How COVID-19 and the knowledge economy change the places we work and live in

Increasing Europe’s competitiveness through innovation stimulates the creation of new jobs. In this context, a more skilled workforce capable of contributing and adjusting to technological developments is needed. 

Employment forecasts predict that the occupational employment structure of the economy is changing in favour of skilled, non-manual occupations. The analyses also highlight a shift towards more autonomy, less routine, more ICT, fewer physical tasks, and more social and intellectual tasks over the forecast period to 2030. New forms of work, such as telework and platform work, require enhanced digital skills as well as soft skills.

The Knowledge Economy (KE) is one of the key factors that define the new skills demand in Europe. It demands specialised and highly skilled labour, for example in ICT and engineering. Furthermore, it stands out from other sectors for its capacity to create (and necessitate) highly skilled, high-wage jobs, and to produce spillover effects for the creation of jobs in related sectors, fostering demand for worker upskilling.

But the KE is also a driver of highly skilled migration, which in turn helps to develop the knowledge-based economy in receiving KE regions and countries. However, this outcome strongly depends on the capacity of the receiving region/country to match highly skilled movers with jobs that match their ability.

In addition to the long-term KE-driven trends described above, the COVID-19 pandemic had global shock effects on the EU productive systems and labour markets, negatively affecting low-skilled individuals, youth, women and migrants in particular.

At the same time, the pandemic accelerated the demand for digital skills, as it became necessary to extend and manage the use of telework and to serve more clients online.

During the pandemic, digital infrastructure and services became even more crucial for distance working and distance learning. For workers, telework and ICT-based mobile work (TICTM) working arrangements may entail greater time and place flexibility, enhanced job autonomy, improved work-life balance and reduced commuting time.

Telework may also improve employment opportunities for people with disabilities, older workers, women with care responsibilities and people living in rural or peripheral areas.

However, TICTM may also contribute to the emergence of new employment and social inequalities between those who can telework and those who cannot because they are employed in sectors in which teleworking is not possible, or because they have no access to a good broadband connection or broadband equipment, or they lack digital skills.

TICTM working arrangements are still predominantly used by highly educated workers with strong digital skills. With the return to ‘normality’ after the pandemic, the extensive use of teleworking is expected to continue, requiring a rethink of the way work is performed, coordinated and regulated.

Currently, teleworking jobs tend to be more concentrated in cities and urban centres than in smaller towns and rural areas. According to research, cities have more teleworking employment (44 %) than towns or suburbs (35 %), or rural areas (29 %). Moreover, during the COVID-19 crisis, 61 % of those living in cities had access to telework, as opposed to 41 % of those living in small towns. The concentration of telework in urban areas may also be due to broadband coverage continuing to be lower in rural areas than in urban areas, despite some progress. According to the European Commission, 10 % of households in rural areas are still not covered by any fixed network, and 41 % are not covered by any fast broadband technology. Likewise, internet access also varies between urban areas and rural areas; in 2019, cities (92 %), towns and suburbs (89 % for both) had comparatively higher access rates than rural areas (86 %).

These disparities are likely to be further challenged in the next few years, as people living in Europe’s main cities will have the opportunity to switch to fifth-generation (5G) internet services. However, by providing spatial flexibility, TICTM could facilitate remote and distributed work, contributing to a more balanced spatial distribution of employment and population.

There is wide recognition that the explosion of teleworking following the COVID-19 pandemic is likely to have a long-lasting impact on the spatial distribution of work, including in peripheral geographical locations, for example across borders. 

TICTM provides workers with much greater spatial flexibility, and people may opt to work remotely, either from home or from other locations, as in the case of the so-called digital nomads, instead of regularly commuting to the urban/city centres where most offices and business activities are usually based.

There is already evidence pointing to more telework, leading to city dwellers leaving densely populated and expensive urban centres for less densely populated suburbs and rural areas.

Teleworking could not only increase the appeal of non-urban living but also lead to demand-driven development of co-working spaces or improvements to telecommunication infrastructure.

Moreover, the local spillover effects may also come into play in suburban and rural areas as a result of increased numbers of TICTM workers leaving large metropolitan areas, for example with moving ancillary economic activity from business centres to residential and possibly rural areas.

It should be noted that the decision about where to live relies on a mixture of interacting factors and not only on employment opportunities – although these play a significant role.

Other factors influencing this decision include proximity of family, friends and other support networks; availability and cost of housing; and accessibility, affordability, and quality of services (e.g. education and health services; transport; arts, cultural or other recreation and leisure activities).

Such factors are likely to mitigate the effect of teleworking on the spatial distribution of work, including the considerable attraction that large metropolitan areas and cities hold.

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