Is the traditional office obsolete?

The outbreak of the coronavirus pandemic has changed working habits of many people. In addition, it became obvious which jobs must be done in the workplace and which activities can be carried out at home or anywhere. Perhaps the current developments are less about the complete end of the traditional office but more about the end of current firm-worker relations in the form of traditional employment contracts.

After the outbreak of the Covid-19 pandemic and the adoption of measures to contain it, many people switched to work from home. The future of the traditional office has got more uncertain. For many years, futurists and other people have argued that the end of the traditional office is near. I do not think that the traditional office will entirely disappear for most firms. But changes in our working habits – at least what regards office workers – are about to happen faster than anticipated in pre-Covid-19 times. In many firms, people might still attend the office space at least once per week but much less frequently and routinely than in the past. For instance, it could be that there will more frequently be office or meeting spaces where workers gather from time to time. It is conceivable that working habits across firms might vary quite a lot in the future. There might be some firms which still heavily rely on the office and in-person collaboration. But a high number of firms might rely on more remote work and only occasional personal meetings and targeted social interactions – be it in the form of workshops or social activities. One might argue that an intense period of experimentation with new technologies, but also changed individual and social preferences has started.

The fast switch to work from home after the outbreak of the Covid-19 pandemic has gone remarkably well for many firms. I strongly believe that many of the current practices will persist even after the pandemic will have hopefully ended. More flexible work schedules and work from home options are important. However, not everything is fine when people work from home. Personal meetings, chats over a coffee or a beer are important elements that contribute to building trust and enabling informal exchange of views. Many of these daily routines are gone at the moment for those people who work from home. Workers currently still use what one may call organizational and social capital that was developed in the past. In the future, it is important to maintain these types of intangible capital that are important for organizations. Even when work from home persists, occasional meetings and encounters in the office space (or somewhere else) will continue to be important. One should also note that at least some people are likely to experience work from home in a negative context at present. Some would probably be happy if they could better separate work and leisure and go back to the office more often. The future of work for office workers should combine a mix of flexible work schedules, work at home or in co-working spaces, and still regular meetings with colleagues at work.

At the same time, however, the question arises as to whether activities that can be performed from home will be increasingly associated with a loss of pay compared with those activities where personal presence is compulsory. When remote work is possible, more people from different places might compete for the same job. Thus, there might be more flexibility in these jobs, but it is plausible to assume that wage developments will on average be subdued. It is also plausible that we will observe some kind of segmented labor market where workers who work in the office may have better pay and career perspectives than people who work from home. In addition, one should be aware of the fact that in the coming months and years, unemployment might remain elevated which reduces the bargaining power of workers and may increase their stress levels.

Perhaps the current developments are less about the complete end of the traditional office but more about the end of current firm-worker relations in the form of traditional employment contracts. Current employment laws need to adapted fast in order to keep track with current developments. Many questions – some of them have already been discussed against the backdrop of the so-called gig economy – will become relevant for a majority of workers and firms as their rights and responsibilities are changing. For instance, is a firm allowed to monitor its workers at home? Do firms have to pay workers for their office at home? Who is liable if injuries happen while working from home? In general, it looks like some rights of workers should increasingly become less depend on the relationship between workers and firms. I think it is not time for a universal basic income in a pure and unconditional form, but some legal rights, access to social security systems, and perhaps even some basic payments might be increasingly be paid out on an individual level and not be related to labor contracts with firms.

The long-term impact of current developments against the background of the coronavirus outbreak remains speculative for the time being. Not everything will change. But I do believe that the pace of change towards more flexibility at work and work from home will accelerate.

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