Anna Thomas
Good afternoon, everyone. I’m so glad that you could join us today for this important discussion on Ensuring an Equitable Workforce After COVID. It’s fantastic to see Chatham House engaging with its corporate membership on this really important issue. My name is Anna Thomas, and I’m the Co-Founder and Director of the Institute for the Future of Work. The Institute for the Future of Work is shaping a fairer future through better work. We’re an independent research and development institute that explores the changing world of work and builds practical solutions to help people thrive.
The question of how to create a more equitable workforce following the disruption of the pandemic, is fundamental to how we can, as a country, and indeed globally, Build Back Better. How in the wake of the crisis can we create together a fairer, more equitable workforce, and provide that workforce with good quality jobs? To do that, we need to understand the immediate and longer-term impacts on different parts of the workforce and the risks of exacerbating existing divides or creating new ones. And we need to keep an eye on longer term future change for the better, as well as juggling immediate needs and demands. With the acceleration in the adoption of technology that we’ve seen throughout the pandemic, what’s really key to this debate is how we move forward in a way that captures the positive aspects of the introduction of technology and allows it to augment, rather than displace or undermine, the work, experience of work and quality of work, for those undertaking it, right across different sectors, places and skills.
And with that in mind, I’m going to introduce our amazing panellists. We have a wealth of experience with us today to help explore these questions and more. First of all, Anu Madgavkar is a Partner at Global – at McKinsey Global Institute, McKinsey’s Business and Economics Research arm. Anu joined McKinsey in 2011 and leads teams based in India, working on global, as well as India-focused, research. Her recent research has focused on global labour markets and skills, gender economics, migration, economic development and poverty alleviation, and applying technology to solving development challenges.
Henriette Kolb leads the Gender and Economic Inclusion Group at the International Finance Corporation, a member of the World Bank Group. She serves as an advocate for gender equality issues in the private sector and works with IFC’s clients, who include both women and men, as entrepreneurs, employees, consumers, community stakeholders and leaders. She leads a global team that’s engaged in co-creating gender-smart private sector solutions through research, investment, advice and peer learning platforms.
Robbie Sinclair, our final speaker, has experience in the full range of contentious and non-contentious issues which impact on companies in both the UK and, also, overseas. Working across a range of sectors, Robbie advises clients on general advisory issues, such as redundancy programmes and discrimination claims, and has experience advising on disputes with employees and former employees, including litigation in the Employment Tribunal Appeal – Employment Appeal Tribunal and High Court, too.
I want to make everyone aware that today’s event will be held on the record and will be recorded and would encourage everyone to submit questions using the chat function, through the event, when they occur to you, and neither the chat nor raise function – hands functions. So, I can put them, as many as possible of them, to the panel after their presentations. Thank you very much, and can I hand over to you, Anu?
Anu Madgavkar
Thank you, thank you, Anna, and a very good morning, good afternoon, good evening, depending on where our audience is. I hope the day finds you safe and well. And many thanks to Chatham House for organising this webinar and involving the McKinsey Global Institute in it.
I’m excited to share a perspective that we built based off a six-month research project, in which we really asked the question, you know, what will stick? It’s very clear that COVID-19 has upended the world of work in ways that we thought were not possible a year ago. Quite easily amongst the most destructive phases in work, as you think about even the whole century, but the real question is, is this something that’s transitory or is this something that – whose effects will have longer term implications for workers, for employers and for all stakeholders?
And as we looked at this, we did a piece of work that spanned eight different countries around the world, representing different stages of development, different labour force structures. And we really thought about the major megatrends that had unfolded during COVID and then what of that is likely to endure. We focused on three major trends.
The first, really, was the phenomenon of remote work, where it’s very clear that, you know, at the heights of the pandemic in different countries, you had 70 to 80% of workers that aren’t actually able to work from anywhere or work from home, just because of physical constraints. But when we dug into the data, we did find that what this is revealing is that there is, first of all, a logic on the part of employees, who really want that flexibility and this phase has revealed the benefits of that. But equally, if you think about individual tasks and activities that each of us do in the world of work, it’s possible that 20 to 25% of the workforce across countries could spend, feasibly, a majority of their working week working remotely without losing productivity. So, for 50 to 60% of the workforce, that’s not really an option, but there is this 20/25% that could feasibly do this and there is a strong employee preference to build in some kind of flexibility in the work. This of course, has longer term ramifications for multiple things, including, you know, the demand for commuter-based services, what that means for the economic geography of where we live versus where we work, and so on and so forth. But one big trend that will persist, not at the peak levels that we’ve seen, but will persist in some shape or form, going forward.
The second big trend that we observed is really a big migration or a surge in all forms of digital interactions, particularly ecommerce and the whole delivery-based economy. Now, as we looked across countries, we found that the share of ecommerce sales as a proportion of total retail sales went up between two and five times, and consumers surveyed, between 50 and 80% of such consumers expressed a strong desire to continue with some form, or a higher form, of digital consumption, going forward. It’s not that we won’t go back to restaurants, it’s not that we won’t visit groceries, you know, as frequently as we used to, but certainly, the convenience and the desire to have that convenience and choice is quite strong, and there’s been a very strong supply side innovation as well from companies that have been delivering digital services. So, this does represent a shift in business models and therefore, in the kinds of employment that will be demanded in future.
