As the COVID pandemic swept the world new measures had to be taken, balancing public health and the necessity of maintaining economic activity. Remote working emerged as a key feature of American COVID economy, accelerating what in the pre-covid era was an emerging but slow and minor trend of the country’s labour market.
Whilst towards the end of 2021 the amount of work from home decreased, as Americans got vaccinated and the office started opening up again, the proportion of remote work continued to be high at the end of last year.
In September 45% of full-time US employees worked from home in some capacity; the highest proportion of this being white-collar workers with 67% working from home either some or all the time.
We should certainly take remote work as a serious economic phenomenon, rather than a fad which will pass. When we discuss “a new normal” and how things won’t go back to how they where before COVID remote work is one of the key examples of that.
Both employers and employees seem to have reasons for supporting long-term remote working, however, these trends expand far further than just the labour market.
If well paying high skilled jobs are no longer tied to urban centres with high house prices it’s likely a lot of workers will move, shifting local economies and real estate markets. If remote work becomes a consistently demand option businesses will have to adapt, possibly offering less pay in exchange for flexibility options. Their investments might also shift, as office space becomes an increasingly redundant investment, further impacting real estate prices and leaving some extra capital for business owners to work with.
Remote work is most likely here to stay, and we should pay attention.
No Longer Just About Money
Remote work can’t simply be understood as the consequence of a public health emergency. Though it might have been triggered by that, the underlying forces at play illustrate key elements of the modern labour market.
Working from home boomed amidst “The Great Resignation”, as 2021 saw more resignations than any year this millennium, with the peak being 4.5 million in November. This was almost a million above the previous record, of 3.6 million in July 2009.
The Great Resignation has shown us new things matter to workers, with things like flexibility or starting their own businesses being up there with higher pay. This highlights something crucial about remote work. Workers care about how their work influences their lifestyle, and as hiring has been difficult recently employers have to care about this too.
This new demand hasn’t been missed by certain employees, with major brands such as Adobe, Spotify and Twitter switching to a hybrid model, facilitating greater opportunities for working from home. Microsoft found that this is true for 66% of employers around the world.
Both employers and employees agree on the positive consequences of remote work, with remote workers being 35-40% more productive than their non-remote counterparts, with 27% of employees saying their productivity went up since the switch to remote. More focused time, quieter environments, and fewer interruptions were cited as key reasons for the elevated productivity.
Other key improvements include higher productivity (40% fewer quality defects in products made by remote workers), higher retention (54% of employees say they would change jobs to find more flexibility), and profitability (21% higher amongst companies which facilitate remote work).
These general positive implications of remote work are the main reason it will most likely remain a constant feature of the future business environment. The truth is these measures simply make businesses better at what they do, whilst making workers happier and more effective.
As important as remote work might be it is still very much in its infancy. Whilst working from home existed before the pandemic, and recent developments have certainly been a catalyst, we have not yet seen all the long-term implications of a major shift.
Chief Upwork Economist, Ozimek, predicts an increase in freelancing as comfort with remote work grows and companies become be more willing to use the services of remote freelancers.
He also stresses companies will need to standardise passing knowledge through the company. Whilst before the tacit knowledge of a firm could be passed on informally, the lack of a cohesive office space will require a new, most likely formalised, system.
Currently, he says the uncertainty of the future of remote work is stopping people from moving significant distances, as they don’t want to bet their lives on remote work sticking around. However, as remote work becomes a more stable part of the labour market this will likely change.
There are also important caveats, which we will have to account for and plan around. For example, a study has found that whilst overall workers felt greater autonomy and satisfaction through remote work, mothers had little control over work intensity or timing. This led to a recommendation for increased childcare provisions.
Further studies found flexible working could lead to the boundary between home and work being taken down, creating more work-life conflict. Such issues will certainly have to be addressed in the future, to protect workers’ mental health.
For urban centres remote work might bring trouble, as certain estimates predict a 5-10% spending decrease in city centres as people spend less time in cafes and more in their kitchens.
Remote working is here to stay, and it seems that both businesses and workers will be better of because of it. With productivity and satisfaction higher for both employees and employers.
However, certain issues will have to be managed such as the threat of work-life balance collapsing as people bring their work into the home, or city centres facing business closures as their customer base decreases.
However, no far-reaching shift will be problem-less, and if we want to seize the opportunities we also must plan for the problems, making sure we adapt to a constantly evolving labour market.
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