Working from home: is it working?

Working from home (WFH) is back in the headlines, with the UK government planning to give workers a statutory right to demand it, even as more businesses are tightening their rules or scrapping it altogether. For Amazon boss Andy Jassy, it’s clear that WFH has not worked. Last month he decreed that, from the start of 2025, all office-based workers must be in the office five days a week. His reasoning was simple: when staff are physically together, it’s easier to “learn, model, practise and strengthen our culture; collaborating, brainstorming and inventing are simpler and more effective; teaching and learning from one another are more seamless; and teams tend to be better connected”.

Is working from home becoming less popular?

Not all businesses take the same view. HSBC and law firm Clifford Chance, for example, have downsized their office requirements on the assumption that WFH is here to stay. But recent months have seen a series of high-profile companies tightening up their rules, including Goldman Sachs, Boots and Barclays. PwC, too, recently announced that from January, UK partners and staff will be “required” to spend at least three days a week (or 60% of their time) in PwC or client offices. Previously staff were “expected” to spend two to three days in the office, but this had proved too “open to interpretation”, the firm said. PwC said its “shift” towards “more in-person work” was for the good of the business.

Is this typical?

Although hybrid working is now the norm in organisations such as PwC, and in large parts of the public sector, most employers have some form of mandatory in-office requirement. But, according to a Virgin Media O2 survey, only a minority – 40% of businesses – demand that staff are in the office five days a week. But among Britain’s bosses, at least, the expectation is that the return to the office will gather pace. According to a KPMG survey of chief executives last month, 83% believe there will be a return to pre-pandemic modes of working within three years. This time last year that figure was just 64%.

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What does the government say?

The government has published a major new employment bill. Among the changes Labour has unveiled are a ban on zero-hours contracts (unless an employee specifically requests one), ending restrictions on trade union organising, banning fire-and-rehire policies and giving workers certain rights from day one of employment and before they’ve passed probation – including the right to sick leave, maternity pay and the right to sue for unfair dismissal. More weirdly, it is also planning to make flexible working – meaning a right to work from home some of the time – the legal default.

Why is that weird?

First, says Martha Gill in The Observer, WFH is by no means a “left-wing” cause. Remote working benefits employers most (by saving on office costs) and disproportionately harms lower-paid, junior staff, who miss out on mentoring, skills training and career progression. Second, says Simon Jenkins in The Guardian, it’s not the role of government to dictate corporate policies on where they want their staff to work, especially given that the evidence is so mixed on the pros and cons, and the jury is out on the likely effects on productivity. Pre-pandemic, only 4.7% of employed Britons worked from home. Now, 40% do so at least once a week, and the average Londoner spends only 2.7 days a week in the office. That’s a massive and rapid social change. “It should be left to settle down before Whitehall marches in to manage it.”

How mixed is the evidence?

One widely cited academic paper, from Stanford’s Institute for Economic Policy and Research, found that fully remote working is associated with between 10% and 20% lower productivity than fully in-person work. Other papers have found declines of 8% to 19%. However, several other studies have found that workers who are in the office full-time are no more productive than hybrid workers working partly at home. In short, there’s no single answer, says Roger Bootle in The Telegraph. WFH suits some workers, not others. Some employers will find that cost savings outweigh any productivity losses; others won’t. Some will find that offering hybrid arrangements will be a key recruitment driver, and will respond accordingly. “The key to making WFH work is surely to have well-motivated and managed staff who can be relied upon” not to slack when out of the office. Some businesses are in this position, but there are plenty of others that are not, “especially in large parts of the public sector”. Either way, it is no business of the government to dictate how this delicate balance should evolve.

Does WFH benefit the economy?

It does, reports Simon Nixon on Substack. Stanford economics professor Nicholas Bloom, writing in the IMF’s Finance & Development magazine, argues that the surge in WFH since the pandemic is having a “hugely beneficial” effect on the economy. Overall, studies show that the “microproductivity impacts” on individual firms are roughly neutral. But the “aggregate macro impact” is strongly positive, for three broad reasons. First, the appeal of WFH and cutting commuting time, which workers rate as equivalent to an 8% uplift in salary, have increased the labour supply and encouraged more women and disabled people into the workforce. Second, WFH releases space in underused office buildings for alternative use, and curbs commuting traffic, cutting pollution and reducing the pressures on transport infrastructure. Third, remote working hugely expands the pool of potential employees, with “massive productivity benefits”. Discussions of WFH need to factor in these wider economic benefits. Overall, the “winners massively outweigh the losers”.

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