And the third big trend is automation. Now, like the other two, it’s not a new trend, but it’s one that is and will be accelerated by the effect of the pandemic. 60 to 70% of CXOs would say, and have said in surveys, that automation is probably the number one or number two, you know, area of acceleration for their companies and businesses, and we’ve looked at the data across periods of recession and economic shock, across multiple countries, in the past, and we find that there is, typically, a big rise in the automation of routine work that occurs in the 18 to 24 months as businesses come back and seek to streamline their operating models and their cost base. And this is something we would expect in the context of COVID, with a greater focus on service automation or service robotics, for example, or even straight through process automation in a bunch of different kind of work.
So, if you add up the effects of these trends on a forward-looking basis, we would expect, not necessarily higher unemployment going forward, but quite a significant change in the kinds of occupations where demand will grow, versus those where demand will actually shrink or grow much more slower than expected in the past. On the positive side, there’s going to be greater demand for healthcare roles, a lot of roles associated with designing and implementing technology and technological solutions, and also a lot of transportation, logistics and delivery-based roles, in terms of taking goods to people, rather than the other way around.
But on the negative side, we will see slower growth, or even a decline in occupational categories that are physically proximate to other people. These typically are in-person customer sales and service, accommodation and food services, and then, to a great extent, office-based work, as well as factory or production-based work, which will be prone to higher automation. What this means is that workers are going to have to change their job descriptions, their role descriptions, and therefore, the skills that they have, just in order to stay employed. More workers are going to need to make those transitions. Between 20 – as much as 20 to 25% greater number of transitions is what we’d expect in a country like the US, a little bit lower in emerging markets. But the impact of these – of needing to make these transitions in order to stay employed – the impact will be much more in groups that are traditionally disadvantaged or less well represented, and this includes women in the workforce, who will have to make four times greater increase in transitions than men, for example and it also includes workers with a high school education or less. So less well-educated workers in lower paying jobs, typically, will face a bigger burden of this increase in transitions that we see, going forward.
So, it could be a better world if we enable these transitions to happen, because they are associated with less drudgery, more fulfilling work, and certainly better paying work, but the challenges will be daunting, because just the leaps that many bands of workers will have to make are going to increase in future. So, I’ll stop on that note and would love to leapfrog from this into other avenues of exploration as we go through the panel.
Anna Thomas
Thank you so much, that’s fascinating. Just one quick question, if I may, before we move on. So, you’ve talked about the risks of this, but also the potential in the future for these – all of these features, factors, that you’ve identified, to improve equity, if they’re done well. What has your research found, say, for example, with remote work, about the con – the potential for it to improve access to good work, compared to the reality that you’re seeing now?
Anu Madgavkar
Well, remote work is interesting, because it’s a bit of a double-edged sword. First, it’s clear that there is a category of what you might call knowledge-based workers who could benefit from greater flexibility, greater autonomy and choice, as the world is more accepting of remote work, but equally, there is 50 to 60% of the workforce, a high number across economies, who – and for many of these workers, it’s really about needing to be at a certain place. So, there is a large segment of the workforce that cannot benefit from the potential of remote work. I think that’s something that’s easy to miss, living, as many of us do in bubbles, where it seems just very easy to, you know, carry on with life as usual, sitting in front of our laptops, but for a large part of the workforce, that’s not the case.
And then, even for those who can work remotely, there are questions about how to make teams effective on a remote basis and how, for women in particular, while this is a boon in terms of greater flexibility that it would offer, it’s also a challenge, because it’s much harder to build the relationships, the networks, the sponsorship that you need on a remote basis. It’s also particularly hard for new entrants into the workforce. And that’s a category that employers, as well as employees, are actually very concerned about, because they don’t have those relationships and networks already, and it’s hard to build them in this world of remote work in the future.
Anna Thomas
Thank you. So, on that note, do submit your questions to Anu through the chat, and it’s a good moment to pass on to Henriette. We’ll loop back to practice and policy recommendations at the end.
Henriette Kolb
Thank you so much, Anna, and thank you Chatham House. It’s a real pleasure to be here with you, with Robbie and Anu, and, like Anu, I really hope that your family’s loved ones are safe and that you have the support you need in your community to navigate these really challenging times.
What I’d like to do in the next couple of minutes is to outline briefly how COVID-19 has exacerbated some of the gaps between men and women, how the trends that Anu described really concretely impact one gender differently to another. But then end on, hopefully, a bit of a hopeful note, and outline what particularly, I think, stakeholders can do about it.
So, let’s look at, you know, where the economies were before COVID. Actually, what we found in our research is that emerging markets are already losing 172 trillion in GDP because of wage gaps between men and women. And because COVID-19 has meant that women drop out of the labour force in much larger numbers, compared to the men counterparts, that, obviously, loss in GDP is just accelerated quite significantly. We only have preliminary statistics on labour force dropouts for more developed economies, but the picture is pretty bleak. In fact, in the US specifically, the labour force participation of women is as low as it was 33 years ago and it will take really concerted efforts to equalise during a post-pandemic and to make, not just copy-paste markets, but create markets that are much more equal.
But we’ve seen these gaps exacerbated, not just on employment, but really on a number of other issues. So, if we take self-employment and entrepreneurship, for example, we’ve seen that women entrepreneurs have, in much higher numbers, had to temporarily close their business or close their business completely. The reason being that, economically, a lot of entrepreneurs were concentrated in service sectors that have been impacted by the pandemic significantly more so. And so, in some countries, for example, in sub-Saharan African, we’ve seen actually a gap of 26% of closures between male and female owned enterprises.
