Corona Daily 330: Office on Deathbed

For most white-collar jobs; offices, office towers, specially designed city centers were already unnecessary for the past twenty years or so. In the nineteenth century, steam power brought machinery and workers to factories. Offices were created for paper work – records, ledgers, vouchers, memos, invoices, files to record a company’s transactions and its interactions with outsiders. That required office employees to conduct the paperwork in one place.  

There is little evidence proximity of workers improves collaboration or innovation. In the last decade, I have visited several offices that are graveyards with employees staring at their respective screens. Their co-working silently in a super-expensive property made no financial sense. It continued as a matter of inertia, because companies had signed fifty-year leases, and because a company is part of a customer-supplier-employees jigsaw puzzle.

I will offer an analogy to explain what I mean. In Europe and USA, divorces are common, so are remarriages. In a society where a large percentage is divorcing, anyone can remarry at any age, because the available pool is large. In India, with a low divorce rate, the pool available for remarriage is tiny. Through inertia, people continue to carry on even through unhappy marriages.

Covid-19 managed to send companies, their customers and suppliers online in one go. With everyone working from home, the long overdue experiment has been conducted, and appears to be successful; judging by how little international trade was affected even during lockdown.

The novel coronavirus has compelled the most conservative parts of society to go online. Who would have thought judges and advocates will run trials sitting at home?

Take the case of banks. Why do banks require large office buildings? Only if their retail and corporate customers are not savvy enough to conduct the operations online. Accounts can now be opened without going to banks. In India, a person can prove his identity online by pressing his thumb on a biometric device at home.

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True, at times employees will need to interact physically. Brainstorming in person may be preferred. But lavish all-employee offices making everyone endure the daily commute is not an answer. People can meet in a small office, and take turns. Or they can meet in Starbucks or McDonalds and the company could pay for the coffee and big Macs.

Technology is advancing so rapidly that in five years time, a near-perfect simulation of an office is predicted.

Commercial property owners are very afraid. This fear is quantified by the crash of the shares of most realty companies.

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Governments will have to play the catch-up game while the concept of office stays in the ICU. The current labour laws and tax laws assume people are in physical offices. Job ads such as “eligibility: only EU citizens can apply” will become outdated once work becomes remote. Income taxes are based on physical residence. What happens when a Brit moves to Dubai and works for the British employer? In the USA, tax laws vary from state to state.

Most countries still specify maximum number of office hours per week. How will they be measured? Should the employer compensate for the employee’s (home) workplace? Equipment? Pay for airconditioning and heating? If the employee injures himself at home while working, who covers the expenses? If companies begin selling office buildings, and terminating leases, what happens to the city center design? Its cafes and restaurants?

Governments can’t run away from these issues by urging workers to come back to offices. The death of offices as we know them is inevitable. The world must start planning for the office-less future.

Ravi