00Executive Summary

The pandemic-induced lockdowns and subsequent shift to fully remote working for many workers brought with it predictions of the end of the office. With the economy now fully reopened, these predictions have not come to pass for most workers. At the same time, the world of office-based work looks different to what it was in the first couple of months of this decade.

But what does hybrid working actually look like, how has it changed, and what are people’s experiences around the world? This report builds on Centre for Cities’ 2023 report on central London workers, to see how the world of office work continues to shift. It introduces two further innovations: it surveys workers not just in central London but in the Central Business Districts of New York, Paris, Singapore, Sydney and Toronto; and it collects from the views of decision makers in companies as well as employees.

The return to the office is a global trend with Paris at the forefront

The picture for central London is a one of a continued return to the office since spring 2023. Days spent in the workplace are up from 2.2 to 2.7 days on average for full-time office workers. Predictions in 2020 that Covid would unleash fully remote working have proved to be well wide of the mark. And mandates to be in work have tightened too. Just over a year ago, 25 per cent of workers had no mandate to be in at least one day a week; that has fallen to 7 per cent.

But London has the second lowest office attendance of any of the six global cities surveyed. Paris comes out on top, with 3.5 days spent in the office. Even in central New York, the centre of many stories about a reluctance to return to the workplace, employees reported that they go to the office 3.1 days per week. Only Toronto had lower office attendance, coming in just below London’s 2.7 days.

Fully remote working hasn’t persisted because employers and employees recognise the benefits to in-person working

The shift back to the office from fully remote working has resulted from both employers and employees increasingly understanding the value of being in the office. Tightening mandates show this on the employer side. But 95 per cent of workers surveyed (across all cities) said there were benefits to being in the office, with the benefits of collaboration between and building relationships with colleagues being the most widely recognised. And while they would come in fewer days than currently required if no mandate were in place, workers would still spend at least part of the week in the office of their own volition. Prevailing attitudes from employees appear to have shifted from ‘I can do my job anywhere’ to ‘I don’t need to be in the office every day’.

This suggests two factors that have shaped the discussion about the return to the office are much less important than conventionally understood. The first is that companies must redesign their offices and offer a menu of perks to entice their staff to come in. In reality, workers already recognise the benefit of coming in and very few say they dislike being in the office. The second is that employers appear to have more scope to increase mandates than they may think. Much smaller shares of London workers (9 per cent) say they would look for another job if employers increased in-office mandates, compared to 37 per cent of London employers not increasing mandates for fear of staff quitting. And this gap is larger in most other international cities.

It’s unclear whether we have now reached a ‘new normal’

Despite this recognition of the value of face-to-face interaction in the office, there are no strong indications that there is a push for a higher return in central London. When asked to think about the impact of home working on productivity today, many employers and employees do not see any negatives. But when queried about future downsides, things that will ultimately affect productivity (skills) and markers of increased productivity (promotion and pay) were raised as potential issues.

This contradiction, at the very least, raises questions about how fixed employer views are on the benefits of home working. These have already seemingly shifted a long way since the last Covid lockdown. It is plausible – given these longer-term concerns – that they will shift again.

Extensive home working could pose a long-term challenge to London and the UK economy

If not, London’s return to the office may even be leapfrogged by bottom-placed Toronto. If employers were to enforce existing mandates more, and increase mandates either as planned or in light of not having to worry so much about staff retention, there is much less room for manoeuvre in London than elsewhere. This is mainly because employees in central London are already much more likely to adhere to (albeit relatively less strict) mandates than in other city centres. With these changes, other cities could see office working levels almost return to pre-pandemic levels while London would reach 80 per cent.

Why would this matter? There is plenty of evidence that high-skilled firms and workers derive productivity benefits from being located close to one another, consistent with agglomeration theory. For workers in city centres, this is particularly through learning (or ‘knowledge spillovers’) – dense environments and face-to-face contact leading to greater transfers of information, knowledge and skills. The responses discussed above show this is something both employees and employers recognise. Less frequent face-to-face interaction between employees in central London would put the city at a productivity disadvantage relative to other global cities.

And it may be something that harms younger workers in particular. Those aged under 35 are more likely to come into the office than older workers. This is because younger workers tend to think they are most productive in the office, while older workers are less likely to perceive decision-making benefits of office working, valuing the flexibility of home working more. Then there is the issue of skills: early-career workers’ development may suffer if their senior colleagues’ corner offices are empty.

To address this, politicians, businesses and business groups should do the following to reap the longer-term productivity benefits that office working can bring to support both London’s and the UK’s economy:

• Both national government and the Mayor of London should continue to work with businesses to increase minimum number of days expected in the office. This could take the form of the Mayor’s post-lockdown ‘Let’s Do London’ campaign, and complement the City of London’s existing ‘Destination City’ campaign attracting business and footfall to the Square Mile.
• The Government can have a direct influence on increasing office attendance of civil servants in central London. There is precedent: Sydney public sector workers have recently faced a directive to return to the office.
• TfL should resume its off-peak Fridays trial. It should be accompanied by an awareness campaign to overcome the limitations of the previous trial.
• The Government should be more proactive in attempting to measure the impact of hybrid working on productivity to inform future decisions on land use and transport investment. The Mayor of London should contribute to this through setting up a Productivity Advisory Council (akin to the Chancellor’s recently assembled council of economic advisers).
• Local and national government should continue with plans for investment in commuter transport infrastructure. This is in the face of continued shifts in commuting patterns in just the last year, and the benefits of getting workers as quickly and cheaply into the city centre as possible, particularly among commuters from the Home Counties.
• Firms should clearly consider the role of mandates in office attendance. Attendance could be improved more by enforcing rather than raising existing mandates. That said, London has the lowest mandates internationally, so a combination of the two may work best.
• Firms should internally review the productivity impacts of hybrid working to ensure that the organisation’s working practices are most conducive to firm-level productivity.
• Business leaders should lead by example. More senior staff coming into the office could improve decision-making, productivity, and the development of less senior workers.
• Firms should consider redirecting budgets for office reconfigurations and perks to subsidising travel instead. Travel costs are a far larger barrier to office working than workers not liking their office environment.