And then combine that with, actually, the drop in access to finance, and that’s something that’s particularly as a bank, obviously, top of mind for us. We’ve seen, even before the pandemic, women had a 1.5 trillion SME credit gap, and again, during the pandemic, what we’ve observed through household surveys, as well as surveys of our financial institutions, is there was a drop in borrowing for women entrepreneurs. And so, when we build back and when we design, like in our instance, working capital solutions, it’s absolutely paramount that we create incentives for our clients, the banks that we lend to, to onward lend to women entrepreneurs and not to lose sight of that. So, finance gap is the third one.
The fourth one is the care gap and Anu spoke about that. I mean, the reason why women have been, obviously, much more predominantly leaving the labour force, is that the care responsibility increased, I should say for both men and women, but disproportionately higher care responsibilities for women. And so, if we don’t rebalance the care issues and really take COVID-19 as a wakeup moment, to re – right size the care responsibility and burden, then I think we’ll have a hard time making those shifts that Anu just outlined. It’s a very fundamental challenge that’s been around for, really, centuries, and it’s mind-blowing that we’re in the 21st Century and yet, haven’t been able to resolve for that.
Two more gaps I want to bring to your attention. It’s the mental health gap, and it’s certainly a severely underfunded area. If you look at mental health statistics that have come out, in particular at the labour force and at workplaces, we’ve seen the impact the pandemic has had on mental health of women has been much more exacerbated for a variety of reasons. One is care, but the other one is gender-based violence. We’ve seen statistics, I think, everywhere, hotlines have had a huge, an enormous amount of uptake, and workplaces have to tackle not just sexual harassment at the workplace, but of course, at the domestic sphere, because now, often women live with their perpetrators. And so, actually the sort of, lockdown and mobility constraints have really impacted women very, very severely. So legal protection is absolutely fundamental in order, as well, for those, and for women to come forward at the workplace and then beyond that.
So, these are the gaps that we’ve seen, as I see and really around the world, and in some countries more pronounced than in others, and really thoughts are particularly currently with India and Brazil and some other countries where the impact has just been absolutely devastating. Now, on a hopeful note, and I want to bring those five points in as well, so one thing that we’ve seen shift is – and it is really quite important, is that media and journalists in, sort of, both TV and print, has accelerated the reporting on the pandemic in terms of how different the impact is on different groups. And I should say, while I have talked, sort of, largely about women, when we go deeper into intersectionality, obviously women of minority origin are even more disproportionately impacted, right? And so, what happened was, in the pandemic, usually you would see, you know, issues around care and labour markets reported on page 15, now that’s really taken centre stage and no matter if you read The Guardian, The Times, or you know, the New York Times or Washington Post, these have really been issues that have been put on the front page. And that’s important, that needs to continue after COVID, right, because we cannot get to more equity if there’s no continued reporting on it.
The second one that really gives us hope is shareholder engagement. So, at the World Bank Group, we have 25 Executive Directors representing the, pretty much, entire world, and we’ve seen incredible rise in interest in our shareholders, ranging from Saudi Arabia to Norway, on gender equality becoming a priority for the Bank and the IOC, and that, I think, is encouraging. What we’ve seen is also in commercial investors, and so we’ve, obviously, focused on all lines of business on the line today, but really, Gender Lens Investing has increased in terms of its assets sales holding, but also in terms, of course, how we measure that and how we can engage in that space.
The third idea for hope is Women, Business and the Law, which is a wonderful report, comes out every couple of years, and the last edition came out in February, and while only ten countries in the world have reached complete parity in the law, we’ve seen reforms accelerate during the year of COVID and that’s really encouraging. For example, 40 economies have put in place care policies, so expanding parental leave, expanding maternity leave, expanding paid sick leave, and so on, to protect employees much better and so that’s really something to call out for.
The fourth area is companies themselves paying more attention. So, my team, just to give you a quick overview, I used to have six people, now I have 70 people on my team, and that is because private sector demand on equalising workplace, supply chain, community, leadership, has really risen. And the last thing that I’m particularly excited about is products that really speak to gender smart solutions have also risen. So, we can offer the private sector more.
And I just end on one quick example, which I think speaks to what Anu ended on, which is the shifts we’ve seen from, not just, you know, delivering people online and ridesharing to logistics. And so, one really interesting observation is in our work that we’ve done with ridesharing companies, Pickme in Sri Lanka, for example, has traditionally ferried around, of course, people, but then in the pandemic, ferried around goods and services, and so, what happened was that women drivers were absolutely tiny, minute minority, because women didn’t feel safe driving other people, in particular men. And so, what happened during the pandemic is that all of a sudden, there was a surge in women drivers coming onboard and what they were really wanting to do is just to deliver food. And so, I’ve seen these shifts in every corner of the world, that because of social, cultural norms and who is more better placed and feels more safer to do what, that has really had an impact on ecommerce platform, on ridesharing and so on and so forth.
So, I’ll happily speak to some of the concrete solutions that we’ve done in order to redesign some of those business platforms and what particularly, we can do in terms of lowering barriers to access to finance and other means, but I’ll leave it like that for now.
Anna Thomas
Great, that’s fantastic. Thanks so much, and keen to loop back to those solutions. Just one thing, from your – the last point that you made, Henriette, what do you think – what – is there anything that stands out? What will best help companies keep focused on gender equity, not just now, but into the future? What’s your point of view?
