The number of adults travelling to work in Great Britain has increased by a slight margin to 53% this week, an increase from 51%, according to the Opinions and Lifestyle Survey.
Meanwhile, the number of adults who worked at home remained unchanged at 31%, at the same time, those who neither travelled nor worked from home also stayed the same at 17%.
Despite this minimal change, there is a gradual trend away from working from home and travelling towards work.
One of the main worries which some economists have is how the pandemic has changed consumer habits.
For example, consumers shopping habits have changed due to the lockdown, online sales have risen during the pandemic, consequently, retail sales are still below their pre-pandemic peak.
At the same time, consumers have begun to switch to online banking. Santander has recently closed 100 physical bank branches as banking apps and other online methods are becoming much more popular with consumers.
But this trend does not only apply to consumers but businesses too.
Due to the lockdown restrictions, many firms have had to conduct their business online through apps such as Zoom or google meet.
So, COVID-19 has forced these firms, especially offices, to essentially innovate and use new technology to maintain output.
However, the question is, will this continue after the COVID-19 Pandemic?
Well, we cannot be certain for sure as there are up and downsides to conducting business completely online and from home.
One clear advantage is the reduction in costs, if all business is conducted exclusively online, or if most of it is, then some firms do not have to rent massive office spaces, hence reducing fixed costs.
But, there is the argument that the firm’s output will decrease as employees may be less productive and lazy within a home environment as they do not have the separation between work and home.
So, if firms decide to stop renting office spaces to conduct matters online, what will be the economic impacts?
Office spaces tend to be located in town centres, this is mainly because people who work in offices need to satisfy their own needs, such as buying expensive coffee, so, the industries clump together as one industry generates demand for the other and vice versa.
However, town-centres rely on high-footfall, the reason why is because there is a lot of spill-over in demand for stores in the area, a consumer who goes to one shop is bound to go to another. Hence, if offices decide to work from home, this footfall, therefore demand will decrease.
This combined with consumer habits favouring online methods of shopping further amplifies this decrease in demand.
Consequently, a large reduction in demand will lead to the collapse of an entire industry, the town centre, thus causing structural unemployment.
And this is why economists worry. Town centres typically have industries such as retail, restaurant, accommodation etc, industries with a large supply of labour. Therefore, due to the limited disposable incomes which these workers have, they may not have enough savings for a sufficient safety net.
But this isn’t a problem, these people can just find work somewhere else in an industry which is needed! Some would say.
Well, there are a few problems with that argument, the first one is that for these people to find new jobs they have to move and migrate.
And migration is scary, people don’t just decide to up and leave everything they know and go to the unknown for a prospect of what could be a better life, (something which they too cannot be sure of) so, labour markets can be also perceived as “sticky.”
People don’t just up and leave, there are many reasons why a book which illustrates this perfectly is ‘Good Economics for Hard Times.’ Nevertheless, we will look at one of these points which is loss aversion.
Loss aversion is the idea that people will decide to make or not make decisions to avoid a potential loss that was of their doing. For example, consumers may decide to pay insanely high warranty prices, the reason why we do this is so that in the unlikely event that something does break, it is not our fault for not having it covered.
So, people may choose to not migrate because, if they do and fail, that will be their loss and their fault. For some, it is much easier to choose not to migrate and be contempt with their current life as they find it better to avoid the potential loss of their doing.
Hence, even if there was work for these people to do (which there likely wouldn’t be as they do not have the skills necessary to go into other industries) some may choose to not move for a variety of reasons, so, the collapse of the town centre would likely result in structural unemployment.
Thus, this illustrates why adults travelling to work is such a big deal, if this trend was the opposite, we potentially would have a large problem with derelict buildings which there is no demand for within the town centre, as well as a large portion of unemployed workers.
Yet, we cannot be sure if this is just temporary, perhaps more adults are travelling to work in industries such as hospitality due to the opening of the economy and such sectors, meanwhile, office workers could still be staying at home.
We will not know for certain until there is more data, but one thing is for sure, if the town centre does collapse, it will be a painful loss for the economy, and it will require a new form of industry in its place, one which may be found by the most entrepreneurial among us.
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