Working from home has become more common during the pandemic, but only in certain sectors. The likelihood that the practice will be permanently adopted depends on perceptions of workforce productivity.
Working from home has grabbed newspaper headlines since Covid-19 struck, with talk of a ‘revolution’ in working practices. This coverage can give the impression that the days of working in an office are behind us.
But working experiences during the pandemic have not been universal. There is a risk that the drastic change to working from home for some leads to the belief that this has been the case for all. Huge numbers of employees in certain sectors, such as information technology and communications, are working remotely, but the proportion is far lower in others, for example, hospitality and retail.
The duration of remote working practices remains unknown. Data suggest that perceptions of employee productivity will be a determining factor, such that sectors where working from home is seen to reduce staff productivity will be the ones most likely to abandon it after the pandemic.
How prevalent is working from home?
In its Coronavirus and the social impacts on Great Britain survey, the Office for National Statistics (ONS) asks respondents if they have worked from home at some point in the past seven days. Figure 1 shows people’s replies between March 2020 and the end of March 2021.
Overall, during this period, home-working has been quite prevalent. Roughly 40% of respondents reported having worked from home during the period 24-28 March 2021. This is down from a peak of about 45% during the second lockdown last winter, which was about the same as during the first lockdown in the spring of 2020, and sizeably higher than during the mini-trough of last summer (27%), when case numbers had fallen and restrictions lifted.
Figure 1: Percentage of working adults that are working from home
Source: ONS
Note: Question taken from the Coronavirus and the social impacts on Great Britain survey asks if the respondent has worked from home at some point in the past seven days. Last data point is from data collected 24 to 28 March 2021.
Until the recent fall back, the winter increase in the overall proportion of people working remotely chimed with the then-rising rates of virus transmission and prevalence. As the case numbers grew, lockdowns were reinstated, which meant that restrictions and health concerns kept more people at home.
Working from home by industry
This is an appealing and congruent story but looking at overall data can obscure what is really happening. In particular, there is a great deal of variation in the prevalence of home-working across industries.
Figure 2 shows responses from the Decision Maker Panel (DMP) survey, a joint effort by the Bank of England, the University of Nottingham and Stanford University, which asks firms about the percentage of their employees continuing to work from home. The survey indicates that the proportion of employees working from home is 37%, lower than the ONS survey (as shown by the dark blue line), and down from the series high of 41% in January. Overall, it tells a similar story of increased home-working throughout the winter.
The chart is hard to read with so many lines around the dark blue line showing the total. But this just shows that there are differences between sectors when it comes to workers’ ability to do their jobs at home. As we might expect, industries such as information and communication, and finance and insurance have a high proportion of employees working from home: 70% and 67% respectively in March 2021. Others including professional and scientific at 63.5% and real estate at around 50% aren’t far behind.
But perhaps unsurprisingly, other industries have far fewer employees working remotely. The wholesale and retail sector is in the bottom third, at about 30%, followed by manufacturing and transport, and storage both at about 25% and 21% respectively, and accommodation and food at the very bottom of the pack at 12%. By their very nature, many of the jobs in these sectors are impossible to do from home.
Figure 2: Percentage of employees continuing to work from home
Source: DMP survey to March 2021
Note: Data are based on responses to the question: ‘Approximately what percentage of your employees fall into the following categories: (i) Still employed but not required to work any hours (e.g. 'on furlough'), (ii) Unable to work (e.g. due to sickness, self-isolation, childcare etc.), (iii) Continuing to work on business premises, (iv) Continuing to work from home’.
Will the current relatively high levels of home-working continue?
There have been media reports of companies moving towards permanent remote working, but it remains unclear whether this will be common. The ONS Business Insights and Conditions Survey (formerly known at the Business Impact of Coronavirus Survey, BICS) seeks to provide some insight by asking firms whether they intend to use increased home-working in the future. Specifically, they ask: ‘Does your business intend to use increased home-working as a permanent business model going forward?’
It seems overall that the answer to that question is no. Figure 3 shows the net employment-weighted percentage of firms that answered positively, in other words the employment-weighted percentage of firms responding ‘yes’ minus the employment-weighted percentage of firms saying ‘no’. The rightmost bar shows that for all industries, an excess 27 percentage points of firms responded ‘no’ (that is, 21% of firms said ‘yes’ and 48% said ‘no’).