Henriette Kolb
So, I think it’s a carrot and sticks approach, and I think in some ways, you know, the law plays a huge role, and I’ll give you concrete examples. We’ve done some work to really measure what companies can do to provide childcare support to working parents, and what we’ve seen is that in 26 countries it’s already mandatory for the private sector to provide some form of care. And these are countries you might not think about, naturally, so, it’s Iraq, it’s Brazil, it’s Jordan, and oftentimes, though, the challenges that this commitment is kicking in based on the number of women employees. So, if a company has 20 women employees, they need to provide childcare. Well, that’s just reinforcing this, sort of, stereotypical norm of women being the caregivers, and what we want to shift to with the law is to say, “While it’s great you’ve asked private sector to do that, but don’t relate it back to women workers, ‘cause then, in essence, you’re really hindering companies from recruiting number 21 women, right? Because then you have to comply.” And so – but going into this, I think – and I’m excited to hear from Robbie, is we’ve seen, obviously, also the UK has some of the disclosure mandate around wage gap, we’ve seen that, really, the law can help in accelerating women in leadership, childcare, gender-based violence protection and so on. So, I think we need to come it from both ends, otherwise one by one, by one company, we would be at this for, unfortunately, I think, a very long time in the future.
Anna Thomas
And yes, you’re right, that’s a perfect segue to our next presentation. So, Robbie, thinking about the balance of corporate social responsibility versus legislation, would you – do share your thoughts on how we can achieve a more equitable workforce.
Robbie Sinclair
Thanks, Anna. And I think – I’ve got about five minutes, so I’ll probably not cover all the topics, but if there are questions, then, please do send them in. I think it’s good at this point just to pivot back to where we were, where we are, and where we’re going to. So, in terms of pre-COVID, from what we saw from clients, what we saw on the market, the big mover was the #MeToo movement, and then as Henriette says, a sort of, a real push on big business to provide more data, led by the UK and gender pay gap reporting. But we were seeing that taken up much more widely in terms of global standards of data being provided and really testing employers out, but it was very focused on gender. I think that what COVID has brought about is an increased focus, increased accountability on gender, but also, ethnicity has really come to the forefront in terms of the weak data on that front, so that it isn’t just a gender problem, it’s an ethnicity problem, and I think, I have a feeling on the back of that, is social mobility. I think that is slowly getting more and more traction in terms of forcing employers to be better across the board on equality and giving people a fair opportunity and providing a workplace that provides a fair opportunity.
I think the second point is that on the, sort of, the outset of COVID, nobody knew it was going to take this long. There was, I think, quite a lot of positivity at the outset of COVID in terms of equality, from a lot of my clients, which are in the HR and the employment space. They thought, this will take a few months. This is all going to be very positive. It’s really going to put remote working on the roadmap. It’s going to push CEOs into seeing that this is a viable outcome, and that’s really going to help people out. So, if you look at, sort of, very male dominated sectors, like trading, there was always that point that you can’t trade unless you’re in the office. That’s been shattered through COVID. And you can go across the industry of office-based workers, where for years, flexible working requests were turned down. I think that, going forward, it’s going to be much harder to turn down those flexible working requests. And so that’s – I think in terms of a positive point from COVID, it’s really changed the conversation in terms of how workplaces are set up for the future.
I think that the point in terms of looking forward from this, obviously all COOs have got their hands on this and they’re reducing office space plans, they’re, sort of, downsizing offices, and we’ve seen across the board, if you’re not Goldman Sachs, basically, you’re saying to people, there’s going to be a flexibility going forward. And in terms of looking at that, I think there is a concern in terms of my clients, in terms of how this is going to work, going forward. Are you going to have some, sort of, male-dominated environment in the office? So, to say, you know, being in the room where it happened, decisions are made in the office, and there is an increased number of male representatives in the office, to the exclusion of those who are working from home, who could be more dominated by the, you know, by the less advantaged parts of the workforce.
You could have more people with childcare needs, there’s a greater percentage of them at the moment who are women, and are they going to be disadvantaged by this lower amount of people in the office? How are the young going to cope with this? You know, if there’s more remote working, how are they going to learn? Are they going to be further disadvantaged by the pandemic? And I think there’s a lot of thinking going on to make sure that doesn’t happen, and if we do come into this, sort of, hybrid working environment, how does that work to create positivity on the equal pay point, rather than further diversions? So, I think that’s where the law and the policies and procedures being put into place, how accountability happens, how accountability is measured, picks up on Anu’s and Henriette’s points and I think it’s something we’ve seen our clients, at least, being very cognisant of in terms of the steps forward.
In terms of the law and where it is, I suppose there are various different points of the law that are relevant to this conversation. In terms of the sort of, the benefit package, I still think, generally speaking around the world, the benefit package built into childcare is dominated by female-focused legislation, which, you know, in terms of how much time you get off at the point of leave, when you have a child, whether by way of adoption or not, is focused on one parent. And then in terms of the flexible working off the back of having a child, the childcare needs, it’s still very much focused around the sort of, the one parent approach. The breadwinner model still exists, and I think as long as that exists, there’s going to be, sort of, greater disparity, rather than a lower amount of disparity.
