Working from home and labour productivity

Eco week 21-17 // 3 May 2021  
One of the lasting consequences of the Covid-19 pandemic will be the way we work with more time spent on working  
from home compared to the pre-pandemic situation. Clearly, the possibility to do so depends to a large extent on the  
industry, the nature of the job but also the country.These developments would have profound implications on where  
people decide to live, the role of cities, the need for office space, the use of means of transport, the needs in terms of  
IT infrastructure (high-speed internet), etc. A priori, one would expect a positive impact on productivity, in particular  
due to increased worker satisfaction and efficiency. Based on recent surveys, that is also what companies seem to  
expect. However, empirical research shows that the impact on productivity largely depends on factors such as the  
IT infrastructure, employee preferences and the way it is introduced and accompanied by company management.  
It seems that one of the lasting consequences of the Covid-19 Clearly, if confirmed, these developments would have profound impli-  
pandemic will be the way we work. Before the health crisis, only a cations on where people decide to live, the role of cities, the need for  
small percentage of the labour force used to work to some extent from office space, the use of means of transport, the needs in terms of IT  
home but this number increased significantly last year. This enabled infrastructure (high-speed internet), etc.  
companies in sectors where working from home was possible and  
From a business and macroeconomic perspective, two factors are par-  
provided that the necessary IT infrastructure was available, to limit  
ticularly important: productivity and innovation. Several arguments  
the hit of lockdowns or other restrictions on their activity. Quite soon, it  
plead in favour of assuming an increase in productivity. Employees  
became clear that this new way of working was not going to disappear.  
may immediately go to their desk at home when they previously left  
A survey of the Federal Reserve Bank of Atlanta in May last year home and hence work longer hours. Meetings start on time and tend to  
showed that “the anticipated share of working days at home is set to be shorter. Reduced business travel implies less time lost on the road  
triple after the pandemic ends—rising from 5.5 percent to 16.6 percent or in public transport. These factors may increase worker satisfaction  
of all working days.” The share of full-time employees expected to and efficiency. On the other hand, there may be sources of distraction  
work at least one day from home per week was expected to see a at home , people may feel alone, there may be frustration in case of  
similar increase, from 10% to nearly 30%. An ECB survey conducted  
in 2020 showed that “More remote working and an acceleration of  
digitalisation were the most frequently cited long-term supply-side  
effects of the pandemic.” More than 75% of survey participants agreed  
that a significantly higher share of their workforce would continue  
to work remotely. McKinsey Global Institute has analysed more than  
,000 activities in more than 800 occupations. Their conclusion is that  
the possibility for remote working very depends on the industry, the  
nature of the job but also the country. “More than 20 percent of the  
workforce could work remotely three to five days a week as effectively  
as they could if working from an office.” This corresponds to three to  
four times as many than before the pandemic.  
Firms Expect Working from Home to Triple, Federal Reserve Bank of Atlanta, 28 May  
020. The survey showed marked sector differences. “The share of people working from  
home at least one day a week is expected to jump markedly in the construction, real estate,  
and mining and utilities sectors, presumably by granting front-office staff working-from-  
home status. It is also expected to jump markedly in health care, education, leisure and  
hospitality, and other services, possibly by relying more heavily on remote-delivery options  
for example, online education and virtual doctor’s visits). Firms in the business services  
sector anticipate that working from home will rise to nearly 45 percent.”  
The long-term effects of the pandemic: insights from a survey of leading companies, ECB  
Economic Bulletin, Issue 8 / 2020.  
What’s next for remote work: An analysis of 2,000 tasks, 800 jobs, and nine countries,  
McKinsey Global Institute, November 2020.  
One would expect a positive impact from working from home  
on productivity. Based on recent surveys, that is also what  
companies seem to expect. The success ultimately depends  
on how it is introduced and managed.  
The bank  
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Eco week 21-17 // 3 May 2021  
hidden overtime or an inappropriate working environment at home5.  
In a survey commissioned by Microsoft involving 9,000 managers  
and employees in large firms in 15 European countries about working  
from home during the pandemic, the percentage of respondents who  
thought that productivity had increased was higher than those thinking  
the opposite . A British survey of close to 5,000 people sheds light on  
the employees’ perspective. “On average, employees consider they are  
about 2% more efficient when working from home. Certainly, there is  
no evidence that working from home is substantially less efficient, the  
big fear before the pandemic.” However, the assessment of the experi-  
ence from working from home during the pandemic may be influenced  
by several factors such as the quality of the IT infrastructure, the pos-  
sibility of using video-based communication, the sudden introduction,  
etc. An overview of the pre-pandemic research on this topic confirms  
the key role played by factors such as the nature of the job, the pref-  
erence or reluctance of employees to work from home and the way  
this is introduced by company management. “Although these analyses  
provide an overview of factors that determine whether this organisa-  
tional change will be successful, they do not allow to determine the  
macroeconomic impact on productivity.”  
Nevertheless, based on the ECB survey, it would seem that companies  
are optimistic in this respect. “Most respondents considered that the  
pandemic would have a positive long-term impact on productivity  
but a negative impact on employment […] 60% said that productivity  
in their business or sector would increase, while hardly any saw  
productivity decreasing as a long-term consequence of the pandemic.”  
Still, the question remains up to which point working from home should  
be deployed. The OECD argues that there exists an inverted U-shaped  
relationship between working from home and worker efficiency because,  
beyond a certain point, negative effects – in terms of communication,  
knowledge flows, managerial oversight- start to dominate the positive  
consequences of increased working from home. However, the exact  
form of this relationship is likely to vary with the relative importance  
of these factors by sector and occupation. Empirical research will be  
needed to find out the optimal combination of working from home and  
on site.  
William De Vijlder  
0 March 2020  
OECD, Productivity gains from teleworking in the post-COVID-19 era: how can public  
policies make it happen?, 7 September 2020.  
World Economic Forum, If pandemic productivity is up, why is innovations slowing  
down?, 16 November 2020. In the survey, 39% of respondents answered that productivity  
hadn’t changed following the widespread use of working from home. 34% (16%) thought  
productivity had increased (declined) somewhat, whereas 10% (2%) were of the view that  
employees were significantly more (less) productive.  
Working from home is revolutionising the UK labour market, Shivani Taneja, Paul  
Mizen, Nicholas Bloom,, 15 March 2021. 49% of people surveyed considered that  
productivity was about the same when working from home whereas 29% (21%) thought  
efficiency had increased (decreased).  
8. Comment le télétravail affecte-t-il la productivité des entreprises? Les enseignements  
très partiels de la littérature, Pierre Pora, INSEE, 23 October 2020. Other recent articles  
also emphasize the importance of these conditioning factors : What do we know about the  
economic effects of remote work?, Cyprien Batut, Youri Tabet, Trésor-Eco, N° 270, November  
020 ; Teleworking : how will it affect productivity, Antonin Bergeaud, Gilbert Cette, Banque  
de France, Eco Notepad, n°198, 5 January 2021.  
OECD (2020).  
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