Who are the winners and losers of flexible working?

Professor Keith Cuthbertson and Dr Dirk Nitzsche discuss the implications of working from home, including the effect on the economy as lockdown eases

Working from home during the pandemic has been a major learning curve for organisations and workers alike, with mixed blessings.

As the government’s roadmap for easing lockdown gathers pace, many employers are indicating preference towards a hybrid model of flexible working, with two or three days per week in the office – and very few suggesting a return to full-time office-based hours.

Support for working from home in the long term has varied across business leaders. David Solomon of Goldman Sachs has referred to working from home as an “aberration”, while Joe Garner, chief executive of Nationwide, has stated that 13,000 of its office workers can choose to work from anywhere in the UK.

Do employees enjoy working from home? 

In a survey of 5,000 UK working adults in early 2021 around half expressed a preference for working from home for anything between two and four days per week, while 20 per cent would happily carry on working from home for five days a week.   

Support for flexible working has grown partly because the pandemic has reduced a stigma previously connected with remote working: that it was a licence to ‘shirk’.

Using the extra hours in a day

An undeniable benefit of flexible working for employees is a better work-life balance, which depends a lot on commuting time and the quality of the commute.In the UK, average commuting time is around one hour per day, and 80 minutes per day for a London commute. Rush-hour commuting on congested rail and road journeys is not conducive to higher productivity.

People are making better use of work and leisure time with a flexible working day as well. A survey of 10,000 working Americans last year found around 35 per cent of time savings were reallocated to their primary job, 8 per cent to a secondary job, 30 per cent to increased leisure such as watching television and doing outdoor activities like exercise, and the rest dedicated to household chores and childcare.

Just from these figures we can clearly see advantages for workers, while employers benefit from reduced employee turnover and less expenditure on office space.

Organisations are still responsible for the work environment

Alongside worker flexibility, working from home also creates increased responsibility for employers that continue to have a duty of care.

Over the coming months there will be a rise in organisational costs, including new work scheduling, changes in office layout and more interactive communal areas. Companies will also have to ensure that working conditions and equipment at home are adequate for their workers, and that fewer face-to-face interactions between employees and management do not lead to a worsening of promotion prospects. New hires and underperformers may be encouraged to spend more time at their designated place of work than established workers, for example. And future job offers may have to allow some working from home to attract the best and the brightest workers. 

In the coming months HR personnel will be kept very busy, whether at home or in the office.

How will working from home affect the economy?

Reports have highlighted how central hubs like Canary Wharf are rapidly becoming deserted as a result of the pandemic shift. With substantial working from home there will be a lower footfall in city centres, replaced by greater online expenditure and an increase in economic activity in the suburbs.

Towns and rural areas around big cities will benefit relative to city centres themselves. Firms may also migrate some of their primary workspace from city centres to towns and retail parks to take advantage of cheaper rents.

Some companies may allow working from home three or more days per week, which could result in employees relocating further afield where house prices and rent are less steep.  

A reduction in city centre office use may result in conversions to residential housing, as has been suggested recently with the City of London. Lower commercial rents, meanwhile, may attract creative start-ups where face-to-face interaction is more important.

Big cities will survive, but daily economic activity will be slashed – particularly in retail, hospitality and office cleaning services. Public transport will generate lower revenues, and will require flexible season ticketing and increased government subsidies. In addition, local authorities will receive less in business rates, which could provide a catalyst for favourable changes in local taxation.

Overall, the catalyst provided by Covid to changes in work practices can be mutually beneficial if all sides take advantage of the new opportunities to be more flexible. Companies should work with employees to plan out an effective work pattern that works for all parties and enables business as usual. 

Keith Cuthbertson is a professor of finance and Dr Dirk Nitzsche is a senior lecturer in finance at the Business School (formerly Cass)