{"id":19440,"date":"2022-10-04T01:00:00","date_gmt":"2022-10-04T00:00:00","guid":{"rendered":"https:\/\/www.economicsobservatory.com\/?post_type=question&p=19440"},"modified":"2023-07-10T13:28:57","modified_gmt":"2023-07-10T12:28:57","slug":"what-does-remote-working-mean-for-regional-economies-in-the-uk","status":"publish","type":"question","link":"https:\/\/www.economicsobservatory.com\/test\/what-does-remote-working-mean-for-regional-economies-in-the-uk","title":{"rendered":"What does remote working mean for regional economies in the UK?"},"content":{"rendered":"\n

Prior to Covid-19, fewer than 6% of employees in the UK reported that they normally work from home in their main job. This figure increased to over half the workforce during the pandemic, and it remained at nearly a quarter of all workers in the first half of 2022 (Office for National Statistics, ONS, Labour Force Survey<\/a>, LFS).<\/p>\n\n\n\n

In reality, this may be an underestimate because it does not reflect the large increase \u2013 since 2019 \u2013 in workers who occasionally<\/em> work from home. Further, the proportion of workers who are doing their jobs from home is not evenly distributed between sectors or regions of the UK.<\/p>\n\n\n\n

Will the transition to home working be permanent?<\/strong><\/h3>\n\n\n\n

The pandemic has led to important and seemingly permanent structural changes in how we work. So far, the expected reversal of the massive Covid-19-induced increase in remote working is only partial, and few expect a full return to pre-pandemic office working in the long run.<\/p>\n\n\n\n

The UK is not alone in this shift. In the United States, for example, roughly half of paid work hours were done from home between April and December 2020, compared with 5% before the pandemic (Becker Friedman Institute, 2021<\/a>).<\/p>\n\n\n\n

Employers in the United States plan for workers to supply 20.5% of full working days from home after the pandemic ends. Most workers welcome the option to work remotely one or more days per week, according to the Survey of Working Arrangements and Attitudes (SWAA<\/a>; see Barrero et al, 2021<\/a>).<\/p>\n\n\n\n

There is now substantial evidence to suggest that the increase in remote working \u2013 and the corresponding decline in working at the office \u2013 will be a permanent shift (De Fraja et al, 2022a<\/a>; Bloom et al, 2022<\/a>).<\/p>\n\n\n\n

In the UK, recent estimates based on employers\u2019 plans indicate that remote working will be 20 percentage points higher in the foreseeable future than it was in 2019 (De Fraja et al, 2022b<\/a>). This is roughly in line with the change shown in data from the UK quarterly LFS, and similar to figures for the United States.<\/p>\n\n\n\n

A key determinant of whether or not an individual works remotely is the nature of their job (Dingel and Neiman, 2020a<\/a>; Adams-Prassl, 2020<\/a>; Dingel and Neiman, 2020b<\/a>). Job characteristics are also important in determining which occupations will see the largest permanent increases in remote working (De Fraja et al, 2022b<\/a>).<\/p>\n\n\n\n

The biggest growth in remote working tends to be in occupations that already had relatively high rates before the pandemic (see Figure 1). This is important for the regional implications of working remotely in the UK. Specifically, differences in occupational composition across regions lead to variation in the permanent change in working from home.<\/p>\n\n\n\n

In 2019, Greater London had 6.7% of workers in health and caring occupations, but 20% in corporate management and business or media, compared with 12.5% and 8.9% respectively in Tees Valley (ONS, 2019<\/a>).<\/p>\n\n\n\n

Because health and care workers have much lower rates of remote working than business and management workers, these labour force composition differences may drive persistent disparities in remote working. This has potentially profound implications for local economies.<\/p>\n\n\n\n

Figure 1: Remote working before and after the pandemic by occupation<\/h4>\n\n\n
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Chart References<\/div>\n\t
\n\t \tRemote working before and after the pandemic by occupation<\/a>Change in economic inactivity among people aged 16 to 64 by reason, April 2021 to March 2022 compared to April 2019 to March 2020<\/a>Regional unemployment rates (16+), post 1992 high\/low, January-March 2020 and April-June 2022 (latest data)<\/a>Real net national disposable income per capita, seasonally adjusted, UK<\/a>\t <\/div>\n\t \n\t