Last week, we had confirmation of the scale of the shock to hit Scotland’s economy in recent months.
Output fell by nearly 20% over the quarter to June on the back of a contraction of 2.5% in the first three months of the year.
However, there are signs of hope. As the lockdown eases, shoots of recovery are emerging as our economy starts to re-open.
But the recovery will be long. Government support has helped prop-up businesses through the height of the crisis. Sadly, it will only be when these schemes come to an end that the full whirlwind of job losses and business closures will be unleashed.
The structure of our economy will look very different when we emerge from the crisis.
There has already been a complete transformation in the way many of us work. Home working rose from 6% before the pandemic to 43% in the first month of lockdown.
For many, this sudden transition will change behaviours forever. A new mindset, supported by significant investment both by individuals and businesses to support home working, won’t be easy to rollback.
New research by Alan Felstead and Darja Reuschke from Cardiff and Southampton University respectively, suggests that the shift to home working is here to stay.
Examining data for over 5,500 workers, they found that nearly nine out of ten of those who have switched to home working during lockdown would like to continue doing so in some capacity in the future. Around one in two want to work at home often or all of the time.
It’s not hard to see why. Home working creates opportunities, including better work-life balance and cuts out daily commuting costs.
Longer-term, home working also opens up opportunities to tackle inequalities in job market outcomes. By being able to work from home, the radius of possible job opportunities that can be applied for – even for those with childcare or other caring responsibilities – becomes that much wider.
But it can also bring stresses, particularly in home-life environments not set up for the world of work. Wellbeing may be impacted if home working increases social isolation, particularly amongst young people, or erodes the barrier between family life and work life.
For businesses, home working is a double-edged sword too. Whilst it may bring opportunities to access a broader talent pool, tackle skills shortages and save on office costs, it may also inhibit creativity, challenge and innovation if employee interaction is reduced. Monitoring staff effort is more difficult too.
Interestingly, the Cardiff and Southampton research finds that only 30% of workers surveyed believed that their productivity has fallen whilst working from home. The remainder reported that they are able to get as much work done as before (if not more).
Of course, a shift to home working has wider implications, not least the existential threat it poses for city centres across Scotland. One consequence of the recessions of the 1970s and 1980s was a fall in demand for industrial property. This bequeathed thousands of empty buildings and derelict sites across large parts of the country.
It’s too early to say whether or not there will be a similar hollowing out of city centres. The risks are not difficult to imagine though.
But opportunities emerge too. New homes. Green spaces. More pedestrian and cycle friendly city centres. The re-birth of regional towns across Scotland.
Seizing these opportunities and minimising the worst of the risks will require more than warm words. It requires a genuine partnership between local authority leaders, businesses and residents. This means finding ways to make sure that local services and changes to infrastructure are informed by the people who live and work in our cities. It also means businesses investing in their local communities and bringing innovative ideas forward. Government cannot do this alone.
Authors
Graeme Roy
Dean of External Engagement in the College of Social Sciences at Glasgow University and previously director of the Fraser of Allander Institute.