In terms of the other points we hear, and the real frustrations we hear from clients, is that there is a genuine desire to do a lot more globally, but whenever we do, sort of, global surveys in terms of what clients can do from a positive action perspective, I think in a lot of countries, the law does not help. So, in terms of what data, you can collect of employees, what data you can ask for from employees, how you use that data, how you advertise for roles, how you select for roles, there’s a lot of soundbites about positive action, but you’re really dancing on the head of a pin between positive action, which is lawful, and positive discrimination, which is not lawful. And I think that governments can make it a lot more easier for positive action to be a lot more purposeful and to allow employers to level the playing field without fear of litigation and we’ve certainly seen a real uptick in positive discrimination claims from white men who say that they haven’t got jobs because of positive discrimination grounds, and they always cite what – the equality points that employers are pushing through, rightly. So, I think that’s one where the government could really protect employers a lot more.
I suppose, looking at it from the employees’ perspective, in terms of discrimination and legislation and whether that’s fit for purpose for those who have been adversely impacted by COVID, I think there is a real broad suite of legislation. I’m happy to, sort of, discuss it in detail, but I know we, sort of – we want to move into questions – but between direct discrimination, associative discrimination, health and safety measures that are – that employees can bring claims on, and the wide array of whistleblowing protection, which has started off in the UK, but is really going across the world at this stage, particularly in Europe, I think there’s a lot of points where employees can say – can assert their rights and say, “This is unlawful, and this is why I’m going to challenge it.” And we’ve seen a real global drive towards hearing from employees, so creating a culture for speaking up. Again, I think that’s been led by the UK, but we’ve seen a lot of our employers bring that in on a global basis, to try to hear from employees, hear concerns, have a lot more surveys from employees, and really try to bring that into how the workplace looks in the future. I think that’s something that’s only going to continue in terms of a speak up culture and trying to encourage that through employers.
So broadly speaking, I think there is, you know, there is a lot of legislation in place to protect employees at certain points. But I think from the employers’ perspective, and actually making change, I think it is a massive rigmarole from an employer’s perspective, and employers probably aren’t doing enough in terms of positive benefits to neutralise those across the genders, which I think is holding points back.
And then, finally, employee data. I think GDPR, we’ve got a lot of points in California, and there’s a real protection point around how employee data can be used, especially sensitive employee data. That’s something that employers need to unpick as they’re moving through it.
And I suppose the other point in terms of a legal challenge, is that employers from a remote working perspective are really thinking about – they would love to offer more flexibility, but when an employee says, “I want to work,” you know, “X number of weeks a year from a different jurisdiction,” it’s not just employment – they would get increased employment protections. The employer would have the rigmarole and the challenge of two sets of employment rights, but also, they have tax consequences and regulatory consequences. So, I think, as a global measure, if we’re going to become a lot more flexible, there would have to be a lot of changes in that area, because most of our clients just say, “I would love to do this, but I can’t do it, because that’s just too hard for us, and we’re not going to create an establishment in a new country.”
And the other point that’s coming from remote working is pay challenges, where, you know, easy point, if you had England, you’d have workers in London on a certain salary, workers in Manchester on a certain salary, Belfast, Glasgow. If people are starting to work from the office two days a week, our clients are starting to get real challenge in terms of how they are paying people differently and whether people should have more of, you know, one paycheque rather than where you are in the UK or where you are in the world, and that’s a real headache in terms of attracting the right talent.
Anna Thomas
Thanks, that’s super interesting, Robbie, and do send your questions in. There’s some really good ones coming in already that I’ll come to in a second. Just picking up a couple of points that you made, Robbie. Have you identified in your, sort of, in your review, any potential gaps in coverage? So, thinking of a couple of examples you’ve given us, the flexible working model that exists, which is, you know, the right to request that only.
Robbie Sinclair
Yeah.
Anna Thomas
You also made the excellent point that it’s not only gender, it’s other – we’re thinking increasingly about race, we’re thinking increasingly about socioeconomic disadvantage too, as we think about creating an equitable workforce, and socioeconomic disadvantages and something currently covered. Are those the kind of – are there any, kind of, areas, those or others, that you think we need to keep an eye on?
Robbie Sinclair
Yes, well, I think flexible working is one where you currently don’t have the right until 26 weeks in the UK, and there’s different points around the globe. I think there’s a real push to make that a day one right for flexible working. And I think it makes it much easier for employees to move. What I would say, in terms of, pretty much all of my clients have that already as a day one right. So, I think that that’s something where the law is lagging behind industry practice.
In terms of data and, sort of, moving points forward, you know, on what employers can do, I think a lot more on positive action. So, I think that governments could – as I said, I think the amount of conversations I have with clients with, “I just can’t get through this, it’s all too difficult,” what – one person’s positive action is another person’s positive discrimination. It’s really not that helpful to have what we have in the UK, where positive action is limited to a tiebreaker situation and industry events. There needs to be more, globally, in terms of what positive action can mean and I think, hand-in-hand with that is, you don’t know what you can do until you have the right data. And I think that, again, having more global standards on, sort of, collation of data and how you use it. You know, there’s a lot of continental European countries where there are extremely strict controls of where you can have positive action. So, in France, you can only even consider positive action with gender, you can’t do it on ethnicity. And these are points where I think that the aim is in the right place, but the effect is not helpful to creating a sort of, a more diverse workplace. So, I think that those sort of points, are ones that globally need to be considered. There needs to be better global standards and there needs to be a sort of, lower cost point for employers to put it into practice.
