Urban economies are changing due to smartworking

Remote working and consumption: how Italian urban economies are changing

As remote working is used as a strategy to contain the virus, the consequent loss of the office economy is irreversibly changing the socio-economic fabric of Italian major cities.

Prior to the Covid-19 emergency, around 500,000 people on average were working remotely in Italy. During the lockdown of spring 2020, it is estimated that there were more than eight million.

Since then, while a percentage of workers has gradually returned to the office, a large proportion of work has continued to be carried out remotely. At the end of August 2020, according to the Sole 24 Ore, 3.5 million workers were still clocking in from home.

After the summer months, Italy and the whole world is now preparing to face the second wave of the pandemic, and once again remote working is proving a crucial tool for containing the virus; companies are being asked to use this strategy to ensure business continuity and guarantee the safety of their employees and of the wider community.

This, then, is an endless exodus that continues to seriously, and in some ways irreversibly, affect related businesses including food outlets, cleaners and facility management. Local transport, maintenance companies, warehouse workers, corporate canteens and restaurants: for these sectors, the emptying out of offices, along with other containment measures, is a real additional threat.

Remote working and the “office economy”

In Italy, the European country where teleworking is least common, the consequences of this general uptake of remote working are clear; starting with how city centres have changed in appearance during the past few months.

Emptier and less polluted, cities have taken on a slower pace while business activities have become decentralised. The new approach to work has turned out to be an opportunity for cities, even after the pandemic, if we think in terms of reduced traffic and the positive environmental impact. But at what cost?

What we do know is that remote working means a new paradigm in terms of consumer spending too, to the detriment of retail and wholesale businesses, which in Italy number more than a million.

Shopping before and after office hours has stopped; the same goes for lunch breaks at restaurants, after-work drinks with colleagues, or breakfast at a coffeeshop before going into the office. Not to mention the drop in spending on clothes and shoes and accessories; what’s the point of dressing up when you are working from your desk at home? The demise of the so-called “office economy” could have a significant impact on the national economy, and especially on that of major cities.

The Agi reports that, counting those businesses that might not reopen for the whole of 2020, and those that shut due to lack of demand or because it is not financially efficient to stay open, the risk of permanent closure could affect around at 88,000 retail businesses and 179,000 (9.9 per cent of the total) for service companies.

A closer look at 3 sectors

The HO.RE.CA channel

According to estimates from Ismea, the Ho.Re.Ca channel, already severely tested by limits on restaurant opening times and reduced seating capacity, will lose €41 billion overall in 2020; spending on dining outside the home is set to drop by 48% compared to 2019, partly due to the ‘work from home’ model. Not to mention the drop in revenues for corporate catering, calculated at -68% in June.

Urban transport

According to Anav, the Italian association for public transport companies that is a member of Confindustria, public transport lost nearly 60% of its passengers from the beginning of the pandemic to August, with a 17% drop in revenues over the year as a whole – equivalent to 1 billion 700 thousand euros. (Insideover)

Cleaning companies

Anip, the Italian association for Cleaning and Integrated Services Businesses, has estimated a drop of at least 15% in turnover for 2020 compared to 2019; that’s the equivalent of 1.6 billion euros, with serious repercussions on more than 40,000 staff. (Economymag)

Redesign work, or redesign the city?

According to Domenico De Masi, a sociologist and Emeritus Professor at Sapienza University of Rome, the recent uptake of remote working represents a major opportunity to redesign cities: “Office work as we traditionally think of it forces us to live the city in two halves. When we go out to work every morning, we leave empty houses. The same thing happens in the evening when we leave our offices. Every day, two cities are created: one is alive and inhabited by day, the other by night. [….] This is an appalling waste  and the daily commute is equally wasteful, as it takes up a lot of time and pollutes the environment”.

However, the mayors of Europe’s largest cities think otherwise, including the Mayor of Milan Beppe Sala; he was one of the first to raise the alarm about the impact of working from home on urban economies: “Workers should have the right to work remotely in the digital age, but we should evaluate carefully the collateral effects and repercussions that widespread adoption of this method could have on cities”.

At this time of great uncertainty, one thing that seems clear is that the geography of work is changing, along with the society and economy of our cities. We’re facing the prospect of a future in which new ways of agile working must necessarily integrate and co-exist alongside traditional organisational structures.

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