Rather than focus on the latest survey covering 8-21 February 2021, Figure 3 takes an average across all waves of the survey asking respondents about home-working. There are six such waves, spanning September 2020 to March 2021. This approach gives a more holistic picture, as the volatility from wave to wave can make it hard to discern a clear pattern.
So what does the picture look like across industries (and waves)? As Figure 3 shows, employers in most industries do not plan to increase permanently remote working. The percentage of ‘noes’ vastly outweighs the percentage of ‘yesses’ across all sectors, bar a few: information and communication, where the proportion of ‘yesses’ surpasses that of ‘noes’ by 27 percentage points, professional and scientific, where ‘yesses’ outpace ‘noes’ by 12 percentage points, and education, with an excess of ‘yesses’ of 6 percentage points. Note that the BICS does not include the finance and insurance sector, which one might expect also to consider maintaining remote working in the future.
Figure 3: Net percentage intending to use increased home-working as a permanent business model
Source: ONS Business Insights and Conditions Survey
Note: Average of waves 14 (21 September-4 October 2020), 16 (19 October-1 November 2020), 18 (16-29 November 2020), 20 (14-23 December 2020), 22 (11-24 January 2021) and 24 (8-21 February 2021). Note that ‘Other Services’ has been removed from the sample. Question: Does your business intend to use increased home-working as a permanent business model going forward? Data are employment-weighted.
Clearly, firms in the majority of industries do not intend to use increased home-working as a permanent feature. Only two, perhaps three, industries stand out: information and communication, and professional and scientific, and education. This may suggest that the discussion of working from home is dominated by the bias of those white-collar workers who use it and write about it.
Why are firms reluctant to move to permanent remote working?
To answer this question, we can look at firms’ perceived consequences of working from home on productivity.
Figure 4 shows the net percentage of firms reporting that working from home has made their workforce more productive. As before, that’s the proportion of firms reporting that productivity has increased minus the proportion reporting that it has decreased, averaged across the six relevant waves of the survey.
With the exception of the information and communication sector, a substantially greater proportion of firms in all other industries report that the productivity of their workers has decreased during the pandemic than increased.
In construction and administrative, the excess of firms reporting lower productivity is 18 and 17 percentage points respectively (6% and 9% reported greater productivity from home-working and 25% and 26% lower productivity, respectively).
The picture is only slightly better in other industries – in real estate, accommodation and food, and arts and entertainment, an excess of 14, 13 and 12 percentage points of firms report lower productivity respectively, while in manufacturing, professional and scientific, and health, that excess is around 10 percentage points, in line with the average across all industries. Education, wholesale and retail, transportation and storage, and water fare slightly better with excess negative productivity reports of between two and eight percentage points.
Even within the information and communications sector, where firms have traditionally been keen adopters of home-working and have reported their intent to use it permanently, the net proportion of firms reporting increased productivity is tiny – specifically, only 0.8 percentage points. The proportion of lower productivity reports (11.5%) almost outweighs higher productivity reports (12.3%).
Figure 4: Net percentage reporting productivity has increased from working from home
Source: ONS Business Insights and Conditions Survey
Note: Average of waves 14 (21 September-4 October 2020), 16 (19 October-1 November 2020), 18 (16-29 November 2020), 20 (14-23 December 2020), 22 (11-24 January 2021) and 24 (8-21 February 2021). Note that ‘Other Services’ has been removed from the sample. Question: How has the increase in home-working affected the productivity of your workforce?’ Data are employment-weighted.
What does this tell us?
Taken together, these data indicate a link between the intentions within a sector to move to remote working on a more permanent basis and perceptions of productivity as a result of working from home.
This pattern is summarised in Figure 5. The vertical axis shows the net proportion of firms intending to use increased home-working permanently. The horizontal axis shows the net proportion of firms reporting increased productivity from home-working since the start of the pandemic.
As we can see, the majority of industries are in the bottom-left quadrant, with only information and communication in the top right, and professional and scientific, and education in the top left. Nevertheless, an overall positive correlation, captured by the trend line, between the intent of permanent home-working and experiences of home-working productivity does emerge.