Anna Thomas
I’m going to go to a quite – I’m going to pick up on that, and start with you, since we’ve finished with you, on the question, but shape it very slightly to what you just said and about technology. So, given changes within the workforce, how do you mitigate against inequality? How would you use technology or – to do what you’ve just described, Robbie, and pre-emptively actively promote equality to mitigate against inequality, as you were introducing technology? Would some kind of pre-emptive approach, assist, for example?
Robbie Sinclair
Yeah, I think the first thing is to make sure the technology isn’t inherently biased, which is what we’ve found quite a lot of articles on recently. But in terms of technology, I think that can really help in terms of sifting stages, you know, for job applicants, so, to remove, sort of, human decision-making. If you had a diver – a platform that promoted diversity and didn’t consider gender, background, those sort of things, in the same way, you could end up with platforms, I would have thought, that could’ve picked the best candidates, and hopefully, you know, secure a better panel of final round applicants for a decision-making process. And I imagine firms could take it one step further and let a machine decide who the best people are. So that’s something where I think a lot of our clients have struggled, because they – whenever they tested out their recruitment platform, they see certain points in their recruitment platform where, say, women do a lot worse at this stage of the sifting process. And they’ve really been working on that, on the way through, to make sure there aren’t disadvantages at different stages of the sifting process and perhaps having technology to do that would limit the amount of discrimination during those early rounds.
Anna Thomas
Yeah, it can shift, perhaps, to a more positive model by spotting those inequalities…
Robbie Sinclair
Yeah, exactly, yeah.
Anna Thomas
…and then pre-emptively making those adjustments needed.
Robbie Sinclair
Yeah.
Anna Thomas
Next question, can I put that to you…?
Henriette Kolb
Can I jump – Anna, can I jump into the same question for a minute? Is that okay?
Anna Thomas
Of course, yes.
Henriette Kolb
On the tech question, ‘cause I just feel Robbie outlined one dimension, which is a really important one, which is, sort of, the bias that’s obviously, you know, in the design, but also, then, in the hiring process. But even more so, one thing that really, sort of, is more fundamental, I think, is if you look at the excluded populations around internet access, you see, like, vast inequities, and that’s one, true for emerging markets. So, if you look at, you know, women accessing mobile internet, they are 23% less likely to do so, so that’s even an access issue, but then even more so you have a usage issue. So, for those who are able to get online, a lot of times, you have huge amounts of online harassment, obviously mostly against, you know, women, but also other LGBTQ populations and so on, so you need to be really aware of that.
And the other point is that to the data point, in terms of what data are you allowed to gather and how do you use the data, oftentimes, I mean, the providers of those platforms have absolutely no idea who’s using it and so, you again have biases in terms of the accessibility, because there’s no understanding in terms of who’s driving, who’s riding, for how long are people driving, and what is the takeaway benefits and the barriers of the different genders and groups that are underserved on those platforms? So, it’s a sort of, careful balance one has got to strike between collecting the data, using the data, but at the same time protecting the data, in order to right-size and change and shape those business models, I think, that are occurring quite quickly.
And then the last point I’d say is, we all thought that digital is going to resolve some of these inequities, right? And so, it hasn’t panned out. In particular, when we look at finance, if you look at the data from 2011 to 2020 on who has access to digital financial services, we all thought that would really close some of the key core gaps, because of mobility not being necessary, you don’t need to go to a bank, you just access, you know, an online account and so on, and in fact, that hasn’t come true. So, actually the gender gap hasn’t narrowed in the slightest between 2011 and 20. And so, a lot of the promises that COVID in some ways had for us, which is online schooling, online health, online banking and so on and so forth, is great for the groups who have access, but it’s obviously, you know, really widening the gaps for those who don’t have access. And in fact, even if you look at, and it might be an interesting point – I used to right now, I’m hosting foster teenagers in Washington D.C., and in fact there’s a huge amount of urban populations in the United States who have no access to internet, right? So, we don’t even have to go all the way to South Asia or some of those countries, it’s happening right there, it’s happening in London, and being aware of that and what can public spaces and public places do to provide this digital connectivity will be absolutely crucial for making it into the new future of work.
Anna Thomas
Yeah, no, thank you for that addition, Henriette. I think that’s super important and another dimension. The added importance of access, not just of internet, to internet and digital infrastructure, but also to data and making sure that access is accessible to everybody. I guess Robbie, in a worker context, in an employment context, that would be employees as well as employers.
So, looping back to the next question and to Anu if I may, how can policymakers and businesses be incentivised to successfully manage job transitions and ensure that workers have the right skills that they need to thrive in the face of changing labour markets?
Anu Madgavkar
Excuse me, I cert – excuse me. I really think that this is quite a crucial and increasingly important imperative for both policymakers and business leaders and action on neither part will be sufficient. So, it’s going to be quite important to, sort of, think about specifically what each of these constituencies can do. As we see it, I think that the big imperative of reskilling and preparing the workforce for the kinds of, you know, jobs that will grow in demand is – falls very importantly in the bucket of businesses. Businesses can do this because they’re closest to understanding what skills are needed.
