The Impact Of Remote Working On Towns Across England
Covid-19 has sent millions to their home offices as social distancing measures become commonplace around the world. Indeed, numerous big-name employers, including Aviva and Facebook, have already said that their workforces will continue to work from home for the foreseeable future.
This has created understandable concern about the long-term viability of the city centers that have largely developed around the needs and desires of the office workers that inhabit it during working hours.
What lessons can we learn from 2020 in terms of the actual impact of social distancing on city life? New research from the University of Nottingham aims to shed some light on the matter.
“The Covid-19 pandemic has led to an unprecedented shift in the fraction of work that is done from home versus the office,” the researchers explain. “This geographic shift in productive activities, which we refer to as the Zoomshock, moves work and workers from their offices in high-density urban areas to comparatively low-density residential neighborhoods.”
The researchers attempt to assess the neighborhoods in the UK that were particularly affected by the surge in remote working, in both positive and negative ways, before exploring what these early trends might mean for the economy in the future.
The researchers calculated the change in economic activity seen as a result of the home working during the pandemic across every neighborhood in the UK. The changes boil down to those who would ordinarily live in a neighborhood but travel elsewhere for work, who are now living and working in that area, and people who would ordinarily work in a neighborhood but would live elsewhere.
The scale of the impact understandably differs significantly depending on the area. For instance, the researchers calculated that if everyone in the City of London worked from home that could work from home, they would lose around 70% of their labor force. This works out at over £9 billion in annual earnings. Even if those workers only did so for one day each week after Covid, it still represents nearly £2 billion in lost economic activity.
The authors argue that this economic activity will become dispersed across neighboring areas. For instance, the Lewisham area is a popular commuter region for workers in the City, and remote working could see a rise in their output of 60% compared to pre-Covid, which would equate to around £1 billion per year.
The work-based economy
This has significant implications for the cafes and gyms we visit on our lunch breaks, the barbershops and bars that cater to the professional crowd, and of course the transport suppliers who ferry us to and fro each day.
The paper highlights that even when lockdown measures were relaxed between July and November, the City still suffered more than Lewisham, which suggests that people remained working at home even when technically they didn’t have to.
“The Zoomshock is large—many people can work from home and many people live in a different neighborhood from the one where they work,” the researchers explain. “This is true both for specific neighborhoods and when we aggregate to the level of local authorities.”
A widespread phenomenon
What’s more, this is far from just a London phenomenon. The researchers found similar trends emerging around the country, with remote working shifting economic activity out of city centers and into suburban areas.
“Within UK local authorities, some neighborhoods have experienced a very large decline in economic activity while others have seen a surge,” the researchers explain. “In general, while the most prominent feature of the Zoomshock has been the relocation of economic activity from a few densely populated city centers to the suburbs, the precise changes are often quite different in seemingly similar neighborhoods.”
While the phenomenon is widespread, however, it’s not equally spread, as some regions have higher proportions of workers capable of working from home, and also a shorter distance between where people live and where they would ordinarily work.
It’s common that wealthier neighborhoods have a greater proportion of people capable of working remotely, which may result in many of the services highlighted above migrating from the city center to be closer to these remote working hubs. This could then help to make already wealthy neighborhoods even more desirable while doing the opposite for less desirable districts.
While 2021 is likely to mirror 2020 in terms of work patterns, it’s not clear yet whether these trends will endure into the long-term. There is already visible signs of “zoom fatigue”, with this likely to result in a growing desire to return to the office for the social aspects and to avoid the isolation that has so plagued society during the pandemic.
What the paper reminds us, however, is that even if the workforce works a few days a week remotely, this will have a significant impact on the economic activity in city centers. Indeed, it’s possible that this mix-and-match approach may result in the work-related services struggle to survive in either the city center or the suburbs.
The researchers suggest that if just half of the workers work remotely two days per week, it would result in a 20% drop in potential demand for local services. This could significantly affect the viability of those services while providing insufficient demand to relocate fully to the suburbs.
What is clear is that with changes almost certainly afoot, it’s vital that analyses like this are used by policymakers to provide targeted and nuanced support to local businesses so that they can adapt to the changing environment.
“Further understanding of the impact of the Zoomshock on economic activity will also be needed in view of the fact that the different characteristics of the zones experiencing positive and negative Zoomshocks will affect their ability to support local businesses,” the authors conclude.