Yes, employees need to have their webcam uncovered. The purpose of the webcam is to make sure that the person we are paying to do the work is the one actually doing the work.
Screenshots are not checked in depth unless someone is having productivity issues. Screenshots are actually a protection for the employee who is not getting work done as they should. Sometimes it turns out that they've been working very hard at a specific problem, but may just not have been able to make progress against it at this point.
I also come at it from a different point of view. I don't have a specific number of widgets per day a person is supposed to turn out. That is not what I am paying for. I am paying for that person's expertise and time and it is up to me to direct it in a way that is profitable for the company. If I direct the person to do a test that is not profitable for the company and they do it to their best of their ability, that is my fault, not theirs. I never ask for overtime, but I do require that people work their allocated hours.
I have 200 full-time employees doing a very wide range of tasks and judging productivity is challenging even though we have many KPIs for measuring it. Time is far easier to manage. I do give incentive pay based on productivity to try to encourage not just butt in the chair time, but productive work.
Back when I was a line employee, I wish that there was a way to pay purely based on productivity. Productivity. As a manager, I have seen it is incredibly challenging to devise a proper system to do so. I have spent years and years working on this and still only have systems that are okay at it. Time just makes sense to measure from an employee standpoint and from a business standpoint, that's why most businesses do it.