And what we’re seeing there is, I think, a set of very interesting different approaches, right, to enabling workers. So, on the one hand, the thinking about hourly wage workers like your typical cashier or retail store person, you know, in a large retail chain, where you know that the transition from this kind of business are going to be quite high going forward, how do you really think about potential career pathways for such people? And there is an effort that some of the large retailers are actually undergoing to say, you know, what are the skills adjacencies or similarities? What could be the stepping-stones from one kind of job to another? How could we reach in or enable a Cashier, for example, to move into the role of a Store Manager, or to move into the role of learning something about technology and becoming a Digital Supply Chain Specialist, and then moving forward in that career, for example? So, there are some overlapping skills and then some new skills. So, one piece is really around providing the funding and the resources and the enablement for employees to do that.
The other approach is to actually demolish the concept of hiring based on degrees, because college degrees are typically very time consuming, they involve a huge amount of investment on the part of both young people as well as mid-career people to go back to college, and therefore, focus much more on skills rather than degrees. And you have companies like IBM that are actually pioneering this as well, to collaborate, create a sort of, online fill certification programme that can be pursued, you know, based on the employee’s capacity to do so, but then jobs and postings are evaluated based on whether those skills are present, not necessarily, you know, whether there is a multi-year degree actually backing that up.
So, in the skilling realm, I think a big focus on these newer models and approaches, but then that’s not sufficient. There is a set of things on the policy side which are more direct interventions to promote occupational mobility in particular. I think that will be quite important.
Anna Thomas
That’s interesting, and so, in terms of specific policy interventions that would incentivise businesses to do this and act as you described, what would it be? Would it be, sort of, tax incentives for investment in human capital, as well as physical capital, for example? Or might it, Robbie, be a, you know, a right to paid time off for learning? What do you think?
Anu Madgavkar
I mean, I would think that both those are important solutions. The cost of physical and financial capital is lower relative to other sorts of investments in human capital. Tax incentives that actually promote that would help. But even beyond that, I think, sort of, maybe some co-ordinated policy moves, right, that would provide incentives, but at the same time, ease some of the barriers that exist to making those types of occupational mobility possible. So, for instance, if you think about occupational mobility, quite often, you require licences and certifications to be practising certain occupations. Quite often, the whole licencing and certification framework is quite dated and doesn’t reflect the needs of the present. Now, during COVID we saw some flexibility on policy in the healthcare space, where Nurses were allowed to do certain roles functions that Doctors typically do, and medical practitioners were allowed to practice on an interstate basis in the United States, which was not allowed earlier.
So, the question might be that as people need to learn, but also move into new kinds of occupations, how can policies, not just incentivise that, but actually tackle some of the, you know, certification-related barriers that exist that actually make this a harder task for individuals to craft these journeys for themselves?
Anna Thomas
Yeah. Does anyone else want to come in on that?
Robbie Sinclair
Just quickly on incentivisation. The one – the biggest question we always get from clients is, “Can we just ding Managers’ bonuses if they don’t hire diverse enough people?” That’s often – as in, “We’ve got targets, targets are okay, but then can we attach it to sticks for the Managers?” And our position is basically, that if you do that sort of thing, it becomes a quota, and it becomes positive discrimination. So, I think a lot of companies have wanted to move down that track, but it is – it’s laced with problems from an employment law perspective. But it is the one a lot of Managers are putting – are being incentivised to hire diverse candidates. There are ways that we’ve worked with clients to row back and give you a sort of a better position in terms of more generic aims for Managers and KPIs for them, which we feel stays on the right side of the line, but it’s just careful communication, both in terms of what your policies and procedures are, what your KPIs are, and most importantly, how you communicate that to the Managers. Because if you communicate it in the wrong way or insufficiently, the Managers will trip you up with how they communicate why they’ve made decisions to the employee population. So, we’ve seen Managers, sort of, say, “Well, I needed to hire a diverse candidate for this role,” which never is helpful in an Employment Tribunal claim.
Anna Thomas
Yes, interesting. Going back, Anu, picking up a question on your, sort of, systematic approach, making sure that there are, sort of, multi policy interventions that target what you’ve all been talking about. The next question is perhaps for you, Henriette, the US/Biden President’s administration has proposed higher capital tax. This may be the way for the US, but for other parts of the world, would it be better to consider retraining – retaining the higher tax for respective corporations to their own budget, but need – the need to allocate to ESG and productivity improvement, including work and labour?
Henriette Kolb
Thanks, Anna. I’m actually tying back into for a minute to the previous question and then coming back to ESG in particular. So just around incentives for companies to reskill the workforce and to invest in that, I think one is to speak to partnerships, and Anu already mentioned that, but I think oftentimes, we’ve now seen, in particular on the digital side, that companies who are using, sort of, gig workforce, are actually banding together to experiment with benefits and skills training around that, and in particular entrepreneurial skillsets training.
One thing we’ve found which has been interesting in evaluating that is that what seems to be successful for reskilling is this entrepreneurial attitude, and rather than having, sort of, hard topics around business management or HR management, it’s oftentime, actually, sort of, this, sort of, label ‘soft skills’ that are making you successful as an entrepreneur, grid resilience and so on and so forth. And we’ve seen that that focus with this label’s types of capabilities are actually faring better during COVID-19, and so I think when we look at reskilling, we want to reskill, you know, in terms of actual skillsets, but also behaviours and attitudes, because without that combination, I think you are not going to be successful in the labour force.
