Why we are not all going to be working from home in the future!
As we may be nearing the end of the pandemic, there is no consensus about how the future of work will look like. There is a great divide among companies over whether their employees will stay at home or whether they will come into the office.
While twitter announced that employees will be allowed to work from home forever, just last week David Solomon, the CEO of Goldman Sachs, called Work From Home (WFH) an “aberration”. Solomon, referring to the prevailing sentiment of working remotely, said, “I do think for a business like ours, which is an innovative, collaborative apprenticeship culture, this is not ideal for us. And it’s not a new normal. It´s an aberration that we´re going to correct as soon as possible.”
WFH was a radical and exciting concept a few years back. It was looked at as a special consideration and concession at the corporate level and yearned by many who could not get it. Over the years, a few corporates added WFH as a permanent feature. The surge of telecommunication, information storage & security systems eased information transfer among remote workers & established an “effective” & well-accepted communication system. The rising service industry, declining manufacturing sector, and the growth of information-based jobs made it much easier for people to WFH.
COVID-19 has accelerated digital transformation
The COVID-19 pandemic accelerated the digital transformation and permanently shifted the coordinates in the working world. Infection incidents and hygiene regulations required a rapid adaptation of work organisation, especially in office work. Thanks to positive experiences and the investments made, these structures will remain in place to some extent even after the pandemic. This trend will further increase the importance of cyber insurance.
Limited potential for WFH
WFH will not be the future working model primarily for two reasons: Firstly, because the potential depends on the sector. Secondly, because, as recent surveys show, both employees and executives value the advantages that working from the office offers.
WFH does not apply to all professions: According to a recent McKinsey study the finance and insurance sector have the highest potential for remote work. The agricultural sector has the lowest potential.
That is why the potential for WFH varies also from country to country. Although India is known worldwide for its high-tech and financial services industries, the vast majority of its 464 million workforces is employed in occupations such as retail services and agriculture. Therefore the potential for WFH in India is limited. The same applies, for example, to Pakistan: A recent study concludes that only 10% of jobs in Pakistan can be done from home. The potential for WFH is higher in advanced economies, but even in these countries the share of jobs that can be performed from home is limited.*
Source: Boeri, T.; Caiumi, A.; Paccagnella, M. (2020) Mitigating the work-safety trade-off, in Covid Economics: Vetted and Real-Time Papers, Issue 2, April 8. CEPR.
The future belongs to hybrid models
In addition, because WFH has its advantages and disadvantages, after working from home for months, many employees crave for more flexible models. It seems that combining WFH with office work is the preferred work model: The future belongs to hybrid working models. According to a recent PwC study, most of the executives and employees in the US expect this hybrid workplace reality to begin to take shape in the second quarter of this year. The flexible hybrid model is attractive to both the company and its employees, as many executives fear that company culture will not survive a purely remote work model and employees will want to retain the newfound flexibility.
*A similar study (Dingel & Naiman, 2020) concludes that 34% of U.S. jobs can be performed from home and the British Office for National Statistics (2020) estimates that less than 30% of the UK workforce could work from home without major changes in the labour market.
This article was written in cooperation with JB Boda
