Remote work: should I stay or should I go?

The ability to telework provided an important source of resilience for people, firms and places during the pandemic. In OECD countries, teleworking grew from around 16% of employees before the crisis to around 37% during the first wave of the COVID-19 pandemic in April 2020.

It has not been a smooth, or an equal transition. In Job Creation and Local Economic Development 2020, we show that the potential for remote working varies significantly across regions: on average, the share of jobs amenable to teleworking varies 15 percentage points across regions within countries. This difference reaches more than 20 percentage points in the Czech Republic, France, Hungary, and the United States, driven by comparatively high levels of potential remote working in their capitals.

Nevertheless, remote working has become a new normal for many workers, and companies are looking to rewrite the rulebook to accommodate their desire for more of it. How will this change where people will choose to live and work across OECD cities and regions?

Should I stay…

The ability to work virtually has opened up new doors – particularly for city dwellers and firms – to find more affordable property, lower costs of living and better amenities elsewhere. A recent survey found 14% of the companies headquartered in Tokyo were considering changing their real estate strategy because of the pandemic, with nearly half of these expecting to downscale their office space (48%) and the remainder expecting to relocate part or all of their office.

We believe a large-scale exodus from cities is unlikely over the short and medium term for several reasons. First, because most employers indicate they are likely to still require at least part-time attendance in the office from their workers. Second, because many cities retain important assets and amenities, which will continue to appeal to residents, including accessibility to retail, leisure, entertainment, social and public services. Third, because the stock and availability of housing – particularly social housing – will remain important anchors for current populations over the short and medium turn.

Indeed, in our recent OECD report, Implications of Remote Working Adoption on Place Based Policies we used real-time mobile phone activity in G7 countries show that urban residents were staying put: there was no evidence of large-scale relocations.

Or should I go?

However, there may be important changes at the margins. We do anticipate a long-term reduction in workers’ physical presence in city centres, and places will need to adjust to scenarios that are likely to include a permanent movement of high-skilled workers outside city centres, an expansion of commuting zones around cities as a doughnut effect, and/or a surge in intermediate cities.

There are likely to be fewer inflows to cities too, as rural residents are able to access city jobs without the need to move there permanently. Another upcoming OECD report shows how the availability of occasional teleworking can massively expand the geographic range of opportunities available to workers. For example, while the size of the labour force is about 0.5 million people within 30 minutes of the Italian city of Trento, expanding to a one-hour travel distance (which many could find equally acceptable for fewer days a week) raises this figure to 2.2 million.

Getting ahead of the game

How should governments react to this uncertain future and the possible scenarios?

First, the pandemic has clearly illustrated the critical role that digital infrastructure can play in building resilience as well as the appeal and productivity of places. There is now an urgent need to close the gap in digital access, particularly in rural areas where 1 in 3 households do not have access to high-speed broadband on average. The Irish government launched a comprehensive programme to support rural communities in making their locations attractive for remote working, through investments in the required digital network infrastructure and facilitating the presence of co-working spaces.

Second, there is a need to invest in digital skills for workers and ICT capacity for firms, especially smaller SMEs who continue to lag in adoption, and for whom digital adoption gaps with larger firms have grown over the last decade. As one example of policy action in this space, the regional agency for economic development of the Basque Country (Spain) has launched Inplantalariak, whereby a team of technology advisors provide free support to help self-employed and micro firms find solutions on teleworking, remote monitoring and management, cyber-security and e-commerce.

Third, mid-sized cities and towns need to work to improve connectivity, amenities and quality of life as a means of attracting and retaining skilled workers. That includes improving public transport to large cities for occasional office workers, as well as enhancing the cultural and leisure offer and the availability and quality of public services. For example, faster rail connections – as envisaged under the US North Atlantic Rail plan – could transform cities such as Hartford, Connecticut into attractive alternative locations for office workers in Boston or New York.

Finally, policy action should seek to anticipate and manage population changes to ensure that outcomes from remote working are efficient and environmentally sustainable. This will require adopting more flexible policies on land use and housing and better integration of rural and urban transport systems, as well as policies to manage new pressures on the environment.

New normal

In a world where much remains uncertain, we can already be sure of some things. To survive, all places now need access to advanced digital infrastructure and policies to support its use. But to thrive, “economic” policies will increasingly need to focus on bolstering the public services and amenities necessary to attract and retain footloose firms and workers, and look to co-ordinate policies over larger geographies as the commuting footprint of workers expands. And all places must put in place more agile policies to respond to their new normal – whether workers stay or go.

  • 2021 OECD Employment Outlook
  • Implications of Remote Working Adoption on Place Based Policies: A focus on G7 countries, OECD, 2021
  • OECD Regions and Cities at a Glance 2020
  • The Digital Transformation of SMEs, OECD, 2020
  • OECD (2020), “Exploring policy options on teleworking: Steering local economic and employment development in the time of remote work”, OECD Local Economic and Employment Development (LEED) Papers, No. 2020/10, OECD Publishing, Paris, (page 23).
  • OECD Delivering Quality Education and Health Care to All
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Jose Enrique Garcilazo is the Head of the Regional and Rural Policy Unit within the Regional Development and Tourism Division at OECD’s Centre for Entrepreneurship SME’s, Regions and Cities. His work mainly focuses on analysing the key drivers for growth and bottlenecks among different types of regions and their impact to aggregate growth. Current projects aim at redefining modern rural development policies that can support inclusive growth and maximize the growth potential of rural areas by valorising their assets and resources. He was the former Head of Unit for Regional Growth and Policies. Author of three books and a variety of articles, Jose Enrique has been at the OECD for the last 13 years. He occasionally teaches at Science Po in the Masters of Public Affairs and in the Masters of International Relations program. Prior to the OECD, he obtained a PhD degree from the University of Texas at Austin at the LBJ School of Public Affairs.

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