When a global shock like COVID-19 puts people out of work, skilled workers are often among the first to lose their jobs. Yet, new research suggests that their training helps them find employment faster than unskilled laborers.
Livia Alfonsi, an assistant professor at Harvard Business School, tracked workers in Uganda both before and during the pandemic. While neither skilled nor unskilled workers were able to fully recover from pandemic-related job losses, job seekers with six months of vocational training found work more quickly than their unskilled counterparts, find Alfonsi and colleagues in the working paper “The Returns to Skills During the Pandemic: Experimental Evidence from Uganda.”
“Skilled workers are cumulatively doing better over the pandemic. They're doing better at the end of the pandemic,” Alfonsi says. “We do still see that there has been overall a loss. Both skilled and unskilled workers are not where they would have been had the pandemic not been there. But the skilled workers show more resilience.”
After tracking 1,100 workers in Uganda who were randomly assigned to either six months of vocational training or a control group with no training from 2012 through 2018, Alfonsi circled back as the pandemic unfolded. She followed both groups through lockdowns, layoffs, and rebounds between 2020 and 2022. The main finding: Skilled workers spent 61 percent more time employed, and earned 17 percent more than unskilled workers overall.
The research carries broad implications for fast-growing economies like those in Africa, whose workers are among the youngest in the world, and beyond, Alfonsi says. Uganda and similar economies are expanding at rapid rates, but Uganda’s high debt, poverty, and limited exports make it more vulnerable during an economic crisis.
“Having a more mobile labor force means that the firms are going to more easily find people,” she explains. “It gives you a more robust, more resilient [workforce] in the face of economic shocks.”
Alfonsi conducted the research with Imran Rasul, a professor at the University College London; Vittorio Bassi, an assistant professor at the University of Southern California; and Elena Spadini, a doctoral student at the University College London.
Earlier study provides ready-made cohort
To track the potential resilience of people with skilled training, Alfonsi and her colleagues turned to a previous study of Ugandan workers who took part in vocational training in 2013.
About 65 percent of the initial 1,700 workers attended and completed six-month training courses in eight sectors: welding, motor mechanics, electrical wiring, construction, plumbing, hairdressing, tailoring, and catering. By 2018, the skilled workers emerged with, on average, 25 percent higher total monthly earnings, were unemployed for 20 percent less time, and earned almost 60 percent more than their non-skilled counterparts.
Pandemic offers perfect labor shock
When the pandemic hit, Alfonsi says, the group seemed an ideal cohort to revisit. Notably, Uganda had two strict lockdowns, one in April and May of 2020 and a second in June and July of 2021, giving researchers uniform specifics to study for everyone in the group. In surveys, the researchers collected labor market outcome information before, during, and just after each lockdown. That allowed the authors to reconstruct labor market ebbs and flows in detail.
That leads to more resilience on the firm side, because there’s a larger pool of workers.
“It was a unique opportunity to study labor market dynamics in a setting where there is basically an absence of a robust social safety net and formal support,” Alfonsi says. “But really, this makes Uganda pretty much a proxy for understanding the entire region.”
Protecting workers, companies, and economies
Uganda’s economy depends largely on small and medium-sized businesses, which often are forced to cut more expensive workers—who tend to be more skilled—first in an economic crisis. While the country wrestles with debt and poverty, its economy is expected to outgrow not only those of North America and Europe, but many neighboring countries, according to International Monetary Fund estimates. Its young workforce is a potential asset that could help buoy companies.
From a policy standpoint, Alfonsi’s research suggests that any government that wants to protect its economy and companies from emergencies should invest in training young workers. While some of the workers in Uganda who held training certificates didn’t return to their pre-pandemic employers, they found jobs in the same industry, the study shows.
Partnering with institutes for upskilling youth is crucial, Alfonsi says. She suggests focusing efforts on improving the overall quality of these institutes while also incentivizing and rewarding the high-performing ones.
“You increase the resilience of your labor force. That leads to more resilience on the firm side, because there’s a larger pool of workers,” Alfonsi says. “Firms can go and rehire once there is an economic recovery.”
