive, so the future
Speaker 1: work was actually nicely imbalanced. If you look at the
Speaker 1: shifts that are now happening, which is remote work, which
Speaker 1: is e commerce, which is automation, they are accelerating the
Speaker 1: pre COVID trends, and with that they also shift I
Speaker 1: think the tension in future work faster on the point
Speaker 1: of due special distribution of work that is accelerating because
Speaker 1: of the remote work, which is a new one. And
Speaker 1: I think the one thing that we say in our
Speaker 1: report is that the new lens that COVID has brought
Speaker 1: beyond the acceleration is basically the notion that proximity is
Speaker 1: a new lens to look at it when is it
Speaker 1: needed and when is it not. And we at least
Speaker 1: think that one more day of remote work per weak
Speaker 1: week is possible for the average of the workforce. And
Speaker 1: that would of course mean that people could live outside
Speaker 1: cities for more of their time at least and commutes
Speaker 1: and so one could be sort of dampened a little
Speaker 1: bit from that. And the you know, the pressure on cities,
Speaker 1: so I think there is a potential. We don't see
Speaker 1: it as you know, people everybody will basically no longer
Speaker 1: work at all together in a physical space because people
Speaker 1: still need to meet. I mean, you talk about the
Speaker 1: pressure on cities, and we heard about it in Dublin,
Speaker 1: but in some sort of cities have also been the
Speaker 1: salvation for quite a lot of economies. It's been the
Speaker 1: great thing that you could bet on the last ten
Speaker 1: to twenty years that there would be more jobs and
Speaker 1: more prosperity being driven by cities. If you're a government,
Speaker 1: should you be just thinking that that model has been
Speaker 1: turned on its head or has it just been toned
Speaker 1: down a bit? I would say it's a shift, not
Speaker 1: a on its head. So when we say you go
Speaker 1: from average about one day a week remote work to
Speaker 1: two days a week, so adding a day to the
Speaker 1: average workforce, of course, but for some parts of the
Speaker 1: workforce it's much more, and others it's much less. That
Speaker 1: is not yet turning the model up and its head.
Speaker 1: But you see impacts on rent prices already, you see
Speaker 1: some impacts on where people choose to live and so on.
Speaker 1: So it is a real shift. Whether that's something that
Speaker 1: then will accelerate or it's sort of is a level shift.
Speaker 1: I think that the jury is still out, and there's
Speaker 1: a big inequality piece because the people, as we've learned
Speaker 1: over the months, of people who can work from home
Speaker 1: and will maybe be taking advantage of voice opportunities buying
Speaker 1: houses in the country and building up prices. There are
Speaker 1: people who already relatively well off, whereas the lower half
Speaker 1: of the income distribution, what what are all these changes
Speaker 1: going to mean for them? So I think it is
Speaker 1: um you know, disadvantaged groups are going to be impacted more.
Speaker 1: I think there's two kinds of pressures that we need
Speaker 1: to take into account. As I said, pre COVID, the
Speaker 1: jobs gained jobs lost was imbalanced and even slightly positive.
Speaker 1: We think about a hundred million more jobs will be
Speaker 1: displaced by COVID and faster because everything is going across
Speaker 1: lots of different acrourse how many countries I'm just trying
Speaker 1: to and so you get a hund million more jobs
Speaker 1: displaced earlier. So it used to be lots of jobs
Speaker 1: displaced to more than two one a million, but you
Speaker 1: get off that tournament, you get on a million that
Speaker 1: are let's call it earlier, And by being earlier, the
Speaker 1: mismatch might be bigger, which means that real skilling needs
Speaker 1: to go a lot faster. One of the things that
Speaker 1: makes this makes it all easier is if you have
Speaker 1: faster growth. And the big thing that determines whether or
Speaker 1: not we do grow more quickly is productivity. We've had
Speaker 1: relatively slow productivity in the last growth in the last
Speaker 1: few years and making more stuff with the same number
Speaker 1: of people. Uh, if you listen to what you're talking
Speaker 1: about in terms of more automation and more things online,
Speaker 1: people working differently. It sounds like productivity is going to
Speaker 1: go up. Is that what you found in your report?
