Key messages
  • Teleworking levels climbed all across the world when governments mandated minimising physical presence at work in response to the COVID-19 outbreak. Large-scale teleworking is likely to persist, as most managers and workers have expressed an interest to continue teleworking at least some days per week.

  • A growing number of governments are looking at the link between teleworking and local development. Some of them have set up dedicated strategies with the goal of enhancing workers’ well-being and productivity, addressing spatial divides, improving job matching, and supporting the green transition.

  • Measures envisaged typically range from creating an enabling regulatory environment for teleworking to incentives for teleworking uptake among SMEs, as well as awareness raising of opportunities and risks associated with this practice and incentives to attract remote workers.

  • However, the potential to telework varies greatly across space, implying that the benefits of teleworking are not equally distributed. Local conditions can both enable and constrain teleworking, calling for a place-based approach in the design of teleworking strategies for local development.

 What’s the issue?

Teleworking has risen to record levels since the COVID-19 outbreak. Countries experienced a dramatic rise in teleworking levels after governments mandated minimising physical presence at work. For example, 47% of workers in France and the UK teleworked during the lockdown in early 2020, and Australia reached the same rate by the end of the year. Teleworking rose by 25, 20 and 15 percentage points respectively, compared to pre-pandemic levels (OECD, 2021[1]).

Teleworking is likely to persist into the future. A 2021 survey suggests that around 40% of managers and 70% of workers from 25 OECD member countries foresee many more staff working from home in the future compared to the pre-pandemic period. Both agree that two to three days of teleworking per week most desirable (Criscuolo et al., 2021[2]). A study in the US suggests that 20% of full work days will be undertaken from home after the pandemic ends, compared with just 5% before (Barrero, Bloom and Davis, 2021[3]). The share of job postings that advertise teleworking more than tripled during the pandemic, from just 2.5% of job postings in early 2020 to 8.5% in late 2021, and has remained near its peak despite the easing of restrictions, further suggesting that teleworking is here to stay (Adrjan et al., 2021[4]).

Teleworking can have a number of benefits:

  • Improving well-being. Time saved from commuting and the adoption of more flexible working schedules may support work-life balance, if safeguards are in place to limit the risk of isolation and blurring work-life borders. At the macro level, job flexibility may lead to higher employment rates.

  • Boosting productivity. Evidence suggests that increasing teleworking levels can boost staff productivity within firms. In particular, productivity climbs with a larger share of staff working more days per week remotely, but drops when teleworking levels become excessive, due to negative repercussions on teamwork and creativity (OECD, 2020[5]).

  • Addressing spatial divides. Teleworking may help to ease urban congestion and promote growth in less dense areas (OECD, 2021[6]). However, it could also create new planning questions, such as how to convert underused office buildings into residential housing (Viros and Nappi, 2021[7]).

  • Reducing commuting and its negative repercussions. Higher teleworking levels would entail a drop in commuting, reducing air polluting emissions from private vehicles. Overall, teleworking can support energy saving, if measures are taken to mitigate adverse effects (e.g. less efficient domestic energy use taking over central office heating).

  • Addressing local skills shortages. Teleworking can help expand the talent pool for firms. This may imply better job matching within commuting distance and make a case for attraction policies that target so-called “anywhere-workers”.

However, the share of jobs amenable to teleworking varies greatly across and within countries. For example, 50% of jobs are teleworkable in Luxembourg, but only 21% are in Turkey. The share of workers that could potentially work remotely differs, on average, by 15 percentage points across regions within OECD countries. Cities, in particular, have a 13 percentage point higher share of teleworkable jobs than rural areas, partly reflecting the skill composition of the local workforce, as the highly educated are more likely to telework (OECD, 2020[7]). At the same time, there is a positive correlation between firm size, digital readiness and teleworking uptake, implying that workers in smaller firms may have fewer chances to telework. Overcoming these barriers would help ensure that the advantages of teleworking are more evenly accessible among people, places and firms (OECD, 2020[7]).

A growing number of governments are looking to teleworking as a local development tool (e.g. Ireland’s Remote Work strategy; Trentino, Italy; Ems Achse in Germany). Furthermore, tools for teleworker attraction have become increasingly popular across the OECD since the beginning of the pandemic, as shown by a growing trend in issuing new seamless visa procedures (e.g. Estonia, Iceland), grants (e.g. New Brunswick, Canada, Tulsa and Vermont, US) and tax breaks (e.g. Greece).

 How does it work in practice?

There are a number of entry points for greening town centres and local commercial districts, spanning business-focused and place-focused approaches:

Strategies linking teleworking and local development do not aim to promote teleworking as an end in itself or prescribe teleworking as the preferred work method across the board. Rather, it is seen as a means for achieving broader objectives, such as boosting productivity and fostering regional competitiveness in conjunction with other policies already in place. They also seek to minimise some of the challenges associated with the expansion of teleworking.

Approaches used in such strategies can vary based on the competences different levels of government have for different policy areas.

  • Creating an enabling environment for teleworking

  • Improvement of regulatory frameworks (e.g. foreseeing an entitlement to request teleworking and a right to disconnect outside working hours).

