The report finds that working from home is holding London’s economy back
A shift to hybrid working since the Covid-19 pandemic risks undermining London’s position as a base for creativity and economic productivity, a leading city policy analyst has warned.
With office attendance in the capital at around 60 per cent of pre-pandemic levels, the Center for Cities said the decline in workplace interactions was affecting the economy. Some scientific studies have shown that such interactions lead to increased performance.
“Policymakers must be careful not to passively allow a public health emergency to have a long-term negative impact on the economy,” said Andrew Carter, CEO of the Center for Cities, which released a report on the impact of cities on Wednesday. working at home.
Data collected from the London Underground in office districts shows that the number of office workers returning home has stabilized since November 2022. From then on, the number of passengers disembarking from the stations amounted to about 70 percent of the pre-pandemic norms.
According to the report, office workers in central London worked an average of 2.3 days a week, which is 60 percent of pre-epidemic levels. The most common work schedule was two days a week.
Citing a number of studies with conflicting results, the report says it’s unclear what effect a decline in office participation would have on productivity in the long term.
However, he cited more than a century of scientific literature demonstrating the economic benefits of personal cooperation, known as “agglomeration” effects. These “suggest that a reduction in office activity hurts productivity in the long run.”
“The big risk here is that hybrid working continues to deteriorate in productivity growth due to the poor performance of the previous decade and a half, when the London economy should be moving in the opposite direction.” he added.
The report highlighted a discrepancy between workers’ and bosses’ views on how much time spent at home is desirable, citing recent comments that senior executives at IBM, JPMorgan and BlackRock should be present.
THE survey The National Bureau of Economic Research, a U.S. think tank, found from 27 countries that employers want an average of 0.7 days of home work per week, but employees want more than 1.7 days.
However, despite the divergence in expectations, data from recruiting website Indeed showed that companies continued to advertise an increasing number of hybrid jobs. This is due to employers’ desire to attract and retain workers in the tight UK labor market.
A report by the Center for Cities warned that office footfall could spiral downward if companies gave up office leases in larger buildings and falling ticket sales led to reduced transport services.
According to the report, the government should support the mayoralty of London to maintain the frequency of subway and bus services, despite the financial impact of the epidemic. He proposed innovations such as eliminating peak fares on Fridays to encourage workers to travel.
He also warned that offices would be converted to residential use, which could lead to a permanent reduction in available workspace. This would “limit the ability of the central London economy to grow in the future,” it said.