Who will be the winners and losers of flexible working?

Professor of Finance discusses the implications of working from home and the societal and economic effects it will have.

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 continues to gather pace, employers are now making plans for the ‘new normal’, with many favouring a hybrid model of flexible working between home and the office and very few suggesting a return to full-time office-based hours.

Support for working from home in the long-term from business leaders has varied. 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.

Professor Keith Cuthbertson, Professor of Finance at the Business School (formerly Cass) explains the ramifications of such a permanent shift in working patterns, and the likely effects we will see on wellbeing, the economy and society at large.

Do employees enjoy working from home?

Professor Cuthbertson said early evidence suggests a strong preferance for a flexible model, whereby workers can choose between home and office on a given day or week to fit in with organisational needs.

“A survey of 5,000 UK working adults in early 2021 suggested substantial support for working from home,” Professor Cuthbertson said.

“Around 50 per cent of those surveyed expressed a preference for working from home for 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. Professor Cuthbertson explained the upside.

“Work-life balance depends a lot on commuting time and the quality of the commute.

“In the UK, commuting time is around 60 minutes 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 therefore making more use of their time ‘outside of the office’. 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 – with the rest dedicated to household chores and childcare.

“Just from these figures we can clearly see benefits for workers.”

Organisations are still responsible for the work environment

While employees see the tangible perks of working away from the office, Professor Cuthbertson believes there will be increased responsibility on employers.

“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 on average at their designated place of work than established workers, for example.”

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.

Professor Cuthbertson predicts further changes in living and spending patterns as a result of flexible working.

“With substantial working from home there will be a lower footfall in city centres, replaced by greater online expenditure and accompanied by 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 rents 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 and hospitality. Public transport will generate lower revenues and may require increased subsidies, while local authorities will receive less in business rates which could provide a catalyst for changes in local taxation.”

All quotes can be attributed to Professor Keith Cuthbertson, Professor of Finance at the Business School (formerly Cass).

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