Great Potential for Work-from-Home Arrangements
The majority of companies have not observed any loss of productivity due to remote work. Three-quarters of companies in the information economy report that productivity has been constant or increased.
02/09/2021 · Wirtschafts- und Sozialwissenschaften, Raumwissenschaften · ZEW – Leibniz-Zentrum für Europäische Wirtschaftsforschung · News · Forschungsergebnis
The shift from working in the office to working from home has been a key component in the fight against the COVID-19 pandemic in Germany. Therefore, the federal and state governments took the decision on 19 January 2021 to lay out plans in which companies have to enable their employees to work from home “wherever possible”. However, the share of employees whose work activities are suitable for working from home remains uncertain. “From the employers’ perspective, there is a very high potential for a shift to working from home within the German information economy. About 45 per cent of companies in this sector expect that more than half of their employees have a job that is – in theory – suitable for working from home,” says Dr. Daniel Erdsiek, researcher in the Research Department “Digital Economy” at ZEW Mannheim.
“In addition, the majority of companies have not observed any loss of productivity due to remote work arrangements in recent months. Three quarters of companies in the information economy report that productivity amongst employees working from home for the first time has been constant or even increased.” These are the findings of a representative survey of around 850 companies in the information economy in Germany which ZEW Mannheim carried out in December 2020.
Only about one in ten companies in the information economy, which consists of the ICT sector, media service providers and knowledge-intensive service providers, do not see any possibility of their employees working from home. By contrast, in approximately one in five companies up to 20 per cent of the workforce could theoretically work from home. In one in four companies, the potential for employees working from home amounts to between 21 and 50 per cent. Finally, 45 per cent of companies assume that more than half of their workforce could carry out their work tasks from home. In the ICT services sector, this share even amounts to 63 per cent. Amongst knowledge-intensive service providers (including legal, tax and business consultants, architecture, engineering, advertising and market research companies) this proportion is as high as 41 per cent. Among media services it is still 35 per cent. On the other hand, the potential for working from home is significantly lower for companies in the ICT hardware sector. As part of the manufacturing sector, the tasks of ICT hardware manufacturers are far less suitable for remote work than those of the subsectors in the information economy that belong to the services sector. Approximately half of the ICT hardware manufacturers estimate the potential for working from home to reach a maximum of 10 per cent of their employees.
“The potential for working from home shows a positive correlation with the size of the companies. The share of companies estimating that more than half of their workforce could work from home amounts to around 42 per cent for companies with 5 to 19 employees. By contrast, a share of 58 per cent of the companies with at least 100 employees see an equally high potential for working from home,” Erdsiek says.
Most companies have not seen a reduction in work productivity due to work-from-home arrangements
While the aim of reducing contact between employees is the focus of the government appeal for work-from-home arrangements, some companies may not want to fully exploit their potential because they fear a reduction in productivity. This is because a further expansion to remote work is also likely to increase the amount of employees who are now expected to work from home for the first time without any prior experience of doing so. However, it is yet to be known to what extent productivity will change over the course of the pandemic for those who are able to at least partially work from home.
“Companies in the German information economy appear to be mostly confident regarding this matter. 60 per cent of companies have noticed no change in the productivity level of employees working from home for the first time since the start of the pandemic. As a matter of fact, 15 per cent of companies have observed an increase in work productivity amongst this group of employees,” says Erdsiek. However, this overall positive assessment of workplace restructuring due to the COVID-19 pandemic is also contrasted by a quarter of companies that have noted a detrimental development of productivity as a result of employees working from home. In addition to the exacerbated childcare situation due to the closure of schools and day care centres, difficulties in implementing models for working from home, such as ensuring that the relevant technical infrastructure is in place, could also play a role. Such difficulties may arise mainly because the rapid change in work organisation often had to be managed without a prior planning phase.
An important factor in assessing work productivity is whether a company is able to fall back on previous experiences of remote work from before the start of the pandemic. Companies with previous experience of remote working are significantly more likely to report an increase in work productivity among employees who have recently started working from home (20 per cent) than companies without such prior experience (six per cent). Similarly, a negative development in productivity is significantly rarer among the companies with experience of working from home (18 per cent) compared to the companies that have only offered remote work models since the start of the crisis (42 per cent). A possible reason for these differences could, however, also be that companies without previous experience in working from home are more critical of this work model and therefore assess the impact on work productivity more negatively. Companies who are experienced in remote work were also asked how productivity had changed for employees who had already worked from home before the COVID-19 pandemic. The majority of companies reported no change in terms of productivity (81 per cent), whereas about ten per cent experience an increase or decrease in work productivity respectively.