Remote work became the norm for many people in 2020. And it is here to stay in the future. In this post we will discuss how are the winners and losers of the emergence of remote work.
Content
Introduction
The global situation experienced in early 2020 led many governments to restrict freedom of movement. Overnight, pretty much all office jobs adopted remote work. And the results were better than previously anticipated.
Although most companies have already told their employees they had to return to the office, remote work is still present to some degree. Many companies have adopted hybrid work models, in which employees come to the office a few days a week and work for home the rest.
As a result, we should assume that work from home is here to stay. Many jobs in the future will have some degree of remote work, and that is likely to impact society and the economy in a significant way.
We will analyze how are the likely winners and losers of remote work. While the net result will be positive, not everyone will be better off with it.
Remote Work Winners
Among the winners of remote work are two groups that stand out most: companies and employees. I am obviously referring to employees whose jobs can be done remotely.
We tend to think companies and workers can never win at the same time. However, this is false. For example, there is a very strong correlation between workers’ wages and a company’s profitability. And something similar will happen with remote working.
Companies
Let us talk about companies first. They tend to be the ones deciding whether their employees should work from the office or from home.
Cons
What are some of the difficulties companies may experience if they decide to make remote work a permanent thing, even as part of a hybrid model.
It is often said that remote work makes it more difficult for employers to control their employees. However, today’s technological enhancements and time management tools allow companies to monitor the productivity of their employees. Consequently, the fear that workers will not do their job will gradually go away.
However, it might be trickier for companies to manage employees who are not physically in the office. Lack of interaction between colleagues can affect collaboration. While it is possible to maintain a positive team spirit by having people in the same office a few days a week, certain tasks might be disrupted.
Complex projects that require a lot of collaboration may have to be done in the office. However, tasks that are the sole responsibility of one person can be done more productively from home.
Pros
When it comes to the advantages of remote work for companies, we have to mention the possibility to save in office-related costs. While this depends on where a company is located, for those in offices in big city centers the cost savings can be substantial.
On the one hand, companies can rent less office space if they adopt a hybrid model. For example, if employees can work from home 2 or 3 days a week, the company may need 50% less office space.
On the other hand, if enough companies do that, such changes will have an impact on the rental price for office space. If offices rents drop, companies will be able to save additional costs.
And for those companies that own their offices, they would have the option to lease out part of their real estate. This would make it possible to monetize an asset that was previously being used exclusively by the company. Hence, good news as well.
Those savings can be used for other purposes:
- Invest in news products, services, and better processes
- Invest in the company’s human resources, potentially paying higher wages
- Reduce prices while maintaining or increasing margins
- Increase profitability which can lead to more growth in the future
Employees
Those employees with jobs that can be done completely or partially from home, have adopted remote work very positively. While most companies still offer the option to work from the office every day of the week, most employees take the option to partially work from home if they can.
There are many benefits for workers to integrated remote work into their lives:
Money
First, remote work allows most workers to reduce their work-related expenses. Regardless of whether they commute by subway, train or car, most of them have to spend less money going to work. This is also positive for our energy policy, as the country has to spend less energy to have these jobs done, meaning less costs with the same amount of economic output.
There are other work-related costs beyond commuting into the office. We talk about buying coffee, breakfast or lunch on a daily basis. These things are way cheaper at home. Additionally, employees can spend less money on office clothes.
Finally, the option of living further away from the city center cannot be underestimated either. That means either spending less money on housing, having a bigger and nicer home for the same amount of money, or a combination of both.
All in all, there is plenty of money workers can save thanks to remote work.
Time
The other important aspect to highlight, and for many employees the most important one, is the higher quality of life.
Not having to spend as much time commuting to the office is a win for most people. While commutes tend to be shorter in small cities, in places like London some people spend a few hours a day commuting. Not having to do that is a great way to improve their quality of life.
With more time on their hands, employees can be more present for their families, live healthier, exercise more, pursue other projects or simply have hobbies. The possibilities are endless.
And, although some companies may be reluctant to implement remote work as a long-term thing, employees assign a monetary value to it. This means companies can leverage that to attract talent or retain employees. Bearing in mind remote work is a perk companies can offer without incurring any additional costs.
Remote Work Losers
Among the biggest losers from the adoption of remote work, we find those who are on the other side of companies and workers being better off with it.
Office landlords, especially if they own office buildings in central areas of large cities, can lose a lot. Lower demand for office space will cause them to lose tenants, and that can lead to office rents going down. And repurposing office space, while possible, will be expensive.
Homeowners and landlords in areas whose biggest appeal is their proximity to office districts, can also lose. The difference between home prices in city centers and on the outskirts of that city is likely to decrease.
If people commute less, corporations and governments operating trains and other public transport networks will see their revenues plunge. This will lead to losses for private operators. In the case of public corporations, taxpayers will have to foot the bill.
Another sector that can see its business affected is that of business travel. Business travel will certainly remain. But just a 25% drop will have a massive impact on airlines, hotels and other service providers that previously catered primarily to business travelers.
Conclusion
I think the changes derived from the adoption of remote working will be positive for society as a whole. Work from home tends to benefit most those who produce wealth: companies and workers.
It takes away from those who, to some extent, were there as rent seekers: office landlords and public transport operators.
If we manage those changes well, they can lead to more economic growth, greater prosperity, and higher quality of life.
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