America has adapted to the COVID-19 pandemic similarly, with the number of Americans working from home jumping from 8% in February to 35% in May this year.
A recent analysis suggested that around 30% of jobs in the UK could be done remotely on along term basis and that 86% of employers intended to continue some kind of remote-working policy post-pandemic. Lloyds Banking Group which employs thousands of workers across London has recently extended its remote working policy, up until Spring 2021. The financial services organisation currently has 50,000 of its 65,000 employees currently working from home. In one more, of many examples of the impact of remote working – leading government contractor Capita is planning to close more than a third of its 250 offices after reviewing remote-working productivity and concluding that staff are working just as effectively from home.
Remote working could take different formats in the longer term. For example, Michel Serafinelli, an economics lecturer at the University of Essex predicts that some remote workers may travel to the office one or two days per week, whilst others may visit the office for one week, every month or so; for conference-style meetings. This could have an impact upon city centres across the world, including of course London. There is already some data that suggests people are leaving the centre of London, in pursuit for ‘more space’ – as renters desire to make use of gardens, spare rooms and close proximity to parks and other green spaces.
Many London property owners are growing concerned with this trend and have urged ministers to cut the cost of transport in and around the heart of London to lure workers back to the city centre. In data sourced by RightMove, searches for rental properties in Earl’s Court were down 40%, year on year in August 2020, whilst searches for rental properties in West Kensington were down by 25%. Whilst it could be speculated that the pandemic may have caused a general decline in overall property searches, this would appear inaccurate as searches for rental properties in towns outside the centre of London have increased dramatically. For example, Chessington, which is 16 miles outside of the centre of London, as seen a 99% increase in August 2020, compared to August 2019.
With city centres across the world, notoriously bad in terms of air quality, noise-pollution and space for active living, it is not surprising that many people are looking to relocate to suburbia now that remote working has become a permanent arrangement for many employees. Whilst there is certainly a danger that some smaller towns may see their business centres turn into proverbial ghost towns, there may be some real benefits to the transition.
A falling price in commercial property rentals may lead to more innovation and more small business startups. This could also lead to a type of ‘rebalancing’, with majorly congested cities, experiencing a decline in its population density, and suburban and rural areas which are very sparse populations and stuttering local economies, experiencing a revival in housing prices as the population increases. With more people working from home, in some cases every day of the week, many will look to relocate to areas which offer the best value and best way of life.
There may be more bad news for city centres in terms too, with a reduction in the footfall leading to a reduction in jobs in high street retail and eateries.
According to Yahoo Finance – “a pronounced slump in vacancies among town and city centre firms has been blamed on high numbers of former customers working from home, on top of government restrictions”.
As unemployment continues to rise, local services that usually sell directly to local customers are impacted by both the increase in remote-working and government restrictions, as the UK leaders adopted a U-turn on their back-to-work messaging that was adopted over the summer.
Whatever the consequences may be, it appears remote working is here to stay. With many tech companies already adapting their recruitment policies and benefits packages. Microsoft, Twitter and now Facebook has been reported to be offering remote-working as a permanent benefit to many employees with some companies taking things a step further by offering more flexible working hours for those who may need them. There may be a double-edged sword in the workings for some employees, however, with some tech companies offering lower salaries for new employees who reside in less expensive locations.
As more companies look to reduce overheads and capitalise on the reduced dependence on office space/commercial real estate, outsourcing of jobs to freelancers and virtual assistants could also be a trend that is set to stay beyond 2020. From legal virtual receptionists to overseas graphic designers, the impact of outsourcing on the UK job market could be significant.
Whatever happens in the long term, 2020 will certainly be a year to remember or forget, depending on your outlook.