  • Financial support mechanisms and regulatory reforms to ensure high-performing and secure internet infrastructure across a territory.

  • Creation of co-working spaces via conversion of public buildings and/or incentives for and partnerships with private owners to do so.

  • Supporting firms in the uptake of teleworking

  • Support to SMEs in adopting teleworking through incentives for upgrading ICT investment and relevant training, including on related managerial practices, such as output-based performance assessment and remote leadership.

  • Promotion of public-private dialogue, collective bargaining and peer learning on teleworking arrangements.

  • Awareness raising of opportunities and risks associated with teleworking

  • Consultation with the social partners and promotion of a quality public debate.

  • Leading by example through public employment practices.

  • Integration of teleworking concerns into policies in related fields, such as housing and public transport planning.

  • Development of frameworks to monitor and assess the level and impacts of teleworking.

  • Attracting remote workers

  • Tax breaks, grants, streamlined visa procedures and other incentives to attract remote workers.

  • Place branding and other territorial marketing campaigns.

 What does the evidence say?

Evidence on impacts of teleworking strategies for local development is still limited. While it is too early to assess the latest policies on teleworking, evidence on pre-pandemic policies is encouraging. For example, Vermont’s incentives programmes for remote worker attraction had sizeable effects on job creation and local tax revenues (see upcoming OECD brief on teleworker attraction policies for more information). Nevertheless, surveys carried out during the pandemic shed light on how growing teleworking levels can affect their underlying policy objectives.

Firms and workers have a positive opinion about teleworking and its impact on well-being and productivity. About 63% of managers and 74% of workers surveyed by the OECD Global Forum on Productivity had an overall positive assessment of their teleworking experience from the point of view of company’s performance and worker’s well-being, respectively. More than 60% of managers in the survey sample believe that labour productivity grew because of teleworking, in that workers are more focussed and commit fewer errors at home. In addition, more than one manager in two saw advantages in terms of the time saved on the commute, a drop in superfluous office costs and an enlargement of the talent pool (Criscuolo et al., 2021[2]). These beneficial effects could expand in the future.

Prospective studies of the potential of teleworking for local development suggest positive impacts as well. In Trentino, for example, the talent pool would expand dramatically should large-scale teleworking remain in the post-pandemic future. In the absence of a daily commute, workers could consider accepting longer, less frequent, commuting. Increasing commuting distances from the provincial capital from 30 to 60 minutes raises the hypothetical labour market from about 0.5 to 2.2 million, providing scope for greater efficiency in job matching, and in turn, higher productivity and competitiveness, whilst also boosting employees’ well-being (OECD, 2021[8]).

Preliminary evidence of a future increasingly marked by teleworking is beginning to show. In Ireland, ConnectedHubs.ie currently includes 216 co-working hubs, 306 desk plans and 291 meeting rooms. Launched in 2021 as part of the national teleworking strategy, this initiative is designed to simplify and standardise the process of sourcing and booking offices and desks in hubs for short and long stays. It is operated by a National Hub Network, a Government of Ireland initiative that provides a vehicle for individual hubs to come together under a shared identity to maximise the economic opportunity of remote working.

 
What should policymakers do?
Potential pitfalls include:
  • Failure to balance trade-offs or take unintended consequences into account

  • Workers may use the time saved from commuting for family and leisure but may also experience blurring work-life boundaries if a clear definition of working times and spaces is not in place.

  • Declining productivity due to excessive levels of teleworking and/or loss of agglomeration benefits from workers concentrating in urban areas. Women may also be more likely to experience a decrease in productivity when working from home because of increased childcare responsibilities compared to men (OECD, 2020[9]).

  • People who relocate outside the urban transit system may become more reliant on private over public transport means, partially offsetting the reduction of air pollution resulting from lower commuting.

  • Increases in other types of disparities

  • SMEs may face disadvantages compared to larger firms in terms of ability to offer teleworking packages to attract talent. Lack of ICT infrastructure limited digital skills among staff or management that is inexperienced with integrating teleworking into the workplace may all be contributing factors.

  • Service workers in central business districts may face knock on effects in light of a reduced foot traffic from office workers.

  • Housing affordability challenges in rural areas as a result of higher demand from high-income entrant teleworkers.

  • Too narrow of an approach that fails to consider other enabling factors

  • Low-density areas may aim to attract new residents with cultural or natural amenities and quality public services, but shortages in internet speed may constrain their ambitions.

  • Lack of childcare facilities within reasonable distance from home may nullify the beneficial effects of teleworking in terms of reduced commuting for parents who relocate to areas with a lower density of population and services.

Strategies to avoid them:
  • Promote blended models, combining on- and off-site work. According to managers and workers, the ideal amount of teleworking is 2-3 days per week (Criscuolo et al., 2021[2]). While this is not a hard and fast rule, it can serve as a rough benchmark to assess where a given place stands in terms of its teleworking level, notably whether there is room for growth or a risk that teleworking is excessive, potentially harming productivity and other public goals.

