Appl Ex 7g – ecogroundup

Application Exercise 7g: Is working from home the new normal?

In a labour market, a sellers’ market means that bargaining power resides with the seller of labour – i.e. workers or members of the labour force. This has occurred over recent years because of the continuing decline in the unemployment rate, combined with growing shortages of labour (or excess demand for labour), that has evolved since the COVID-19 economic recovery.

The existence of COVID-19 made condensed working environments (e.g. in the CBD) more risky from a health perspective. Employers work forced to become more nimble and seek out alternative working arrangements, where employees could continue to work in a safe environment. Hence, remote working became a much more common arrangement, with the most obvious form being the arrangement whereby employees worked from home, using technology to perform their tasks.

This is because Australian cities are very spread out with many CBD workers commuting long distances today place of employment. It therefore makes it much more enticing for these employees to remain working from home for at least part of the week. In other words, the (opportunity) costs of commuting long distances to perform work that could otherwise be done at home is quite high.

Office landlords in the city as well as businesses relying on foot traffic (e.g. cafes, eateries and the retail sector more generally) are keen for workers to return to the city. In the case of landlords, they are currently experiencing a loss of revenue (rent) due to tenants (businesses) downsizing or businesses more generally requiring less office space. In the case of retail businesses and those in the hospitality sector, they are also losing revenue and profits given that there are fewer people working in the city. [A number of small retail/hospitality outlets have already closed]. Those businesses remaining in the city with a vested interest in seeing the end of remote working not primarily concerned about protecting their income.