Lack of trust and low levels of digital skill constrain remote working

• Remote working may increase productivity, reduce costs and be more attractive to employees

• Teleworking may encourage offshoring and affect labour markets beyond national boundaries

• Low levels of digital skill are likely to be a barrier to more widespread working from home

More people want to be able to work from home, but are unable to do so because employers will not allow it, partly because they do not trust them. This is one of the main findings of new research into remote working carried out by the European Bank for Reconstruction and Development (EBRD).

The EBRD conducted a survey of employees in 15 economies to find out why,

during the Covid-19 pandemic, there had been lower levels of remote working in the regions where the Bank operates. It found that fewer people than expected had worked from home, even when they had the type of job that made remote working possible.

The study of remote working was part of the EBRD’s Transition Report 2021-22 ‒ System Upgrade: Delivering the Digital Dividend, published today. The research found that while employees were keen to embrace remote working, they did not expect their employers to allow it, partly because of a lack of trust. Economies with higher levels of interpersonal trust tended to have greater proportions of employees working from home. Low levels of trust, meanwhile, tended to prevent employers giving, or employees seeking, permission to work with less supervision. Surveys show that interpersonal trust is relatively low in the EBRD regions.

The Bank’s research looked at the implication of remote working for the 38 economies covered by the EBRD. It found that:

• Well-managed remote working could benefit both firms and workers. There is evidence that remote working may increase productivity, reduce the costs of office space and be more attractive to employees.
• Detaching workers from the office will have significant implications for cities and could boost the economies of smaller population centres. People may choose to move to these areas for lifestyle reasons or because housing costs are lower.
• Increased remote working may also affect labour markets beyond national boundaries. In particular, it may lead to increased offshoring from more advanced economies as it is becoming easier for firms to maintain a globally distributed workforce. This could bring more employment to economies in the EBRD regions.
• Women more often work in “teleworkable” jobs than men – that is jobs which are capable of being done remotely. The gap is typically larger in economies where the EBRD operates than in advanced economies, mainly because of women’s higher representation in the service sector.
• Employees would like, on average, to work two days a week from home once the pandemic is over. In contrast, employers plan for an average of one full workday per employee per week.”
• Low levels of digital skill are a probable barrier to greater working from home, especially among older workers. In most economies in the EBRD regions, the young (24-35) are more likely to have jobs that could be done remotely, in contrast to the more advanced economies, where middle-aged workers are most likely to have these types of job.
• The pandemic could also speed up the adoption of artificial intelligence (AI) technologies. Many firms struggled to operate remotely during lockdown and may try to replace employees with AI-based services in future.

EBRD Chief Economist Beata Javorcik said: “The Covid-19 pandemic has made both firms and workers reconsider many of their assumptions about how they do their jobs. This research suggests that employers might be missing out on the potential benefits and that many of their staff are keen to make remote working a regular part of their lives. It seems as though the trust gap is one of the causes. It’s also clear that the consequences stretch far beyond the office desk – remote working has implications for the future of our cities and for areas such as offshoring. It also suggests that countries need to invest in digital skills if they are to create the best opportunities for future growth.”

Later today, the EBRD is expecting to announce its new strategic approach on accelerating the digital transition setting out how it will use all the instruments at its disposal ‒ policy, investment and advisory activities ‒ to unleash the transformational power of digital technology in the economies where it invests.