So as we move from the bottom left to the top right of the chart, a falling proportion of industries that perceive home-working to have decreased productivity is associated with a falling proportion of the intent not to use home-working permanently in future. This description is couched in negative terms because as shown, firms in the majority of sectors found a decrease in productivity and do not plan to increase remote working.
Information and communication is the outlier here, where the intent to use home-working permanently goes hand in hand with the perception that home-working has raised productivity. Professional and scientific, and education present the counter-intuitive association of an intent to increase home-working despite reported experiences of lower productivity while working remotely.
Figure 5: Net percentage expecting increased home-working as permanent (y axis) vs net percentage reporting increased productivity from home-working (x axis)
Source: ONS Business Insights and Conditions Survey
Note: Average of waves 14 (21 September-4 October 2020), 16 (19 October-1 November 2020), 18 (16-29 November 2020), 20 (14-23 December 2020), 22 (11-24 January 2021) and 24 (8-21 February 2021). Note that ‘Other Services’ has been removed from the sample. Questions: ‘How has the increase in home-working affected the productivity of your workforce?’ and ‘Does your business intend to use increased home-working as a permanent business model going forward?’ Data are employment-weighted.
The future of working from home
Based on this analysis, it does look like economic considerations are important for firms when deciding whether to allow their employees to work from home or not. In those sectors where working from home would reduce productivity, firms are likely to do less of it. Does this mean that the prediction of having everybody work from home is overstated?
To get a handle on this, it is helpful to refer back to Figure 3, which showed the net percentage of firms intending to use increased home-working in the future. Figure 6 breaks this down by plotting, for each industry, the percentages intending to increase home-working as a permanent business model, or not.
Figure 6: Percentage intending to use increased home-working as a permanent business model
Source: ONS Business Insights and Conditions Survey data
Note: Average of waves 14 (21 September-4 October 2020), 16 (19 October-1 November 2020), 18 (16-29 November 2020), 20 (14-23 December 2020), 22 (11-24 January 2021) and 24 (8-21 February 2021). Note that ‘Other Services’ has been removed from the sample. Question: Does your business intend to use increased home-working as a permanent business model going forward? Data are employment-weighted.
It could be that those firms intending not to increase remote working simply return to pre-pandemic levels. At the same time, the firms intending to increase home-working opportunities compared with past practices may stay at the current high levels. In all, this would result in a reduction in home-working from current levels, but an overall increase relative to before Covid-19.
In terms of the size of the increase, the pre-pandemic level of home-working was around 13% of employees and, as Figure 6 shows, 21% of (employment-weighted) firms in all industries and across all waves expect to increase home-working permanently.
How does that translate into a share of employment done remotely? A recent DMP wave asked firms for the share of workers that they expect to be working more from home and for how many hours. The rise in the share of workers is 23 percentage points, which compares closely to the 21% in the BICS. The DMP respondents expect less of an increase in the number of hours working remotely, predicting a rise of 14 percentage points. This is likely because most firms expect workers to work at home around two days a week out of five.
In sum, it appears that working from home will fall relative to the high levels during the pandemic, but it is likely that it will be more common than before Covid-19. Crucially, any rise is expected to be concentrated in a few industries rather than common across all types of work.
Where can I find out more?
- The ONS Business Insights and Conditions Survey was formerly known as the Business Impact of Coronavirus Survey. The published data are count of businesses weighted: the data in this article are employment-weighted following a special tabulation by the ONS.
- Remote working: Report from the Wales Centre for Public Policy on the future of office and home-working.
- Why working from home will stick: A study by Jose Maria Barrero, Nicholas Bloom and Steven J. Davis of the shift towards working from home.
- How the COVID-19 crisis is reshaping remote working: A VoxEU article on the uneven adjustment to remote working during the pandemic.
- The productivity of working from home: Evidence from Japan: Masayuki Morikawa explores productivity when working from home.
- Homeworking in the UK: Before and during the 2020 lockdown: Alan Felstead and Darja Reushke explore the scale of the shift to remote working and the likelihood it will continue post-pandemic.
- Collaborating during coronavirus: the impact of Covid-19 on the nature of work: A National Bureau of Economic Research study exploring employees’ digital communication patterns during lockdowns.
