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Will people go back to the office after the pandemic?

Covid-19 restrictions have forced many people to work remotely to mitigate the spread of the virus. But even after re-opening, a majority of employees would prefer flexible arrangements to continue, with working from home an option for some part of the week.

The coronavirus crisis has changed many aspects of our lives, including our working patterns. Although growing numbers of people were starting to work from home before the pandemic, the trend accelerated substantially after the start of the crisis. Only 5% of employees worked from home pre-Covid-19, but the proportion increased to more than 45% in April 2020, and it has remained high ever since (Office for National Statistics, ONS, 2020a; ONS, 2020b; Felstead and Reuschke, 2020).

But as economies around the world slowly start to re-open, a mixture of home and office work – ‘hybrid working’ – seems to be the way forward.

What does evidence from economic research tell us?

  • There is a substantial demand from employees for hybrid working arrangements after restrictions are removed (Bloom et al, 2021; Barrero et al, 2021).
  • Improvement in ‘work-life balance’ is the main advantage of home working reported by workers. Conversely, the main disadvantage is the difficulty of collaborating effectively with colleagues (ONS, 2021).
  • There is not yet a clear consensus about the impact of working from home on productivity (Bloom et al, 2015; Morikawa, 2020).
  • It seems that working from home will be more common than before Covid-19, although it will decrease compared with levels seen during the height of the pandemic (Haskel, 2020).

Do workers want to return to the office?

There has been an increase in the number of people expressing their desire to continue working from home. Only 18% of UK employees rarely or never want to work remotely, while approximately 82% would like to do it at least one day per week (Bloom et al, 2021). Around 23% want to work from home every day, and 59% want some mixture of home and office working (Taneja et al, 2021; Bloom et al, 2021).

Similarly, 78% of American employees that are able to work from home would like to continue doing so at least one day per week, with 31% reporting that they would like to work from home every day and 46% preferring a hybrid arrangement (Barrero et al, 2021).

According to recent ONS data, 85% of workers in Great Britain who are currently working remotely expect to use a hybrid approach in the future. Those with higher incomes are more likely to expect a hybrid arrangement than those with lower incomes (see Figure 1).

Figure 1: Expectations of returning to the usual place of work (by annual income band)

Source: ONS Opinions and Lifestyle Survey (COVID-19 module), 21 April to 16 May 2021
Notes: 'Hybrid working' is a combination of ‘I will mostly work from the usual place of work and sometimes from home’, ‘I will split my time evenly between my usual place of work and home’ and ‘I will mostly work from home and sometimes from my usual place of work’.

Before Covid-19, working from home was often perceived as a way of evading work. But since people were forced into remote work by the pandemic, such stigma has decreased (Barrero et al, 2021).

After several months of lockdown measures, the benefits and challenges of remote working are becoming clearer. Hybrid work gives employees more autonomy regarding when and where to work, improving their work-life balance. For example, when working from home, people can organise their workday around their family commitments.

This work-life balance argument is an important factor in why many workers favour the hybrid approach: Figure 2 shows that workers from all age groups perceive improvements in work-life balance as the main advantage of working from home.

Figure 2: Advantages of working from home compared with the usual place of work (by age group)

Source: ONS Opinions and Lifestyle Survey (COVID-19 module), 21 April to 16 May 2021
Notes: Respondents were able to choose more than one option.

The main disadvantage of working from home is the feeling that it is harder to collaborate with co-workers, something that is a particular concern for employees aged between 16 and 29 (Figure 3). Younger people are also more likely to report an increase in distractions when working from home.

Figure 3: Disadvantages of working from home compared to the usual place of work (by age group)

Source: ONS Opinions and Lifestyle Survey (COVID-19 module), 21 April to 16 May 2021
Notes: Respondents were able to choose more than one option.

What is the effect of hybrid working on productivity?

Whether hybrid working is here to stay will depend on the extent to which workers’ productivity is adversely affected (see Haskel, 2021). Despite its importance, evidence on this is still inconclusive. While some employees feel more productive at home, others feel more productive at the office (Palumbo, 2020; Oakman et al, 2020).

For example, one pre-pandemic study looking at the impact of working from home on the performance of Chinese call centre workers finds that employees assigned to work from home experienced a 13% increase in performance compared with those working in the office (Bloom et al, 2015). The increase is associated with fewer breaks and sick days, and a quieter working environment.

In addition, home workers reported higher work satisfaction and their job attrition rate fell by 50%. In contrast, another study investigating emergency call handlers at a police station in Greater Manchester finds that face-to-face working increases productivity (Battiston et al, 2017).

Several factors could affect productivity at home, such as appropriate physical space, available technology or whether there are children at the household. In any case, at the beginning of the pandemic, productivity fell in many countries.

One recent study of US companies reports an overall decline in productivity, but less so in industries with more educated workers (Bartik et al, 2020). Another study using Japanese data finds a similar decline in productivity caused by home working, with a decrease of 30-40% relative to working at the office following the onset of the crisis (Morikawa, 2020).

