The digital economy and the future of work

Self-filmed at home by our authors, during the Great Shutdown.

The fast view

The concept of an office as a place requiring the physical presence of labour has been slowly eroded by the globalisation of services. Three factors have been driving this little noticed phenomenon:

• Online freelancing platforms have come of age, making it cost efficient to pair labour requirements and labour supply at reasonable cost
• Machine translation services are now readily available, broadening the accessible talent pool
• Communications infrastructure can finally facilitate (rather than frustrate) a smaller world via augmented reality, virtual reality and holoportation

Despite these changes, the current workplace has been slow to imagine a different reality. COVID-19, however, has suddenly shown what is possible in terms of remote work. The number of people working online is 10-30% higher than those who imagined they could two years ago.

By working remotely, space becomes compressed, and borders fade—what starts in New York, arrives in Dallas and ends in Bangalore. And the implications for white-collar workers, commercial real estate and digitisation of services are profound. Specifically:

• The countries with the weakest labour market arrangements would warrant a higher risk premium
• There is likely to be downward pressure in major urban centres as the premium of being in central locations is somewhat eroded
• The companies that become the backbone of this new digital economy—the commercial platforms, the data platforms, and the technical tools—will deserve a premium

Put all this together, and it amounts to a major socio-technological paradigm shift. Though we may still be some way away from being able to work remotely from idyllic beaches, within a decade our current world of work could look unrecognisable.

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