Is less office time good for growth?

Posted by: Paul Donovan

04 Sep 2020

Weekly Update

  • People will spend less time working in offices in the future. This is part of the fourth industrial revolution. The pandemic has accelerated the change. What does this mean for the economy? Home working will shift but not reduce consumption. It should result in a more efficient economy with higher living standards. Food and travel show this.
  • Home working means we are buying fewer ready-made sandwiches, but workers are not going on collective diets. We are still buying the same calories, just in a different way. Demand has shifted location, not disappeared. In fact, preparing meals at home is more economically and environmentally efficient.
  • In 1930, the economist Keynes predicted technology would allow a 15-hour working week within a hundred years. Keynes was almost right. Technology cut the amount of time spent doing household chores. Leisure boomed as a business. Today, technology is cutting the amount of time (and money) spent travelling to work. That again increases the time and money that can be spent on leisure.
  • The challenge is employment. Jobs will shift from declining parts of the economy (e.g. sandwich makers) to expanding parts of the economy (leisure). Policy must focus on making that as easy as possible.

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