Working from home has revolutionised office life and brought major changes in the lives of millions of people. But is it working?
This question has been given new focus by the announcement from Amazon that from the beginning of 2025 it expects all office-based workers to come to the office five days a week.
Defending this decision, Amazon’s chief executive Andy Jassy said: “It’s easier for our teammates to learn, model, practice, and strengthen our culture; collaborating, brainstorming, and inventing are simpler and more effective; teaching and learning from one another are more seamless; and teams tend to be better connected to one another.”
Many of us who have spent our lives in offices would surely agree. And some time ago, when working from home (WFH) was all the rage, it was noticeable that leading US investment banks, including Goldman Sachs and JP Morgan, made similar pronouncements to Amazon’s.
And there has been a general drift back to the office. According to the office occupier sentiment survey from real estate business CBRE, whereas average office utilisation across Europe, the Middle East and Africa was about 35pc in mid 2023, it seems to have risen to about 40-50pc, albeit still well down from the pre-pandemic average of 65pc.
The survey also reveals, though, that the largest group of respondents (39pc) are only coming in two days a week, compared with the 48pc of employers who would like them to come in three days a week.
Yet by no means all businesses agree with Amazon. HSBC and Clifford Chance have substantially downsized their office requirements on the assumption that significant homeworking is here to stay.
Indeed, the leading UK accountancy firms and other commercial banks have made it the new normal for most of their workers to be at home for much of the week.
And in much of the public sector, home working is the dominant mode. Under the previous government there was an attempt to apply pressure on civil servants to attend the office more regularly but it doesn’t appear to have worked.
Then last week came the news that teachers are to be allowed to work from home some of the week – not when they are supposed to be teaching their classes, but in non-teaching time used for planning lessons and marking.
Who is right? There isn’t a straightforward answer. The Amazon share price rose by 2pc following the announcement of the five days a week policy. This followed a 38pc rise in the share price in the six months after the announcement of a three-day week policy in February 2023, compared with a 19pc increase in the Nasdaq composite.
This isn’t quite the killer point that it might seem. Nike’s share price has continued to decline as first a three-day and then a four-day policy were enacted.
Moreover, some studies have found that workers who are in the office full-time are no more productive than hybrid workers. And a recent UK survey from the Office for National Statistics found that in August, more than 20pc of businesses used or intend to use increased home working as a permanent model. For information and communication firms, that proportion rose to 45pc.
There is a balance to be struck. One clear advantage of WFH is that businesses can economise on office space. Meanwhile, employees can save on the time and money spent, and on the stress endured, in daily commuting.
In some sectors productivity may not be materially harmed by at least partial WFH but I find it difficult to believe that it is actually increased. Some advocates claim that WFH is advantageous because workers really like it and so it makes it easier to retain and recruit staff.
This may well be true and it may make perfect sense for an individual employer but it may make no sense for the system as a whole. If all employers were offering WFH then there would be no competitive advantage to be had by your company offering it – but a disadvantage to not offering it.
This is rather like a business declaring that giving a 10pc pay rise to all its workers made them happier and made it easier to attract and retain staff.
Yes, but this is hardly the way forward for the system as a whole, unless uniform WFH or a 10pc pay rise persuaded significant numbers of people to join or rejoin the workforce. (Actually, there is some evidence that WFH does increase workforce participation by women in the 25-45 age bracket).
The issue turns on the impact on productivity versus the saving of costs. The key to making WFH work is surely having well-motivated and well-managed staff who can be relied upon to put in a full day’s work when they are working at home.
Some businesses are in this position. They can be net beneficiaries of WFH. But there are plenty of activities where this condition does not apply – especially in large parts of the public sector.
Accordingly, the Government’s plan to make flexible working a right for all employees could be extremely damaging. The only people who know the balance between WFH’s impact on productivity and cost savings from lower office attendance are individual business managers. It is not for the Government to dictate such things.
I recently had a personal insight into the world of WFH. One afternoon this summer, a young lady was enjoying lying on a lilo in the swimming pool of the house where I was staying, soaking up the Mediterranean sun, with her arms dipping into the water and occasionally taking a sip from a cocktail.
At one point, she glanced at her watch and announced loudly to her fellow revellers: “Yippee, it’s 4.30. Only another hour of working from home.”
As you may have suspected, she is employed in the public sector.
By the way, for the avoidance of doubt, I should declare that this article was written from home.
Roger Bootle is senior independent adviser to Capital Economics.
roger.bootle@capitaleconomics.com
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