The great divide: are office workers more productive than those at home?

Four years ago when the world of work was upended by the Covid pandemic, confident predictions were made that a permanent shift in remote working would follow the removal of lockdown restrictions.

Much has clearly changed since. Some of the earliest preachers of the brave new teleworking world – including the US tech companies Google and Microsoft – are among the most vocal to repent.

This week Amazon joined their ranks, handing down an edict to corporate employees demanding they return to the office five days a week, effective from 2 January. The chief executive, Andy Jassy, argues there are “significant” advantages to face-to-face working.

Related: Amazon mandates five days a week in office starting next year

Others, including Goldman Sachs, Boots and Barclays, agree, as growing numbers of companies push to limit remote working. At Tesla, Elon Musk has a typically outspoken approach, telling staff unwilling to return to the office full-time they can “pretend to work elsewhere”.

However, it is also clear the pre-pandemic working landscape will never be entirely rebuilt. After the initial push to return employees to the office after lockdown, flexible practices and the balance of power between bosses and workers is back on the agenda as the new Labour government promises a radical redrawing of employment rights. Expected within weeks, the plans include make flexible working the default option for workers from day one on the job.

Since the last lockdown ended three years ago, most employers have introduced some form of mandatory in-office work requirement. However, research by VirginMedia O2 suggests only a minority – four in 10 firms – demand staff are at their desks five days a week.

Over time, this figure could rise, with a KPMG survey of UK chief executives published on Wednesday reporting that 83% believe there will be a return to pre-pandemic ways of working within the next three years, up from 64% a year ago.

Even so, many bosses reckon a “one-size-fits-all” approach remains inappropriate, acknowledging that in the right circumstances, hybrid and flexible working arrangements are valuable tools. Even Amazon knows this, with remote work still allowed with management approval. The firm also offers a four-day working week and flexible contracts in its warehouses.

Utilisation of remote work will naturally differ across occupations. For factory workers and train drivers, there isn’t much choice; whereas in IT and professional services, take-up is often split along generational lines, or determined by career stage, living arrangements, and caring responsibilities. Research shows generation Z workers, early in their careers, are more likely to commute to the office.

One often overlooked fact is that home-based workers are in the minority in Britain, and always have been – even at the height of the pandemic, when the level peaked at 49% of all working adults in the first half of 2020.

Threatening to further atomise an already inequality-strewn workforce, official figures show workers in the highest income bands, with degree-level qualifications, and in professional occupations were most likely to work from home. London residents reported the highest levels.

At the height of the pandemic more than 70% of all staff in the borough of Richmond upon Thames worked from home at some point in 2020, the highest rate in the country, compared with less than 14% in some northern English towns, including Burnley and Middlesbrough.

Another growing rift is between workers at British companies and in the public sector, where hybrid working is more established, and those with owners based abroad who are pushing for in-person interaction. Wall Street banks such as Goldman Sachs, for example, require staff to attend the office full-time, mirroring policies in place for US colleagues.

Views on the pros and cons can be stubbornly held, as demonstrated by the status of WFH as a culture war front under the previous Conservative government, when Jacob Rees-Mogg passive-aggressively left notes on the desks of absent civil servants.

Highlighting how utilisation can depend on management preferences, Nationwide under its former boss, Joe Garner, launched a “work from anywhere” policy in 2021 – only for his successor, Debbie Crosbie, to scrap it last year.

Economists are divided on the benefits for productivity. Goldman Sachs has highlighted academic studies over the past decade ranging from an impact of -19% to +13%. Working from home means cutting out commuting, which can benefit mental health, and could mean fewer distractions – but not always.

Co-location can bring productivity benefits, helped by the sharing of ideas, grounded in research dating back to the Victorian economist Alfred Marshall, who studied the clustering of Lancashire cotton mills, and John Maynard Keynes’s idea of the “industrial district”.

In the 21st century, however, new technologies had been pushing ahead with remote-working practices long before the Covid pandemic: the lockdown WFH boom only accelerated a shift that was already under way.

Some studies have found that hybrid workers are just as productive as full-time workers, are less likely to quit, and can help companies save money on office costs. The latest surveys from the Office for National Statistics show more than 20% of businesses use, or intend to use, increased home working as a permanent model, a share that has been steadily rising over time.

“We therefore doubt the Amazon announcement will be the start of a trend,” says Matthew Pointon, an economist at the consultancy Capital Economics. “Indeed, moving to a full-time office model would not even be possible for firms that have already downsized their office space, such as HSBC and Clifford Chance.”