Speaker 1: What we wrote in the report Productivity and Growth, is
Speaker 1: that the productivity potential has accelerated and could actually lift
Speaker 1: one or two points in multiple brackets. And therefore the
Speaker 1: productivity potential exists for a significant growth and so we
Speaker 1: should say, sorry, just but one or two percentage points
Speaker 1: for productivity. That's a big deal because the average is
Speaker 1: between one and two potentially. So we think that on
Speaker 1: a GDP per capital basis, if you have the nice
Speaker 1: world of that productivity and demand, you can get to
Speaker 1: a three percent growth for the next decade. If you, however,
Speaker 1: are in a place whether demand doesn't come and this
Speaker 1: productivity stays tepped as you described, you know, you're more
Speaker 1: in the below one percent uh typic. And of course
Speaker 1: you have an art scenary where the productivity comes the
Speaker 1: demand doesn't, and that will lead to lots of labor
Speaker 1: tension again because then basically we use the productivity to
Speaker 1: do the same work with less. You know, the goldilocks
Speaker 1: are that we do the productivity and demand and the
Speaker 1: one thing that we have learned. I think in COVID
Speaker 1: is it is possible to stimulate the demand. We can
Speaker 1: have a whole debate about that point, but the reality
Speaker 1: is we have secured an economy in twenty twenty, and
Speaker 1: we're probably going to come out with a reasonable economy
Speaker 1: now because we support it, and so then demand and
Speaker 1: supply of time could be in sync. If it's not
Speaker 1: in sync, this productivity will lead to more tension on
Speaker 1: the job market, pressure on the job market story, I
Speaker 1: should say, So there's a I mean, there is a
Speaker 1: big difference in those two scenarios, and it feels like
Speaker 1: the lower the demand that you see, the more likely
Speaker 1: you're going to have this very unequal outcome with even
Speaker 1: more even worse impacts for the people who have already
Speaker 1: not done that well out of the last ten years
Speaker 1: or so. So, if you're a government trying to make
Speaker 1: sure that you're in the good scenario and not the
Speaker 1: bad scenario, what should you be doing right now? I
Speaker 1: think this exit out of the stimulus area needs to
Speaker 1: be very carefully done, and it's not easy because it's
Speaker 1: stuff that we haven't done at this scale. H Ever,
Speaker 1: I think, or in at least in a long time
Speaker 1: at this broad base across the world. But if you
Speaker 1: kind of pull back before the engine runs, you might
Speaker 1: actually get a temporary standstill, and you're more in the
Speaker 1: negative scenario. If you hold it too long, of course,
Speaker 1: it could be overheating, which is another discussion. But what
Speaker 1: you would love to sort of say is, so take
Speaker 1: the stimulus gas off when the underlying engine runs, because
Speaker 1: then you know it will sort of at this and
Speaker 1: and that that's a careful balancing act. If you look
Speaker 1: at recoveries in the US that we studied over the
Speaker 1: last seven years, you had once where it was in
Speaker 1: sync post Wars, of course one of the bigger ones
Speaker 1: um and where it was less in sync. Uh. And
Speaker 1: also there have been disparities about that between the US
Speaker 1: and Europe. I would say in the global financial crisis,
Speaker 1: the US had more of a multiplier effect of stimulus
Speaker 1: at the outset, not even at the highest levels. Then
Speaker 1: Europe at at the moment, Europe is actually catching up
Speaker 1: on the stimulus levels. So I think in that area
Speaker 1: there's a lot of learning going on whether that will
Speaker 1: be enough to put the demand and supply in sync.
Speaker 1: But is any demand the right kind of demand? Because
Speaker 1: this has obviously been one of the debates about the
Speaker 1: stimulus in the US. It's it's massive in scale. But
Speaker 1: one of the criticisms has been from the likes of
Speaker 1: Larry Summers and others, is if you're going to spend
Speaker 1: two trillion dollars and you want to be maximizing the
Speaker 1: long term impact on growth and productivity, this isn't necessarily
Speaker 1: how you would spend the money. I mean, do you
Speaker 1: think is there a risk that this money is going
Speaker 1: to be sort of gone in the next year or
Speaker 1: two and you're still left with a need to do
Speaker 1: the kind of investment infrastructure and other things that you
Speaker 1: talk about in your report in order to really make
Speaker 1: that longer term growth come through. You would always prefer
Speaker 1: good long term growth as long as it also has
Speaker 1: the short term growth in it, so because you don't
Speaker 1: want that short term dips. So there's there's a nirvana
Speaker 1: here that you would like to have. Um I think
Speaker 1: we're i would say, in an experimental phase where we're
Speaker 1: learning how this will work out, whether the productivity potential
Speaker 1: will be balanced in the right way or not. Anyone,
Speaker 1: Like we say you can't predict the business cycle, I
Speaker 1: don't think you can really predict how this will fully
Speaker 1: play out in the sentiments of people, uh, in how
Speaker 1: it will be spent. But of course you would love
Speaker 1: a fair share of this to go to long term investment.
Speaker 1: But at the same time, you don't want a massive
Speaker 1: restructuring wave to occur right now at the moment the
Speaker 1: said handover things. I think the thing where we're now
Speaker 1: learning we knew little about the virus. I think we
Speaker 1: know very little about this handover moment where you need
Speaker 1: to keep people in business, but you also trying to
Speaker 1: achieve structural change. I mean it says it's a difficult balance.
