Potential of working from home vastly over- exaggerated

Potential of working from home vastly over- exaggerated

The potential for people to work from home and predictions of the death of the office have been vastly over- exaggerated, according to new research from London School of Economics and Political Science.

“Before declaring that the office and our cities are dead, policy makers should be careful about seeing the world solely through the eyes of the metropolitan elite – whether they’re based in London, Milan or Washington. Not everyone is working from home, or can work from home, even if they want to”, says Riccardo Crescenzi, Professor of Economic Geography at LSE and one of the authors of the research paper.

The paper stresses that poorer regions and Small and Medium Enterprises (SMEs) have been left behind by the digital revolution.

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The research looked at data from Italy which shows that only 12% of workers were able to work from home at the peak of the pandemic in 2020. This contrasts with estimates, based on survey data, which project double this share of jobs could be done from home.

“Italy is the only advanced economy to have collected data on the remote working status of every single worker in the economy. However, the paper’s findings echo those of US research which measured remote work using information on commuting habits. It found that while working from home is common in large cities, less developed areas have a much lower share of people working from home”, LSE says in a summary.

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“The UK needs to look at the signals that we are finding in the data from other countries. This tells us that there are practical barriers to the adoption of working from home for the less dynamic regions and sections of the economy. Remote working is not yet the force for inclusion and over-coming regional disparities that it is sometimes depicted as”, Crescenzi says. 

“Current estimates of the adoption of working from home practices are based on the findings of widely used surveys which overly represent people who are working from home, because they are more responsive to online questionnaires. We should be careful about using this data to base important policy decisions on, such as the design and planning of urban infrastructure and transport.

The research found that remote working is more common among larger and more productive companies. 70% of large firms, with 250 or more employees, had at least one worker teleworking during the 2020 lockdown. Only 1%t of firms with fewer than 10 employees adopted working from home practices.

Companies that allow their employees to work from home also tend to be based in wealthier regions. In Lazio and Lombardy  –  home to Rome and Milan respectively –  more than 21% of employees were able to work from home during the lockdown. This is in contrast to less than 2% of workers in the less developed, and poorer areas of Southern Italy of Calabria, Molise, Apulia and Sicily.

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“Even after taking account for the different industrial composition of the regions – with more knowledge being based industries based in northern Italy – the gap between the estimated potential for people to  work from home and the reality remains staggering”, according to the research.

Professor Crescenzi said: “If you are sitting in a small business in Newcastle, you may not have access to the technologies nor have managers with the right skills to make working from home successful in the way it can be for bigger, wealthier companies.

“If the government is serious about its levelling up agenda and supporting an inclusive transition to the digital economy, it needs to ensure that we have excellent broadband connectivity across all areas of the UK.”

Dr Davide Rigo, Leverhulme Fellow at LSE and co-author of the study, said: “Smaller companies need more support to train their workers in digital skills and knowledge, as well as help in adopting cloud technology – which is so essential for effective working between team members working remotely from one another.”

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