Working from home is a seismic shift in employment patterns that has rocked businesses, charities and public sector organisations across the world.
From Hong Kong and Singapore to London, New York and Toronto, white collar workers have changed the way they work, shop and pursue leisure, culture and recreation, shifting many local economies on their axis. For many towns and cities it’s as if the sun shines at a different point in the day, such is the transformation in how about 60% of people conduct their lives.
Britain is one of the most affected countries, according to a study of hybrid working by the German economic thinktank Ifo, based on surveys from most big industrial states.
Office space lies empty and unproductive, with mostly skilled and professional workers refusing to sit at a desk in an office as they did before the Covid-19 pandemic.
Analysts at the US bank Morgan Stanley say the markets for office space globally will be oversupplied for between five and 13 years as developers wrestle with a combination of high borrowing costs and hybrid working, which will hit demand and put a cap on how much rent they can charge.
Cluttons, the estate agent, in its review of UK office space, said that in the three months to the end of June the vacancy rate was at 7.6%, the highest level since 2014. It is tipped to hit 9% next year.
In central London, which accounts for more than half of office construction and where industrial cranes still dot the skyline, the vacancy rate is already higher than the national average, at 8.9% – up from 5% when the pandemic started.
Given the extent of hybrid working, it might be thought these vacancy rates would be even higher. Morgan Stanley says the office market has Brexit to thank for a limit on construction after the decision to quit the EU made Britain less attractive to hot money that has poured into real estate in other countries.
Employers worry about the productivity of staff who work from home, setting them on a collision course with many existing and prospective staff who are determined to avoid the office.
A recent study by the thinktank Centre for Cities found office workers in the capital were spending only 59% as much time in their workplace as they were before Covid and more than a third “would quit if told to return to the office full-time”.
The thinktank’s director of policy and research, Paul Swinney, says that while it is unclear how much working from home has affected a worker’s productivity – a measure of how much is produced in every hour worked – the benefits of firms clustering in cities could be lost.
Some of the benefits flow from the intangible cross-pollination of ideas that have brought the biotech industry to Cambridge, finance firms to London’s Square Mile and increasing numbers of media businesses to Manchester.
Research by Jesse Matheson, a senior lecturer at the University of Sheffield, appears to justify Swinney’s fears. It found that remote working moves economic activity from large urban centres to residential suburbs, atomising the workforce to some extent.
This is not a temporary issue, he adds, because the average amount of work done remotely has permanently increased by two days a week, relative to pre-pandemic levels.
Cities identified as greener and more family friendly, like Sheffield, are the main beneficiaries and are already seeing huge spikes in house prices as a result.
These same smaller cities will enjoy a switch in spending on retail and hospitality worth £3bn in England and wales. Their gain will be London, Birmingham and Manchester’s loss.
Some academics have argued that home working should be embraced by employers after studies showed that those able to find space in their home to plug in a computer and spread out a few notebooks were more content with their employment. It can be argued that happier workers are more productive.
Home workers can juggle childcare and other caring responsibilities more easily and cut out long commutes that have become more prevalent over the last 20 years as high property prices have pushed people to travel farther to work.
Prof Nick Bloom, an expert in hybrid working at Stanford University in the US, found that the value of home working to these employees was equivalent to an 8% pay rise.
Maybe it is no surprise that the Ifo study shows hybrid working is more popular in the US, UK and Canada – the capitals of Anglo-Saxon capitalism – and less so in Germany, France and Spain.
The need to work from home could be to escape a bullying, aggressive office work culture. More workers have disappeared from the UK and US workforce in the last two years than almost anywhere else, many of them taking early retirement.
There is less support for childcare in the US and UK compared with continental countries, and cheaper public transport in France, Germany and Italy, all of which makes for an easier and more conducive working environment for workers old and young.
From research of 34 countries, the Ifo survey found full-time UK employees work from home for 1.5 days a week on average, beaten only by Canada’s 1.7 days. In the US the figure was 1.4, while the average in Germany was 1 day, in France 0.6 and Italy 0.7. If productivity is tied to teamworking and face-to-face meetings, the UK is in a difficult place.