Speaker 1: Just going back to the world of worth, the big
Speaker 1: numbers that you were talking about in terms of people
Speaker 1: having to change jobs and reskill. Um. You know, the
Speaker 1: great thing about your research is that you're always looking
Speaker 1: at the experience around the world. Are there positive stories
Speaker 1: you can tell about reskilling those workers because a lot
Speaker 1: of governments are, certainly in the UK, there's a thing
Speaker 1: that we're just not very good getting people from one
Speaker 1: sector into another if they perhaps don't have the right
Speaker 1: kind of skills. So I think there are a couple
Speaker 1: of angles of positivity here. One is I think companies
Speaker 1: are taking more responsibility for this task. Let's just be
Speaker 1: clear this is also out of self enlightened interest because
Speaker 1: many of the workers you need in the future are
Speaker 1: not available in the places where people are located. So
Speaker 1: companies are taking a larger share of this work in
Speaker 1: retraining their workers. Another interesting thing which is a more
Speaker 1: policy idea that is I think getting more attraction, which
Speaker 1: is that it's no longer about job to job, degree
Speaker 1: to to degree, but it's task to task. So let
Speaker 1: me give you an example. If you have a job
Speaker 1: but tent task and the new job had another tent task,
Speaker 1: it could take four years to relearn it, whereas if
Speaker 1: you go from tent task to you specialize in two tasks,
Speaker 1: the relearning could be one or two years, and so
Speaker 1: that thing gives a little bit more of potential for
Speaker 1: speed of reskilling and the from from those two tasks.
Speaker 1: People can of course an upskill to more tasks, but
Speaker 1: it's no longer directly if you go away from you
Speaker 1: have to have the full degree for the full job
Speaker 1: to something that is more doable. In ref skilling, you
Speaker 1: open up the gates for that. Some regulation changes are
Speaker 1: sometimes needed because the regulation is sometimes oriented towards jobs
Speaker 1: with full degrease rather than the task level. And it's
Speaker 1: actually at the task level where the change is happening.
Speaker 1: I guess finally we should say, I mean, do you
Speaker 1: ever think about we've we've you've written a lot and
Speaker 1: an enormous amount of energy has been focused on how
Speaker 1: the world's going to change as a result of COVID.
Speaker 1: Do you sometimes, maybe in the bath or something, wonder
Speaker 1: what would happen if a year's time everything is exactly
Speaker 1: the same and we've we've gone back to work and
Speaker 1: we've actually decided that we really enjoy being at work
Speaker 1: five days a week, and a lot of these long
Speaker 1: term changes have just not happened. I mean, do you
Speaker 1: think that's possible that this is all just a big overreaction.
Speaker 1: I think there will be a fairer amount of you know,
Speaker 1: catch up demand in parties, in bars, in travel, and
Speaker 1: we see the early signals of that. So business travel
Speaker 1: we don't see it yet, but we see it in
Speaker 1: commercial travel, in personal travel. And I don't think people
Speaker 1: have lost They need to go on all the day,
Speaker 1: they need to go be together and solved. I don't
Speaker 1: think that has changed. But will people make more careful
Speaker 1: choices for what they will travel in business? Will they
Speaker 1: more more careful choices when to stay one more day
Speaker 1: at home and be efficient that way, I think that
Speaker 1: will have shifted. I have a very simple framework and
Speaker 1: that might help you think about this. If everybody likes
Speaker 1: what happened, it's gonna stay. If nobody likes it, it's not.
Speaker 1: Let me give you two examples. In telemedicine, on first
Speaker 1: line contact, there's a big step up. The doctors actually
Speaker 1: like it, the patients like it, the regulators like it,
Speaker 1: and government likes it. So I do think there will
Speaker 1: be heightened levels of telement in first line contact and
Speaker 1: just got a lot better, like people actually like digital
Speaker 1: with the bank. However, home schooling, the kids don't like it,
Speaker 1: the parents don't like it, and the teachers think it's
Speaker 1: better done in class. So guess what, when we open schools,
Speaker 1: we went back, and when they're not open yet, when
Speaker 1: we open them, we will go back. And so to me,
Speaker 1: that might be a way to think about what sticks
Speaker 1: are not And lots of things will be on a
Speaker 1: spectrum in between these things, but that might be just
Speaker 1: a way to think about it. Spencemit Coachure of the
Speaker 1: Kinsie Global Institute. That was very clear. Thank you very much.
Speaker 1: Thank you. So that's it for this episode of Stephanomics.
Speaker 1: I'll be back next week with a lot more from
Speaker 1: around the world. In the meantime, please if you could
Speaker 1: take the time to rate the show, it would help
Speaker 1: us broaden our reach. And for more news and analysis
Speaker 1: from Bloomberg Economics, you can follow at Economics on Twitter.
Speaker 1: This episode was produced by Magnus Hendrickson, with special thanks
Speaker 1: to Janett Newman, Alonso Soto, Dara Doyle, and spend Smid.
Speaker 1: Lucy Meekin is the executive producer of Stephanomics and the
Speaker 1: head of Bloomberg Podcast is Francesco