The work-from-home (WFH) revolution has clearly won hearts and minds. According to KPMG and the Financial Services Skills Commission, half of UK finance workers want to WFH after Covid-19, with around one-quarter wishing to make the switch full-time. Unilever CEO Alan Jope said his workers will not return to their desks five days a week. Morgan Stanley predicts 30 per cent of American workers will continue to work from home. Facebook CEO Mark Zuckerberg estimates half of staff will permanently embrace remote work, with the company ‘aggressively opening up remote hiring’.
But without mitigating strategies in place, the shock therapy of the work-from-home revolution could end up destroying any hope of a great British economic comeback. If millions of us remain reluctant to flood back into workplaces and urban areas, the impact could be catastrophic for sectors banking on commuters and consumers returning in droves. What compounds the risk is that in the spider’s web of our economy, companies in the most ‘at-risk’ sectors employ the services of firms most likely to have embraced home-working.
While businesses in say hospitality and property could be hit the hardest, the spill-over effect will be hard to contain. Bosses who think they can pressure staff to come back should be wary as well. The moment one organisation imposes such a demand than another will offer working from home options to entice employees (as EE, Monzo and the NHS already are).
Yes, there has been economic orientation towards online this year. But that has not been enough to prevent catastrophe if too many people stay at home, or if social distancing remains in place. The (unevenly-distributed) savings rate may not be enough to power a recovery which begins to falter, with a domino effect impacting everything from finance to farming.
Some firms have already cottoned on to the fact that the WFH revolution will have devastating effects. The food delivery service Deliveroo has recommended re-running the Eat Out to Help Out scheme this year. In a letter to the PM, they joined other hospitality businesses calling for to extend the 5 per cent VAT rate on restaurant food, the extension of business rates relief and the furlough scheme, and support for businesses managing rental arrears. If commuters and consumers cannot be induced back in large enough numbers, and the pressure to end support schemes grows too large, then the government should commit to help firms re-engineer, or at least cushion them, for the new normal. The alternative could be the wipe-out of sectors primarily kept alive by state sponsorship.
A related headwind to watch out for (given the hopes pinned on the jabs) is the temptation at the first sign of any vaccine-resistant strain to again lockdown. A vaccine resistant strain is something the Prime Minister of Israel has already warned is inevitable. New Zealand recently locked down Auckland after just three new Covid-19 cases. The Covid Recovery Group of Conservative MPs recently wrote to the Prime Minister to ensure all Covid-19 restrictions are lifted by the end of April. No sooner had this landed on Mr Johnson’s desk than the Foreign Secretary told Sky News the government needed to ‘retain some flexibility’ on lifting restrictions to account for the impact of variants.
An anticipated summer tourism boom – by no means guaranteed, considering a likely hangover of uncertainty, and likely confusion about quarantining and air corridors – could well be blamed for any vaccine-resistant strain, with politicians likely to encourage annual jabs thereafter. While the government will want to prevent another spike, workers and businesses need an end to the uncertainty (as do parents and children). The threat of restrictions and lockdowns will hold back investment, hiring and spending just when the country needs them to power any great comeback. To avoid 2021 turning into 2020 redux the government must continue to support towns and cities, induce consumers and commuters back, and commit to managing Covid-19 without resorting to yet more lockdowns. The alternative is frankly unthinkable.
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