Unequal opportunities to work from home have introduced new economic and spatial divides as working remotely is nearly exclusively an option for high-income earners, and small and medium-sized enterprises were unlikely to adopt digital technologies.
In the medium to long-term, digital technologies could become an important engine for job growth says a comment in the “Sri Lanka Poverty Assessment Accelerating Economic Transformation” report compiled by the World Bank.
However, despite wide scale ownership of cellphones in Sri Lanka, the digital revolution will fall short of expectations without expansion of high-speed networks and accessible data on the whole island. Sri Lanka could provide new opportunities for economic mobility through policies that expand or universalize access to digital infrastructure.
Investments in digital literacy are a prerequisite for widely shared benefits from these new opportunities.Digital technology and the internet can act as driving forces of income convergence, both across individuals and across districts. However, if access is higher among richer households or in richer districts, digital technologies can compound existing inequalities. Digital access is higher for richer households (Figure 31a), so that it aggravates economic inequality and lowers economic mobility. In addition, the digital divide also has a geographic dimension as richer and more urban districts have higher access to technology.
Internet use is twice as prevalent in urban areas as in rural areas. In the former, four out of ten people used the internet at least once in 2018, relative to only two out of ten in rural areas. The high correlation between the different dimensions of inequality – economic, digital and spatial – makes it unlikely that digital opportunities will have an equalizing impact without large policy intervention. One example is the impact of opportunities to work remotely.
Deteriorations in labor market outcomes are the main channels through which the COVID-19 pandemic has increased poverty.
Just as improvements in the labor market drove poverty reduction pre-COVID, widespread job and earning losses are the main drivers behind rising poverty since the onset of the pandemic. Sectors such as construction, transport, manufacturing, food, and accommodation created the majority of new jobs in recent years but have been particularly hard hit.
On the other hand, jobs that can be done remotely from home have likely been largely insulated from the unemployment shock.
Since opportunities to work from home tend to benefit mostly high-earning workers, inequalities in digital access have introduced new economic and spatial divides.
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