The great remote work debate: Does it boost or bust productivity? It depends.
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The debate around remote work is alive and well, and it’s given us all a lot to talk about, including fun new acronyms like WFH (“work from home”) and RTO (“return-to-office”).
With a growing number of return-to-office mandates in Canada and labour productivity on the decline, whether remote work helps or hurts productivity is a question that is more relevant now than ever.
Although opinions have been divided and, at times, research has been contradictory, the simple answer is: it depends.
Working from home—on the decline
In November 2023, a quarter of Canadian workers worked from home at least part-time. Although this represents a significant increase from the pre-pandemic era, more recent trends have shown a steady decline. Notably, sectors such as public administration, finance, insurance, real estate, and professional, scientific, and technical services have experienced the most substantial decreases in remote work.
Fully remote job postings have also steadily decreased since 2022. Despite this decline, the share of job postings advertising flexible work environments have remained steady, due, in part, to the growing share of job postings that include hybrid work arrangements.
The ongoing debate
Previously, we identified some of the benefits and challenges of remote work.
Advocates highlight its numerous advantages, including time and cost savings, improved work-life balance, heightened flexibility, and reduced stress. Moreover, remote work is viewed as a catalyst for a more dynamic labour market, breaking down geographical constraints and expanding options for both employers and workers.
However, critics argue that remote work may compromise personal connections among coworkers, impact organizational culture, and limit learning and training opportunities. The central point of contention, however, revolves around productivity.
The productivity puzzle
Canada’s labour productivity has declined for six consecutive quarters, dropping below pre-pandemic levels in 2023 and prompting questions about whether these declines can be attributed to remote work.
Labour productivity is defined by Statistics Canada as a measure of real gross domestic product (GDP) per hour worked. GDP measures the total output created through the production of goods and services in a country, region, or sector. Put more simply, labour productivity measures output per unit of input - goods and services produced per hour worked.
Digging deeper, we can see that the relationship between remote work and labour productivity varies significantly by sector, with gains and declines in both intensive and non-intensive remote work sectors. US data also shows there is little evidence of remote and hybrid work substantially impacting productivity.
So, where does this leave us?
To understand the impact of remote work on productivity, it’s important to shift the focus to a smaller scale and examine the relationship by sector, organization, job, and task.
While most studies have shown that remote work enhances job performance and productivity, these findings have hardly ended the debate.
The impact of remote work on productivity depends on the nature of the work, the experience of workers, and organization and sector characteristics. One lens that can help evaluate this relationship is to look at jobs as bundles of tasks. For example, independent work complements a remote environment, while collaborative work can be more challenging in a remote environment. Trade-offs are inevitable in most jobs, with some tasks becoming more efficient in a remote setting while others suffer.
Reframing the conversation
Overall, the relationship between remote work and productivity should not be generalized. Instead, a more nuanced perspective is required.
As we navigate the evolving landscape of work, it is important to recognize the multifaceted nature of remote work's impact. Is remote work good for workers? Is it good for businesses? It depends. Some jobs are inherently conducive to remote work, while others are not. This distinction affects labour productivity.
Michael Willcox
Economist
Michael Willcox contributes to the analysis and development of labour market information in Canada. He brings experience in policy analysis and program evaluation from prior roles in the public sector.