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COVID-19 and its Impact on Remote Work

Published 20 May 2020 / By Nilanjan Raghunath & Tony Tan

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Introduction

This blog is part of the COMPAS Coronavirus and Mobility Forum.

Even before our current situation, remote work, as a form of work arrangement, had become increasingly popular. According to a 2016 survey by the Society for Human Resource Management, 60% of companies in the United States offer their employees remote work opportunities. However, Gallup’s data suggest that while remote work is becoming popular, its uptake has not been particularly significant in terms of the proportion of remote work hours. Almost half the employees opting for remote work do so for less than half of their total work time. However, the COVID-19 pandemic has accelerated the deployment of remote work as countries remain in lockdown. This is likely to become the new normal.

Remote work presents different sets of advantages for companies and employees. Nancy Kurland and Diane Bailey (1999) suggest that for organizations, the main benefit is the rise in productivity, while for individuals, the main benefit is the flexibility provided. One study suggests that offering home-based remote work to a group of volunteered employees can increase productivity by 13%. However, a further extension of the study, involving the firm extending home-based remote work to the entire firm, resulted in 22% increase in productivity (Bloom et al. 2015). This is related to a study by Song Yang and Lu Zheng (2011), which suggests that organizations that adopt flexible work arrangements ceremoniously by not offering the option to all employees would not reap the benefits of increased productivity. At the same time, employees are able to enjoy flexible work arrangements, which can help employees improve work-life balance, ultimately contributing to productivity (Mohan, Prabha, & Mohanraj 2010). Thus, productivity can be increased under the right circumstances.

Nevertheless, employers are still reluctant in employing remote work arrangements due to worries about the possibility of distractions or multitasking and the reduction in informal learning that occurs in the workplace (Jaffe, Trajtenberg, & Henderson 1993). Managers are finding it difficult to monitor the progress of employees. Furthermore, the continued success of traditional work arrangements has deterred the need to change work arrangements.

However, the COVID-19 pandemic has resulted in a drastic shift in business needs. There is an urgent need for companies to digitize extensively. Businesses are only able to continue operations if they adjust their working styles, allowing employees to work from home. While remote work has been common for customer service jobs, businesses from sectors such as healthcare, sales and education have shifted towards remote work as well in response to the pandemic. Although this global experiment is still playing out, surveys among various populations hint at the future of remote work. Globally, individuals and businesses are changing their attitudes toward remote work. An April 2020 survey in Singapore revealed that 80% of employees would like to continue remote work arrangements for at least half of their working hours even after mandatory social distancing measures end. Similarly, some businesses have extended remote work options for employees beyond the end of lockdown periods, and even as a permanent option. Notably, these are predominantly technological firms, who already have the necessary infrastructure to facilitate the shift to remote work.

Unfortunately, it is not so smooth for other companies. The pandemic has highlighted the inability of many businesses to adapt to sudden crises and the need for remote work. A survey suggested that remote work has reduced productivity for 20% of Singaporeans. Similarly, Nicholas Bloom, whose study suggested that remote work boosts productivity (Bloom et al. 2015), suggests that productivity is bound to drop as individuals are being forced into remote work without the necessary infrastructure in place. For example, many governments and workplaces are relying on online videoconferencing platforms that were previously untested, which have led to security breaches. Moreover, countries have different levels of preparedness to facilitate remote work. In particular, the developing world is severely ill-equipped to allow remote work. Moreover, a 2017 report by the International Labor Organization suggests that there is a need to consider relevant legislation to regulate remote work standards. They note that working hours of individuals tend to increase when they are working remotely, and there is a need to ensure work-life balance even as remote work becomes the norm.

Governments and companies need to establish the necessary frameworks for digitalization. In Germany, the Green Party and other politicians from the Social Democratic Party are debating on whether bills, can be enacted to force businesses to provide remote work opportunities for all employees. While details are not concrete, it could be similar to The Netherlands’ Flexible Work Act, which came into force in 2016. This Act requires companies to provide explanations for denying remote work and making businesses accountable for home workspaces. Furthermore, it ensures that companies establish transparent guidelines to measuring productivity of employees, while allowing employers to check on their employees’ home workstations. These are all concerns that governments globally need to take into account.

While the labour market will be transformed with remote work, we still have the ability and responsibility to regulate it to maximize productivity.

Read the associated blog: COVID-19 and Challenges to the Future of Work

Nilanjan Raghunath is Assistant Professor of Sociology at the Singapore University of Technology and Design; Tony Tan is a PhD Candidate in Sociology, Purdue University.