Today we launch The Case for Remote Work in which innovation expert Dr Matt Clancy makes the economic case for why, even when the pandemic has passed, we won’t all go back to the office – or, at least, not as much.
I’m sure you’ve read, heard, or debated the pros and cons of working from home. It’s an inevitable conversation for anyone living through the varying degrees of lockdown. But while we all have preferences on how much we want to work from office or home, and it’s easy (often based on these preferences) to have strong instincts on what the world of work should look like, Clancy’s paper follows the evidence, which strongly suggests the virus has pushed us towards a new equilibrium.
Clancy shows that working from home doesn’t make us less productive. As you might expect, this varies across business size and sector, but there are a decent number of experiments showing that a lot of firms benefit from home working. For example, a Chinese travel-booking company, CTrip, assorted employees by lottery to work from home, finding worker performance increased by 13% at home.
It’s not just call centres: since the pandemic, 29% of American small business owners believe productivity has increased for their remote workers and more than half of hiring managers think remote work is going better than expected. Over 60% of hiring managers are planning to increase their use of remote work in the future. And the times appear to be a-changin', with more than 40% of small business owners aged 18-34 planning to hire full-time remote workers, compared to just 10% of small business owners aged 50 and up.
It’s not just about productivity though. Cities are great places to build businesses because of agglomeration effects – ie. the benefits of having lots of people and infrastructure in one place. It’s why businesses in the same sectors cluster together. However, remote work done well means we can get more of the benefits of agglomeration without the costs. These costs are obvious things like commuting, rental and house prices and transport emissions, but an increase in working remotely could allow people to live away from big cities, which for some people is less preferable than living in the countryside or closer to friends and family. Also, given how obsessed this government is with levelling up, an increase in working from home could help spread wealth a little more evenly around the country.
Clancy isn’t arguing that we’ll all be working from home. Only that this will become more common, alongside working from co-working spaces and satellite offices. (Anecdotally, friends based in Canary Wharf who have nightmare commutes are mostly happier to work from home than we are, based in our convenient TOG co-working space in Victoria.)
The report recommends a range of policies to support the transition to remote work, including tax relief for home working expenses, investment in broadband infrastructure, and better online education. Ultimately, it should be up to each business owner to work out how to organise their workforce and then let the market decide which is more efficient, but government would waste a lot of time and effort trying to turn back the tide.
To accompany the launch of the report, we have a video where Sam Dumitriu interviews the author, alongside Rory Sutherland of Ogilvy UK and Adam Ozimek of Upwork. We’ve also uploaded the recording to Soundcloud. It’s over an hour long, but I think it’s one of the most thought-provoking events we’ve ever done. For those in a rush, Clancy's CapX article is worth checking out, and if you only have a minute this Twitter thread will give you the main points of the report.
As Stian Westlake, Chief Executive at the Royal Statistical Society, and author of Capitalism without Capital, says: “It sets out a clear, intuitive model for how to think about remote work from an economic point of view, and a clear explanation for why a shock, like Covid-19, might change things permanently. What's more, it provides a superb survey of what existing economic research says on the pros and cons of remote work. If you read one economic paper in 2020, make it this one!”
A nation of technologists
Applications are now open for Tech Nation’s flagship growth programmes: Rising Stars 3.0, Upscale 6.0 and Future Fifty 9.0. Rising Stars is a pitch competition for early-stage, innovative tech companies; Upscale is a growth programme for mid-stage tech companies; while Future Fifty a late-stage growth programme. There is a simple tool to help you know which category your company fits into.
Entrepreneurship 101
On 21 October, the APPG for Entrepreneurship will be hosting a panel event to mark the launch of Dr Eamonn Butler's new book: An Introduction to Entrepreneurship for the Institute of Economic Affairs.
Accompanying the launch, the Institute of Economic Affairs will be creating and disseminating a short explainer video, and they are looking for entrepreneurs to take part by filming short clips (up to 30 seconds), introducing themselves and explaining why entrepreneurship matters and the role it will play in supporting the recovery.
The video will be pushed out through social media, as well as played at the launch event. If this is of interest, please contact Annabel Denham. The event will feature Dr Eamonn Butler, Emma Jones MBE, Matt Ridley, Author. You can register for the event here.
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