But as the pandemic wore on and employees adapted to the new reality of Covid-19 restrictions, productivity began to increase. For example, based on a survey of individuals in the United States, workers reported better-than-expected experiences and higher productivity when working from their homes (Barrero et al, 2021). The study also estimates an increase in aggregate productivity of around 5%, mainly driven by savings in commuting time. In fact, those working from home spend around 35% of their savings in commuting time working on their primary job (Barrero et al, 2020).

On average, workers in the UK report being as productive as they were pre-pandemic. In industries more suitable for home working, such as financial services and information technology, workers report being more productive. The opposite is true for those working in less suitable jobs, such as car repairs or entertainment.

In addition, workers who previously worked from home sometimes experienced an increase in productivity, while those who never worked from home before reported a large decline in productivity (Etheridge et al, 2020).

Workers’ wellbeing is an important consideration when weighing up the effects of increased home working on productivity. The pandemic has clearly worsened people’s mental health. Uncertainty, social distancing, anxiety, lockdowns and health issues have all contributed to the decline of wellbeing levels (Banks and Xu, 2020; Brooks et al, 2020; Brodeur et al, 2020).

The deterioration of workers’ mental health is strongly associated with changes in their productivity. For example, workers who state that they have difficulties in performing their jobs and get much less done at home report decreases in mental health similar to the effects of an unemployment shock (Etheridge et al, 2020).

Hybrid working could help improve workers’ mental health through reduced commuting time, more flexibility around schedules and extra time for other activities, such as time spent with family and friends.

There is evidence that the flexibility to choose whether or not to go to the office, either for a change of scenery or to collaborate and interact with colleagues, reduces job-induced stress, increases job satisfaction and boosts productivity (Hayman, 2010; McNall et al, 2019; Barrero et al, 2021). But it is important to keep workers connected when working from home to avoid possible drawbacks, such as isolation and loneliness (Brodeur et al, 2020).

What else do we need to know?

Despite employees’ preferences for flexible working arrangements, hybrid work has its challenges. To start with, effective communication and planning are fundamental for a hybrid approach to work. Remote workers cannot run into their co-workers, and if communication is not well managed, there may be disruptions in the information flow.

Another potential issue is ‘zoom fatigue’ (Nadler, 2020). People engage differently in a virtual context. In particular, workers find it harder to pay attention for a prolonged period of time online compared with in person. This means that the continued use of technology could result in more exhausted workers, harming wellbeing and productivity. Hybrid working may also create new demands for managers as they will have to be able to coordinate monitoring and alignment remotely.

With this in mind, technology is crucial. The widespread adoption of communications technologies during the pandemic raised the relative productivity of working from home (Davis et al, 2021). But to work efficiently and healthily remotely, workers need resources, such as proper equipment and internet connections. Digital skills are also critical. To retain and improve productivity as more work moves online, employers need to ensure that their employees are properly supported to build digital fluency.

Hybrid working could also have an impact on cities and towns. With companies moving away from dense offices, and workers commuting less, there may be a decline in big city centres (Anderson et al, 2020; Barrero et al 2021). Working from home allows workers to relocate from densely populated areas to the suburbs (Nathan and Overman, 2020).

The decrease in the number of commuters to city centres will also have an impact on services supported by workers, such as cafés and bars (Financial Times, 2020). As city economies are heavily dependent on workers travelling in, the longer-term impact of Covid-19 on urban areas will depend on how long working from home will continue in the future and whether workers will move away from the city to the suburbs (Althoff et al, 2020; Nathan and Overman, 2020, De Fraja et al, 2021).

Beyond this, the potential impacts of hybrid work on inequality are also an important consideration. Not everyone is able to work remotely. Workers in retail, transport, accommodation and food are less likely to work from home due to the nature of their jobs (Dingel and Neiman, 2020; Taylor and Griffith, 2020). In addition, more vulnerable groups who are least able to work remotely are the young, the less educated and ethnic minorities (Bell and Blanchflower, 2020).

Evidence from the pandemic also suggests that women have a lower ability to work from home (Adams-Prassl et al, 2020a). Women often have to take on more childcare than men while working remotely, which decreases their productivity and increases the probability of losing their jobs (Adams-Prassl et al, 2020b; Andrew et al, 2020; Etheridge et al, 2020).

As Covid-19 forced many into working remotely almost overnight, employers and employees had to adjust quickly to the new reality of lockdown restrictions. Despite uncertainty in many countries over when workers will be allowed to return to the office, it seems that many will continue to work from home for the foreseeable future. A hybrid approach could combine the benefits of remote working with the benefits of social interactions when working in person at the office.

Overall, this shift in working patterns will influence employer and employee decisions alike, ranging from where firms locate to where people live and their ability to adapt to new settings. It will have crucial policy implications, such as changes to urban structure, in the years to come.

Where can I find out more?

  • Microsoft 2021 Work Trend Index: A study that combines a survey of 30,000 people from 31 countries with productivity and labour analysis from Microsoft Teams and LinkedIn data to understand hybrid work trends.
  • The economic impact of returning to the office: A report by PwC assessing the impact of working from home versus if workers were to return to their regular working hours in the office on consumption, agglomeration effects and productivity.

Who are UK experts on this question?

Author: Larissa Marioni, NIESR
Photo by Nathan Dumlao on Unsplash
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