The Impact of Working From Home
Working from home (WFH) refers to when employees are able to complete their work tasks from their house. This has become an integral part of the new normal caused by the Covid-19 pandemic. While not all jobs are able to be performed remotely, many industries and businesses have made changes that were previously thought not possible to accommodate this. This does pave the way for a new precedent for workplaces, with 74% of firms [1] apparently planning to increase home working permanently, and a plethora of potential consequences. A few of the impacted areas are explored in more detail below. [2]
Impact on Real Estate
The most obvious impact of workers not going into the office anymore would be on the commercial real estate involved. Many professional service businesses have shifted workers from offices to working from home indefinitely, with vague plans in place to bring workers back. However, this move has been delayed multiple times as cases have risen, and accompanying government measures have come into place. However, considering that not all workers have been as able to work from home, either due to their home situations or technological limitations, businesses have tried to accommodate this. This has resulted in office owners having to bear both ‘Covid-proofing’ (to accommodate social distancing measures) costs and lower rent payments as 15% of office rents have gone unpaid in Q2 and Q3. [3] This is a much more optimistic situation than in retail rental payments, where only about 40% of rents were paid. While most of this impact is a direct result of the Covid-19 lockdown forcing tenants to close, without an income or certainty, increased working from home has further exacerbated this impact. This is especially the case in city centres where the majority of many retailers’ custom comes from office workers who are simply not in the city centre at the moment. This is especially the case in the UK, where workers have been much slower to return to the office. This has also meant a prolonged period of low revenue for these retailers, as while certain schemes such as the Eat Out to Help Out Scheme have seen revenues increase, some businesses have not benefited proportionately, especially considering the higher rents in such areas.
If working from home does become a more permanent fixture, these retailers are unlikely to survive without some sort of overhaul or change in strategy to appeal to a different target market, as the entire demographic of city centers could be changed as a result. This leads to another potential effect; the impact on residential real estate. If workers no longer need to be in a fixed geographical location, they may choose to live away from cities, triggering house price increases outside of cities and potentially a fall in house prices within cities. However, there are still plenty of jobs (considering the much higher population density) in cities, which cannot be completed from home. Therefore, this impact is unlikely to be that pronounced, especially over the long term as populations continue to grow and the rural-urban divide is not adequately bridged. This is especially the case in the wake of Covid-19, where wealth inequality has worsened, as seen in recent reports of the top 1% of American households owning 15 times more wealth than the bottom 50% of the US population. [4] This is not a problem unique to the UK, as rural-urban divides tend to exist everywhere, despite various governments’ efforts to reduce any such disparities.
Impact on Individuals
The Covid-19 lockdowns have prompted many to consider moving out of cities, as the home suddenly became a lot more important due to the high proportion of time spent in it. The benefits of working from home include the time and money saved from not commuting, increased time to spend with loved ones, and having a personalised workspace to suit one’s specific needs [5]. While there was and still is the looming fear of redundancy for many, as government support measures are reduced, there have also been a plethora of mental health effects for those who have been able to continue working throughout this period. [6,7]
Issues here involved a lack of social interaction taking a toll on people and the phenomenon is known as ‘Zoom fatigue’, attributed to the higher levels of cognitive strain required compared to face-to-face meetings ([8] due to the lack of non-verbal communication cues and the pressure to deliver the same level of communication without them, as well as technical difficulties and having to see one’s own face being stressful). For some adults, isolation has also proved a very lonely time or an intensely stressful time if their household consists of many children or multiple generations all trapped within a small space. However, these impacts cannot solely be attributed to working from home, as if it were to become a permanent fixture past the pandemic, the environment would be quite different-i.e. proper office spaces being set up in the home and socialising still occurring outside of working hours and lower anxiety levels than during the pandemic, as well as the option of returning to the office becoming available (working from home more permanently would likely still involve some time in the office to ensure that businesses and individuals get the best of both those environments). The work-life balance may have improved for some but worsened for others, as a lack of commute does save time, but the lack of physical distancing from one’s work station has prevented some workers from shutting off from work fully, even after hours. This has of course also impacted productivity. At this point, it is not known whether the current levels of productivity are sustainable in the long run, but current results seem promising with 43% of employers have noticed an increase in productivity from working from home, compared to 29% of employers having noticed a fall (from a survey conducted by CIL Management Consultants [9]).