And then, pivoting to ESG and how that matters for, I think, the conversation around incentives, is that if you have very strong environmental, social and governance guidelines, and IFC have been quite proud to pioneer our performance standards, since several, you know, years, they have been, sort of, setting, I would say, the gold standard for how businesses need to comply and take into account workers’ rights, human rights and so on and so forth, and occupational health and wellbeing. So that, we have seen, is increasingly of importance for investors and can be incentivised through, obviously, public policies. So, looking at expanding, you know, commitments and compliance to workers’ rights, to human rights, to child and children’s rights and so on and so forth, and most importantly, in terms of climate change, to environmental rights, and building that into, you know, your investors’ due diligence journey, I think, will be absolutely key going forward.
Anna Thomas
And so, I’m hearing from you there’s an increasing interest, I guess, in the ‘S’ in ESG?
Henriette Kolb
Indeed.
Anna Thomas
And focus on, sort of, better work standards as part of shaping an equitable workforce. What – I’m sorry – what – ‘cause there’s interest at the moment. What happens next in terms of driving that debate? What’s the next step that businesses or investors could take, in your view?
Henriette Kolb
Right, so we have actually something which might be of interest, I’ll put in the chat in a minute. But we’ve seen, sort of, convergence among the bilateral investors, the development finance institution, around a set of criterias called the 2X Criteria, and what it allows is to look at your corporate leadership, your entrepreneurs, your supply chain and then your workers and so on, and see how could you actually deploy capital with a gender lens, and what would that mean? What would be some of the key benchmarks to make it easier to understand what is gender lens investing? So, I suggest you might want to check that out. So that’s focused, in particular, on gender equality in terms of its outcomes.
So, it looks at how many women and men does your business employ, how many women are in the C-suite, in the board, and so on? And then, what we’ve seen is actually, that if you invest in more gender equal companies, the returns are better. And so, to give you a really strong example from the private equity industry and venture capital, we’ve looked at 7,000 funds in emerging markets, and what we’ve seen is that gender balanced investment decision-making committees had 10 to 20% higher returns compared to one gender only. In fact, one gender only in the private equity industry is mostly just men. There’s very few funds where you would have a predominantly female Investment Decision Committee. But more importantly, if you look at the allocation of capital, gender balanced teams would actually allocate 12% of volume to women entrepreneurs, and in male dominated decision-making in investment it was 7%, so, it’s almost double in size.
So, you can actually use asset allocation and decision-making to include the S much more strongly, and we start, obviously, from a gender perspective, where we’ve seen, first, experimentation around racial equity and using investment lenses that are trying to come at racial equity in terms of its outcomes for those investments. We’ve seen some pioneering funds doing that. And so, I think we need to broaden out the inclusion lens, and yes, obviously, I feel like, very strongly about, you know, focusing on balancing the equation between men and women, because women have 50% of the population and not minority, but at the same time, not forgetting people with disabilities, LGBTQ and minorities who are extremely underserved and those at the base of the pyramid.
Anna Thomas
Thank you. Does anyone else want to come in onto that? We’ve got time, I think, for just one short question.
Anu Madgavkar
I do think, in thinking about more equity in the workforce, there’s a large and growing segment of independent workers, gig workers, but also broadly, freelancers, contractors, those who are not actually – don’t have those, you know, lifetime bonds, right, with an organisation or an employer. So even as we think about interventions that large employers and organisations can put in place and the kinds of incentives you need for that, there’s an equally important set of interventions to support and enable independent workers who are quite fragmented. And some of these might include things like some of the larger platforms, of course, coming together on a co-ordinated basis to try and provide benefits, but this could also be more technology and marketplace driven, where you could think about ways in which independent workers could subscribe to some, kind of, service where they could pool their hours or pool their benefits and create some kind of collectivised support mechanisms for healthcare or for insurance or for paid time off and what have you, right, which they are not likely to get from the organised system. So, I think that’s a big avenue of, you know, increased collaboration and partnership that also needs to be the focus, going forward.
Anna Thomas
Fantastic. And now, I can see that we’re coming up to 2 o’clock. Could perhaps, each of you give your one take home message to the audience about how businesses can best shape a more equitable workforce in the future? Anu, since – and I think you – since we’re with you, do you want to start? Your most important message for this audience.
Anu Madgavkar
I think the impact that technology will have on the world of work is accelerating at such a pace, that the single biggest thing businesses should do is, fundamentally, think about how to reimagine and reinvent work and double down on new approaches to reskill and redeploy people. I mean, that is clearly the most important thing.
Anna Thomas
Great, thank you. Robbie?
Robbie Sinclair
I would say communication, communication from the top in terms of the importance of this, as Henriette said, there’s clear stats in terms of the importance, and unless the key decision-makers are genuinely putting the message forward across the organisation, and that that is getting through the root and branch of the organisation, that communication is – if it doesn’t come across well, will – it will be a failed endeavour and it will be seen as, sort of, a PC drive, rather than something that a business needs to change.
Anna Thomas
Thank you so much. And finally, Henriette?
Henriette Kolb
I think one is help working parents to care for kids and elderly, so really, having employee supported care solution is key. And then, one that’s quite easy and often the most difficult thing to do is be kind and have emotional and personal conversation and be bold in that space, because people do need in this, in particular, very isolating period, someone to just listen and talk to.
Anna Thomas
Thank you so much. Thank you so much, all of you, for a really interesting discussion. I hope you enjoyed it, those of you who could join us, and look forward to continuing it in various forms after we’re done. Thank you.
Anu Madgavkar
Thank you.
Robbie Sinclair
Thank you.
Henriette Kolb
Thank you.
