Working from home – will it stick after the pandemic?

Big companies are starting to announce their working policies for autumn as staff return to the office, generally based around a so-called hybrid policy – a mix of working at home and in the office. Two things seem clear from the pandemic. First, working from home can work for many jobs, though there are trade-offs and questions. And second, the debate on what happens next is really only starting. Employees will have more freedom, but just how much remains open to question.

1. The overview

Broadly, working from home during the pandemic has, well, worked. Previous studies had shown tentative evidence that working from home can boost productivity and employee satisfaction. This seems to have been confirmed by the pandemic – the general feedback is positive, both internationally and in Ireland, though with significant concerns too, not least how interaction in teams is managed and how the employee/employer relationship works in many aspects.

A recent paper by the US National Bureau of Economic Research (NBER) titled Why Working from Home will Stick, estimates, based on a survey of 30,000 Americans, that 20 per cent of full-time hours will be working from home after the pandemic, versus 5 per cent beforehand, an extraordinary level of change.

The paper identifies a range of reasons for why working from home will stick: the relatively positive experience from the pandemic; lower stigma in relation to people staying home – previously seen as a bad career move in many firms; new technologies; and lingering fears about crowded spaces in workplaces and commuting.

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It points out that even after a vaccination campaign is completed, it is impossible to know how far people will go back to old working patterns. Whether they do or not has “profound implications” for working arrangements, how and where people spend their money and the types of businesses and communities which could thrive post-Covid.

The researchers believe working from home can boost productivity by around 5 per cent – partly due to saved commuting time. Typically 37 per cent of the commuting time saved goes to their job, it found, and the rest to areas like childcare, shopping and leisure. Better off workers benefit most as they have greater opportunity to work from home and also typically have longer commutes – and thus save more from not having to undertake them.

A paper by the Irish National Productivity and Competitiveness Council (NCPC) on remote working in Ireland underlined the importance of making sure longer-term working from home strategies worked, requiring the correct technology and management skills, for example. It also pointed to the possibility of working from home boosting some regional locations from where people might work in future, either at home or in special local hubs – as well, of course, as improving quality of life for many people.

2. Will it stick?

Will working from home stick, or will employers try to pull people gradually back to something like the old normal? Most big Irish firms which have announced policies for the autumn – AIB, Bank of Ireland, PWC and some big multinationals – are opting for hybrid models, with people in the office two to three days a week to start. In some cases, notably the banks, this is being used in part to cut office space requirements, indicating a permanent shift.

Surveys have indicated that in many cases employees welcome the option for this mix of working from home and the office. It is unclear whether it will “stick” as a long-term policy. Some companies – and staff – complain about the lack of interaction. Managing this in a hybrid setting is not straightforward, particularly if employees are coming into the office on set days, as opposed to for specific tasks. Taking on new employees and functions like training are also complicated. A lot of thinking and testing remains to be done.

Working from home also raises wider questions, for example for younger, single employees. Many will live in smaller, sometimes shared accommodation and thus may prefer to work in the office. Conversely, high rentals have encouraged some to return to locations outside major cities either to live at home or in cheaper accommodation. But this is only workable long-term if they get clear guidance from their company that they will not be required to regularly attend the office. In turn, those looking to buy a property in a rural location outside commuting distance will find the bank seeks proof that they can continue to work from here long-term, to ensure they can continue to earn.

Working from home will stick –but at what level remains a crucial and uncertain question.

3. Bigger generational gaps?

The NBER paper shows clearly that the better educated and better-off will get the most gains, as they tend to work in jobs where working from home is possible. The same is the case in Ireland, where those who have lost their jobs and are reliant on the Pandemic Unemployment Payment are primarily lower-paid people in sectors where working from home is not possible due to the nature of the work. Working from home in the longer-term will give a bigger boost to the better off, but will also help many younger families.

4. The dilemma for city centres

The NBER paper estimates a potential fall in spending of 5 to 10 per cent in city centres – less people coming to work means less sandwiches, coffees, lunchtime shopping and after-work socialising. So whether working from home sticks and to what extent has huge implications. Many city centre businesses will be in trouble if office staff do not return in decent numbers. Those in suburbia will thrive as business is redirected.

And as things stand it does seem that suburbia, rather that rural towns, stand to benefit most. A study by Gerard Brady, IBEC chief economist, for the Social and Statistical Inquiry Society estimated that close to four out of 10 Irish employees could potentially work from home, but this was comprised of half the workers in Dublin and just a third in most rural counties. Studying 177 regional towns, he found those which are traditionally commuter towns stand to benefit most from working from home, due to the nature of the jobs done by people who live there. In rural Ireland, meanwhile, the benefits could be more limited.

5. The policy implications

The implications of working from home for future policy are very significant. For example, if people generally return to offices most of the time, this means it is worth supporting city centre businesses to hold on. If footfall in the city does not return, many businesses will not be viable, but there will be new opportunities in the suburbs and a much higher demand for services. And this goes further. Ireland’s spatial planning for the future is based on a concept of denser living near workplaces in city centres, served by strong transport links. But what if significant numbers are working from home? And what does it mean for public transport?

The NCPC underlines the importance of competitiveness both nationally and regionally in an era of remote working. Nationally competitiveness – and making Ireland a pleasant place to live – is vital not only to attract firms but to attract their employees too, in an era when remote working means they could live anywhere.

Regionally, things like broadband connections and local working hubs become vital if rural locations are to take advantage of these trends. Brady of IBEC believes regionally based incentives could be needed, for example – better incentives for firms to hire people in rural areas.

And underlying this is the risk that post-Covid and in an environment where remote working is possible, the existing divides in society– driven both by income, age and location – may all widen. If this is not to happen, then policy interventions will be needed.