Business
Back to the Office: Will Employers’ Return Mandates Spark a Productivity Boost?
The COVID-19 pandemic emerged as a health scare, prompting governments and businesses to take extreme precautionary measures to prevent the spread of the disease. Shutting down businesses and offices did the trick. The pandemic was contained in record time. The economy and social activities recovered, and in many instances, much faster than many expected.
The post-pandemic recovery, though, hides what businesses now struggle with: boosting productivity to recover from the slack that accumulated during the pandemic and, in some instances, was gathering from even before.
A comparison of productivity metrics between the US and Canada indicates that workers’ productivity grew at similar rates before the pandemic. The seasonally adjusted data for output per person in the US business sectors and labour productivity in Canada’s goods and services sectors showed identical patterns before the pandemic. Since then, US and Canadian productivity trends have diverged, with US businesses reporting growth while Canadian counterparts experience a decline.
Economic productivity measures how efficiently we convert inputs like labour and materials into goods and services. Although it has been over five years since the pandemic began, causing significant disruptions to work environments, supply chains, and more, most of these pandemic-related disruptions no longer exist. So, what is the reason for the decline in productivity growth in Canada?
Canada is not alone in facing challenges with productivity growth. The residential construction sector in Australia faces similar issues. The average time to complete construction, from permit approval to project completion, has increased across all housing types, especially for apartments. Before the pandemic, it took about 25 months to finish apartment construction; by 2024, that had risen to 33.3 months. A comparable, though less significant, increase in construction times is seen in Australian townhouses and houses.
Some employers believe remote work is partly responsible for the slowdown in productivity growth. They are calling employees back to the office. Consider Zoom, the software firm whose videoconferencing platform enabled remote work for hundreds of millions of workers, revised its remote work policy in 2023 and required employees to work in person at least two days each week.
The difference in post-pandemic productivity between the US and Canada is not the only distinction between the two economies. Remote work is reportedly much more common in Canada than in the US. In December 2021, Statistics Canada reported that 50.4 per cent of public sector workers worked from home. In comparison, only 20.7 per cent of US public sector employees worked from home.
Unionization rates also differ significantly between Canada and the United States. In Canada, the proportion of workers who belong to a union remains notably higher than in the US. As of 2022, the overall unionization rate in Canada stood at 28.7 per cent. This figure represents a downward trend over the past several decades, having decreased from 37.6 per cent in 1981.
In contrast, union membership rates in the United States are considerably lower. In 2022, only 10.1 per cent of American workers were union members. This rate has seen a substantial decline since 1983, when union membership was at 20.1 per cent. The data for both the United States and Canada highlight a persistent and long-term reduction in union membership across the United States.
Recently, the return-to-work mandates have become increasingly stringent. Employees, though, are resisting. Worker surveys frequently show higher self-reported productivity for remote or hybrid work compared to working onsite. In contrast, most employers struggle to assess or report productivity for hybrid workers, making it challenging to obtain employer-based assessments through business surveys.
Ideally, firm-level data analysis should compare pre- and post-pandemic remote or hybrid work trends to assess their impact on productivity measured by sales or value added. Objective metrics are essential, as self-reported evaluations are insufficient, but clear causal evidence may still be hard to find.
In Ontario, Premier Doug Ford’s government has requested that remote workers be in person full-time starting next year. Interestingly, the union representing public sector workers is challenging the government’s decision to bring employees back to their offices. The union criticizes the short notice given for the return. Although this may be an essential issue, the pandemic has been over for years. Employees should have anticipated the return to pre-pandemic work arrangements.
Working remotely or in designated workspaces should be based on what maximizes employee productivity. Managers should not conflate attendance with productivity, and workers should not assume they are significantly more productive because of the flexibility.
Unions and employers should rely on objective measures to assess whether employee productivity is affected by remote work arrangements. Differences in productivity trends between Canada and the United States, the greater prevalence of remote work and unionization in Canada highlight the complexity of evaluating productivity outcomes. Multiple factors influence productivity, which makes drawing definitive conclusions challenging.
The post-pandemic recovery, though, hides what businesses now struggle with: boosting productivity to recover from the slack that accumulated during the pandemic and, in some instances, was gathering from even before.
A comparison of productivity metrics between the US and Canada indicates that workers’ productivity grew at similar rates before the pandemic. The seasonally adjusted data for output per person in the US business sectors and labour productivity in Canada’s goods and services sectors showed identical patterns before the pandemic. Since then, US and Canadian productivity trends have diverged, with US businesses reporting growth while Canadian counterparts experience a decline.
Economic productivity measures how efficiently we convert inputs like labour and materials into goods and services. Although it has been over five years since the pandemic began, causing significant disruptions to work environments, supply chains, and more, most of these pandemic-related disruptions no longer exist. So, what is the reason for the decline in productivity growth in Canada?
Canada is not alone in facing challenges with productivity growth. The residential construction sector in Australia faces similar issues. The average time to complete construction, from permit approval to project completion, has increased across all housing types, especially for apartments. Before the pandemic, it took about 25 months to finish apartment construction; by 2024, that had risen to 33.3 months. A comparable, though less significant, increase in construction times is seen in Australian townhouses and houses.
Some employers believe remote work is partly responsible for the slowdown in productivity growth. They are calling employees back to the office. Consider Zoom, the software firm whose videoconferencing platform enabled remote work for hundreds of millions of workers, revised its remote work policy in 2023 and required employees to work in person at least two days each week.
The difference in post-pandemic productivity between the US and Canada is not the only distinction between the two economies. Remote work is reportedly much more common in Canada than in the US. In December 2021, Statistics Canada reported that 50.4 per cent of public sector workers worked from home. In comparison, only 20.7 per cent of US public sector employees worked from home.
Unionization rates also differ significantly between Canada and the United States. In Canada, the proportion of workers who belong to a union remains notably higher than in the US. As of 2022, the overall unionization rate in Canada stood at 28.7 per cent. This figure represents a downward trend over the past several decades, having decreased from 37.6 per cent in 1981.
In contrast, union membership rates in the United States are considerably lower. In 2022, only 10.1 per cent of American workers were union members. This rate has seen a substantial decline since 1983, when union membership was at 20.1 per cent. The data for both the United States and Canada highlight a persistent and long-term reduction in union membership across the United States.
Recently, the return-to-work mandates have become increasingly stringent. Employees, though, are resisting. Worker surveys frequently show higher self-reported productivity for remote or hybrid work compared to working onsite. In contrast, most employers struggle to assess or report productivity for hybrid workers, making it challenging to obtain employer-based assessments through business surveys.
Ideally, firm-level data analysis should compare pre- and post-pandemic remote or hybrid work trends to assess their impact on productivity measured by sales or value added. Objective metrics are essential, as self-reported evaluations are insufficient, but clear causal evidence may still be hard to find.
In Ontario, Premier Doug Ford’s government has requested that remote workers be in person full-time starting next year. Interestingly, the union representing public sector workers is challenging the government’s decision to bring employees back to their offices. The union criticizes the short notice given for the return. Although this may be an essential issue, the pandemic has been over for years. Employees should have anticipated the return to pre-pandemic work arrangements.
Working remotely or in designated workspaces should be based on what maximizes employee productivity. Managers should not conflate attendance with productivity, and workers should not assume they are significantly more productive because of the flexibility.
Unions and employers should rely on objective measures to assess whether employee productivity is affected by remote work arrangements. Differences in productivity trends between Canada and the United States, the greater prevalence of remote work and unionization in Canada highlight the complexity of evaluating productivity outcomes. Multiple factors influence productivity, which makes drawing definitive conclusions challenging.