Flexible working contributes £37 billion to the UK economy

14 December 2021 Consultancy.uk 5 min. read
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As organisations look to encourage workers to return to the office, they should not be too hasty to return to the way things were pre-pandemic. A new study has found that flexible working contributes just under £40 billion to the UK economy – suggesting firms would do well to support some level of home working even after lockdown measures subside.

Stressed, over-worked employees are more likely to take time off sick and more likely to quit. Meanwhile, a mounting body of research before 2020 showed that over-worked employees were less engaged and productive. For example, one study found that in the US, employee stress is costing employers over $250 billion in lost time alone.

As a result, experts were increasingly recommending that businesses should bring in flexible working practices, long before the era of the home office that Covid-19 ushered in. Flexibility in working hours, and where work is performed, was cast as a positive for both employees and employers; enabling improved work-life balance, supporting different demographics to carry out types of job they had traditionally been excluded from, and boosting productivity as a result. Even with that said, however, many employers remained resistant to implementing flexible work, largely due to a fear of being unable to control staff as directly.

Estimated net benefit of current rates of flexible working

One of the key impacts of the lockdown months was that these preconceptions were challenged. Without a choice but to let employees work from home, 2020 normalised flexible working, removing the previous stigma around it that it made people less productive. Now, home working is no longer an optional ‘nice-to-have’ in many businesses and sectors; staff enjoyed its benefits, and in the middle of ‘the great resignation,’ will look elsewhere if employers refuse to offer flexibility in some form, going forward. At the same time, leaders saw that by giving people more ownership of their time, fitting work around their life, productivity could actually improve.

In fact, according to new research from Pragmatix Advisory has found that flexible working is already making a significant contribution to the UK economy. Commissioned by Sir Robert McAlpine and flexible working campaigner Mother Pukka, the paper is the latest to underscore the benefits of such arrangements. Indeed, while the rapid shift to flexible time came with some costs in 2020, they were vastly outweighed by total benefits of the mode of working.

Year one implementation and ongoing business and administrative costs of flexible working amounted to around £810 million, by Pragmatix’s estimations. In contrast, reduced absence and a happier workforce boosted productivity by £12.7 billion alone. At the same time, without needing to commute to the office every day, or various other costs incurred by traditional working life, flexible working contributed lower wage inflation over time to business profits – worth around £21.9 billion. Including a £2.9 billion reduction in hiring and training costs, due to lower staff turnover, flexible working was overall estimated to contribute £37 billion to the UK economy.

Estimated net benefit of flexible working

Further to this, Pragmatix Advisory suggested increasing flexibility, with its improvements to staff morale and productivity, could help the country bounce back from the shock of the pandemic faster. The firm forecast that a 50% increase could create 51,200 new jobs, and unlock £55 billion for the UK economy.

In particular, this may come as welcome news to sectors which are presently struggling to return to pre-pandemic performance. At present, flexible working contributes more than £4 billion to the UK’s arts sector, for example – but if that flexibility were increased by 50%, Pragmatix asserts it could benefit by £6 billion. Similarly, the health and education sectors could see flexible working provide almost £5 billion in benefits, at a time when resources are spread thinner than ever before.  

Reflecting on the study’s findings, Paul Hamer, the CEO of Sir Robert McAlpine, told business news site City A.M., “The misconception that flexible working is only applicable to a select few sectors needs to change. This report demonstrates the glaring benefit to the UK economy if adopted more widely.”

Reasons working mums have not made a flexible working request

However, if firms are to deploy flexible working successfully, they need to be mindful of supporting the different needs of employees. Reacting to the study, Kelly Metcalf, Head of Diversity, Inclusion and Wellbeing at professional services firm Fujitsu, warned that to be truly flexible consists of more than just allowing occasional remote working. For example, in some roles an employee needs to be present – but that does not mean flexibility is out of the question: in roles like teaching, agreements on job sharing can support workers’ needs too.

Metcalf explained, “It’s important that we acknowledge employees’ many and varied personal circumstances, such as caring responsibilities, outside-of work interests and more. We need to remain as flexible as possible in order to help people to effectively integrate their work and life commitments if we want to be able to attract the biggest pool of talent. This is all possible if employers shift focus, from measuring their employees productivity by output rather than hours in the office - or even online. The opportunities for creating a more engaged and forward-looking workforce are endless when flexible working is fully unlocked.”

Beyond employers being told flexible work is an option, many may also need to do more to encourage its uptake, due to traditional perceptions of their workforce. The Pragmatix study also noted that certain workers fear their request for flexibility is likely to be turned down due to social expectations, or that they may damage their careers. Fathers were twice as likely as mothers to have such fears due to such normative assumptions. Meanwhile, more than 40% of working mothers said they thought such a request would be viewed negatively by their employer.