Preliminary surveys already show a change in sentiment towards traditional working in offices. [12]
Impact on Businesses
For businesses who have been able to operate remotely, it has allowed them to gain a competitive edge over those which could not and to therefore, be in a better position to weather through the current economic downturn. They have also been able to reduce costs in terms of maintaining physical offices. While many have continued paying rents, they have saved money on electricity and other in-person perks offered to many office workers. Many have likely considered permanently reducing the amount of office space they need, especially if they are considering making remote working a longer-term option for employees. Further benefits that could materialise, would be being able to hire the most suitable staff, regardless of geographic location. By maintaining the option of remote working for employees, employees may also be happier to work for their employer, as many have expressed a desire to continue such practices. This would increase the efficiency of the workforce and increase the business’s success over time. Furthermore, by reducing commuting and office electricity usage, the carbon footprint of businesses is greatly reduced.
There are a couple of issues that would need to be addressed in the long-term though. New procedures for monitoring performance and encouraging development would likely have to be implemented, incurring costs in the short run. This is in addition to further costs required to get staff set up in a comfortable working environment at home (although this is mitigated by the fact that Covid-19 has forced many employers to already bear the brunt of these one-off costs). Regulatory requirements for certain roles must also be considered, as working from home could leave certain areas more vulnerable to malpractice. If people choose to work from home whilst on holidays, there are also issues in terms of taxation and therefore, limits the amount of flexibility whilst working from home are also likely. [10]
Further Considerations
By enabling office workers to work from home to their benefit, this could further economic disparity, as lower-paid roles are often unable to do so, such as retail jobs having to be performed in person. Furthermore, any disruption to physical workplaces, such as the current pandemic, have allowed those who can work from home to continue working and benefit, while other sectors have suffered greatly, with job losses disproportionately hitting those sectors and certain demographics heavily employed in them-i.e. women (slowing down progress on trying to overcome the decades of inequality in employment there) and young people. This has also increased geographical divides, as certain areas are more conducive to homeworking when compared with cities with very high property prices. Some such cities have a lot of people living in inter-generational properties with very limited square footage, therefore, workers have been aching to get back to the office in these places.
Furthermore, not every country has had the ease of access to technology to allow for homeworking to even be possible. Not everyone has had access to a laptop or even the internet in their homes. While many businesses have been able to provide the equipment and technology necessary for working from home, a lot of countries simply lack the infrastructure and means to do so. Arguably though, this pandemic may have increased the rate of development in some countries where possible, as a result of working from home becoming a necessity and the necessary equipment and technology having to be bought and implemented to sustain businesses’ survival. However, overall, this would still further the gap between living standards in developed and developing nations, as the benefits would likely be most pronounced for high-paid workers in developed countries who have seen a much smoother and natural transition to homeworking that has built on existing flexible working practices. [11]
[1] https://www.bbc.co.uk/news/business-54413214
[2] https://www.ft.com/content/c4000088-c256-4d31-ba98-f695c39e6e21
[5] https://www.flexjobs.com/blog/post/benefits-of-remote-work/
[7] https://happiful.com/working-from-home-taking-toll-on-mental-health-relationships/
[8] https://ideas.ted.com/zoom-fatigue-is-real-heres-why-video-calls-are-so-draining/
[10] https://www.nibusinessinfo.co.uk/content/advantages-and-disadvantages-employees-working-home
[11] https://globalworkplaceanalytics.com/work-at-home-after-covid-19-our-forecast