Cities’ Post-Pandemic Status: More Important, Not Less
Although it may seem counterintuitive, more in-person work environments and the concentration of jobs in cities could be a medium- to long-term impact of the pandemic’s shift to remote working. That’s among the key findings of Citi GPS Technology at Work: The Coming of the Post-Production Society, a report produced by Citi and the Oxford Martin School at the University of Oxford.
“Cities are going to be more important as hubs of the collaboration and innovation at the foundation of developed economies,” says report author Dr. Carl Benedikt Frey, director of the Oxford Martin Programme on the Future of Work at Oxford. “Walkable streets, bars, restaurants and cafes facilitate serendipitous meetings and help us identify problems that need solutions. Every new ‘knowledge industry’ job in a city also creates demand for five new service jobs that can’t be offshored or automated, like teachers, healthcare workers and cleaners.
“Livable cities brimming with culture and experiences will continue to be the engine of economic growth and job creation for a long time to come,” he continues.
At the peak of the pandemic in April 2020, almost two-thirds of economic activity in the U.S. was being generated remotely. Although the post-pandemic world will see much lower levels of remote work, a recent survey suggests that 20% of all workdays will continue to be done from home. This shift could see a short-term raise in productivity by 5%, largely by saving time by commuting less.
However, creativity and innovation diminish when people work in isolation, meaning that progress and productivity will eventually stall. The report notes that U.S. patent applications declined as much as 18% during Prohibition, when people were deprived of their social networks along with their booze, and only returned to previous levels after the act was repealed.
“Jobs that can be done remotely can often also be automated and offshored, meaning that occupations that center on the kind of sporadic interactions that drive innovation will become an ever-growing share of the workforce in advanced economies,” says Frey.
In addition, the shift towards remote work is accelerating the subdivision of many professional service jobs into tasks that are more automatable, like clerical or accounting work, or offshorable, like payroll management and IT support.
“Both the employment support during the pandemic and the current recovery are impressive, but the world changed last year and the shift to digitization and remote work, which we find includes more vulnerability for female employment, needs to be thought through by policy-makers, employers, employees, educators and investors,” says Rob Garlick, managing director, Citi Global Insights. “The time to do so is now, given supply chain re-engineering could include onshoring while the step change in remote work will increasingly include in-country versus offshore decisions.”
This vision of the future should not be taken to imply that all manufacturing and white-collar service jobs will inevitably vanish in places like the US and Europe, Frey writes in the report. “We want to highlight the direction of travel so that governments and organizations can work on creating the jobs of the future and developing the employment skills those jobs will need.”