Economic and Political Outlook 2021
Check out CEDA's new report featuring insights from economists and political commentators on the year ahead.
Just a decade ago, working from home was so unfamiliar and aspirational to most of the population that the Federal Government set a target for 12 per cent of the public service to regularly work from home by 2020 assisted by the National Broadband Network.
Fast forward 10 years and we are entering the sixth month of a massive natural experiment. At the peak of nationwide lockdowns in late April and early May here in Australia, 46 per cent of those working were doing so from home. Around the same time in the US, a nationwide survey conducted by Stanford Economist Nicholas Bloom and his colleagues found that 42 per cent of the US population was working from home, accounting for about 60 per cent of economic activity.
In those early COVID lockdown days, worker satisfaction with these arrangements also appeared relatively high. Over 80 per cent of respondents to a survey conducted for NBN Co suggested that working from home positively changed the way they thought about managing work/life flexibility. Furthermore, 67 per cent expected to work from home more after COVID-19 ended, mirroring the future expectations of employers.
But there are potential pitfalls for wellbeing and productivity based on research conducted before and during COVID-19. A previous experiment conducted in China with travel agency call centre employees working four days a week for nine months found that despite productivity gains, participants suffered from isolation and loneliness.
COVID-19 has created similar challenges for many workers. However, many workers have also suffered from the opposite of isolation during COVID-19 – the major distractions of home schooling children and sharing work spaces with their partners. There are also equity concerns – between those who can and cannot undertake work from home during a global pandemic, but also between the haves and have nots when it comes to home office space. In the US study cited above, less than half of those working from home were able to do so privately in a room that is not their bedroom.
Even for those with a room of one’s own, there are other hazards like the deluge of video meetings. If you find yourself suffering from Zoom doom, the increased mental and social fatigue of participating in virtual meetings may not be the only cause. Early evidence from studies using de-identified email and meeting data suggests that the number of workplace meetings is increasing in the virtual world.
An event study of lockdowns in 16 large metropolitan areas in North America, Europe and the Middle East found that people are attending on average 12.9 per cent more meetings during their workday with a greater number of attendees. Thankfully the average length of those meetings was about a fifth shorter than previous meetings in the office. Unfortunately, the wins for workers ended there – shorter meetings were not enough to stop the length of the average workday blowing out by 8.2 per cent.
If people are working longer days without a commensurate increase in output, all else equal the impact on productivity will not be positive. The available self-assessments of workers and experts suggests that the impact of working from home on productivity is likely to be different in the short and long-term.
A recent poll of 4500 office workers in the US, UK, Ireland and Australia by Equiem found that over a third thought they were more productive during COVID-19 based on factors such as the lack of daily commute and less interruptions from colleagues. Australians were the most bullish on productivity – 46 per cent thought they were more productive compared to 32 per cent in the US and 30 per cent in the UK.
Nicholas Bloom believes that as long as workers have the internet and space that they need productivity increases can be sustained in the short-term (likely up to nine months). But the long-term outlook for productivity is less certain unless companies return to the office at least a few days a week. Bloom’s concern is that creativity and innovation are stifled without face-to-face interactions including the spontaneous informal kitchen and hallway conversations that spur new ideas and collaboration.
The OECD agrees in a recent paper. They find that while teleworking has the potential to improve productivity, its overall impact is ambiguous and carries risks, especially for innovation and worker satisfaction.
The findings of these studies conducted before and during COVID-19 implies that there will be inevitable adjustments to employers’ approaches to working from home in the years to come. The silver lining is that based on this massive natural experiment there will be more research than ever before, giving employers a more rigorous basis for their work from home strategies.