  • Facilitate knowledge and practice sharing on teleworking among public and private employers as well as the wider public, to minimise the downsides of teleworking and make its opportunities accessible to the largest share of people in teleworkable jobs. This may include:

  • Fostering an evidence-based public debate on the societal implications of large-scale teleworking, and raising awareness of the opportunities and risks inherent in this practice at firm level and beyond;

  • Expanding programmes to support digital skill upgrading and management practices; and

  • Promoting employer role models and best practices in the field of teleworking.

  • Integrate teleworking concerns into other policy areas, for example related to boosting residential energy standards, accessibility of childcare, and incentives to upgrade digital skills and infrastructure.

  • Set up comprehensive tools to monitor and assess the impact of teleworking strategies for local development. From the design stage, an in-depth reflection upon their underlying goals and corresponding indicators will ensure that the solutions envisaged are fit for purpose and take into account potentially unintended consequences, including for different groups (e.g. SMEs, women). The outcomes of such assessments can also contribute to the development of a broader knowledge base and inform the design of future strategies.

 Related resources

OECD (2020), Job Creation and Local Economic Development 2020: Rebuilding Better, OECD Publishing, Paris, https://doi.org/10.1787/b02b2f39-en.

The future of teleworking. A place-based toolkit for local development (project flyer for governments): https://www.oecd.org/cfe/leed/Trento-Teleworking-Flyer.pdf

The new reality of teleworking: People, firms, places | 9th SPL meeting (webinar held on 3 September 2020): https://www.oecd.org/italy/spl-9th-meeting.htm

OECD (2020), "Exploring policy options on teleworking: Steering local economic and employment development in the time of remote work", OECD Local Economic and Employment Development (LEED) Papers, No. 2020/10, OECD Publishing, Paris, https://doi.org/10.1787/5738b561-en.

OECD (2021), "The future of remote work: Opportunities and policy options for Trentino", OECD Local Economic and Employment Development (LEED) Papers, No. 2021/07, OECD Publishing, Paris, https://doi.org/10.1787/35f78ced-en.

OECD (2021), Implications of Remote Working Adoption on Place Based Policies: A Focus on G7 Countries, OECD Regional Development Studies, OECD Publishing, Paris, https://dx.doi.org/10.1787/b12f6b85-en.

Contact

Mr Mattia Corbetta, Policy Analyst, Local Employment, Skills and Social Innovation Division, OECD ([email protected])

Mr Wessel Vermeulen,  Junior Economist, Local Employment, Skills and Social Innovation Division, OECD ([email protected])

References

[4] Adrjan, P. et al. (2021), “Will it stay or will it go? Analysing developments in telework during COVID-19 using online job postings data”, OECD Productivity Working Papers, No. 30, OECD Publishing, Paris, https://doi.org/10.1787/aed3816e-en.

[3] Barrero, J., N. Bloom and S. Davis (2021), Why Working from Home Will Stick, National Bureau of Economic Research, Cambridge, MA, https://doi.org/10.3386/w28731.

[2] Criscuolo, C. et al. (2021), “The role of telework for productivity during and post-COVID-19: Results from an OECD survey among managers and workers”, OECD Productivity Working Papers, No. 31, OECD Publishing, Paris, https://doi.org/10.1787/7fe47de2-en.

[6] OECD (2021), Implications of Remote Working Adoption on Place Based Policies: A Focus on G7 Countries, OECD Regional Development Studies, OECD Publishing, Paris, https://doi.org/10.1787/b12f6b85-en.

[1] OECD (2021), “Teleworking in the COVID-19 pandemic: Trends and prospects”, OECD Policy Responses to Coronavirus (COVID-19), OECD Publishing, Paris, https://doi.org/10.1787/72a416b6-en.

[10] OECD (2021), “The future of remote work: Opportunities and policy options for Trentino”, OECD Local Economic and Employment Development (LEED) Papers, No. 2021/07, OECD Publishing, Paris, https://doi.org/10.1787/35f78ced-en.

[8] OECD (2020), Capacity for remote working can affect lockdown costs differently across places, https://www.oecd.org/coronavirus/policy-responses/capacity-for-remote-working-can-affect-lockdown-costs-differently-across-places-0e85740e/ (accessed on 3 July 2023).

[9] OECD (2020), “Exploring policy options on teleworking: Steering local economic and employment development in the time of remote work”, OECD Local Economic and Employment Development (LEED) Papers, No. 2020/10, OECD Publishing, Paris, https://doi.org/10.1787/5738b561-en.

[11] OECD (2020), How’s Life? 2020: Measuring Well-being, OECD Publishing, Paris, https://doi.org/10.1787/9870c393-en.

[5] OECD (2020), “Productivity gains from teleworking in the post COVID-19 era: How can public policies make it happen?”, OECD Policy Responses to Coronavirus (COVID-19), OECD Publishing, Paris, https://doi.org/10.1787/a5d52e99-en.

[7] Viros, C. and I. Nappi (2021), “Can office conversion help solve the housing crisis in cities?”, OECD cogito, https://oecdcogito.blog/2021/10/29/can-office-conversion-help-solve-the-housing-crisis-in-cities/ (accessed on 3 July 2023).

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