Teleworking transformed the world of work for many over the last two years. Many commentators have speculated that it will change our geography too – as people leave cities for greener environments and more affordable housing.
A rapid transformation
The scale of the transition has been staggering. 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.
The move to remote work has helped protect many jobs, firms and communities during long periods of isolation and social distancing. But the big question is: will it result in a more fundamental shift in the geography of where we live and work?
Initially, its impact reinforced disparities between places: teleworking allowed workers in successful cities to continue working throughout the pandemic while others, especially in rural areas, could not. This in part reflected differences in the types of jobs performed. OECD analysis shows that the share of jobs amenable to remote working was 13 percentage points higher in cities than in rural areas. But it also reflected the better quality and availability of digital infrastructure in cities than in rural areas where 1 in 3 households cannot access high-speed broadband. To illustrate, in April 2020 41% of the labour force was teleworking in the Île-de-France region, compared to only 11% in Normandy.
Jobs amenable to remote working in selected European and OECD countries, 2018
Share of total employment (%), large regions (TL2)
Changing perceptions
Yet while teleworking initially protected many jobs in cities, it also proved to both firms and workers that those jobs can be done elsewhere.
For firms, this provides an opportunity to cut costs on office space and recruit from a larger pool of workers beyond cities. Our recent report highlighted that 14% of companies in Tokyo are now considering reducing or relocating office space.
For workers, teleworking provides opportunities to move outside dense and expensive cities to greener environments with more affordable housing.
An evolution or revolution?
Many governments are seeking to seize the moment to attract businesses, jobs and skilled workers to new places, easing congestion and affordability pressures in cities while providing new opportunities elsewhere. For example, Ireland’s newly launched “Our Rural Future” plan focusses on boosting quality of life, improving public services and digital connectivity to attract workers to rural communities. And in France, the town-centre action plan (Action coeur de ville), which launched in 2018, should help mid-sized cities capitalise on these new opportunities by improving housing in the city centre as well as accessibility and transport.
Yet there are strong drivers for people to remain in or close to existing employment hubs. First, because employers are likely to still require at least part-time attendance in the office from their workers, keeping them close to – if not in – their cities of employment. Second, because many cities retain important assets and amenities, which will continue to appeal to residents, including accessibility to retail, leisure, and public services. Third, because the stock and availability of housing – particularly social housing – will remain important anchors for current populations at least over the short and medium turn.
This suggests that the real winners might be areas close to cities with good digital and transport connections, and a good quality of life, including some medium-sized cities and suburban areas, many of which will benefit from the programmes in Ireland and France.
Emerging evidence seems to support this. In the US, for example, overall population changes in cities were minimal during 2020. The cities with the highest out-migration – New York (Manhattan), Houston and Austin – each lost a net of fewer than 15,000 citizens. And while the top locations to which they moved were destinations were places with lower costs of living, movers tended to remain close to their place of origin.
Challenges ahead
Nevertheless, any longer term shifts will require careful management. Places need to be supported to:
- Supply the right digital infrastructure for teleworkers. For example, the German “Gigabit programme”, is extending broadband in areas where there is no market-driven expansion;
- Extend public transport systems to connect to major hubs for occasional commuters; and
- Manage increased demand for housing and public services, as well as pressures on the environment. Here sound planning systems and land value capture mechanisms can help protect the environment and generate resources to fund new public services and amenities.
Cities may also have to adapt to lower demand. There is a challenge in addressing possible job losses amongst those who cater for office workers, such as those in hospitality and retail. There is also the challenge of adapting land use – for example in making converting vacant offices into housing or better public spaces. And there may be financial challenges stemming from reduced public revenues from enterprises and public transport.
The future remains uncertain. However, while teleworking is unlikely to prove the salvation for many lagging places, we need to be prepared with the right policies to welcome new faces to new places.
