Cities Could Be More Important Post-pandemic, Not Less, Suggests Report From Citi and University of Oxford

Paradoxically, more in-person work environments and the concentration of jobs in cities could be a medium- to long-term impact of the pandemic’s shift to remote working, suggests Citi GPS Technology at Work: The Coming of the Post-Production Society, a report produced by Citi and the Oxford Martin School at the University of Oxford.

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“Livable cities brimming with culture and experiences will continue to be the engine of economic growth and job creation for a long time to come.”

The report cites the automation of manufacturing and clerical tasks alongside the potential for professional services jobs that can be done remotely to be done cheaper overseas as the start of a foundational shift in developed economies. The future of work in these countries, it suggests, could be based largely on innovation, exploration and creative thinking which require face-to-face interaction and geographic proximity.

“Jobs that can be done remotely can often also be automated and offshored, meaning that occupations that centre on the kind of sporadic interactions that drive innovation will become an ever-growing share of the workforce in advanced economies,” says report author Dr Carl Benedikt Frey, director of the Oxford Martin Programme on the Future of Work at the University of Oxford.

At the peak of the pandemic in April 2020, almost two-thirds of economic activity in the U.S. was being done remote. And while the post-pandemic world will see much lower levels of remote work, a recent survey suggests that 20% of all workdays will continue to be done from home. This shift could see a short-term raise in productivity by 5%, largely by saving time by commuting less.

However, creativity and innovation diminish when people work in isolation, meaning that progress and productivity will eventually stall. In addition, the shift towards remote work is accelerating the subdivision of many professional service jobs into tasks that are more automatable, like clerical or accounting work, or offshorable, like payroll management and IT support.

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“Both the employment support during the pandemic and the current recovery are impressive but the world changed last year and the shift to digitisation and remote work, which we find includes more vulnerability for female employment, needs to be thought through by policy-makers, employers, employees, educators and investors,” says Rob Garlick, Managing Director, Citi Global Insights, adding that “The time to do so is now, given supply chain re-engineering could include onshoring while the step change in remote work will increasingly include in-country versus offshore decisions.”

This vision of the future should not be taken to imply that all manufacturing and white-collar service jobs will inevitably vanish in places like the US and Europe, says Dr Carl Benedikt Frey in the report. Adding that “We want to highlight the direction of travel so that governments and organisations can work on creating the jobs of the future and developing the employment skills those jobs will need.”

The report suggests that these new roles will predominately be in knowledge industries, like technology, science or consulting. The roles themselves will be focussed on innovation and development, like designing new technology products or service algorithms which are then manufactured or administered in middle-income countries. These sorts of roles rely on the creativity of in-person collaboration, unplanned meetings, and informal socialising as much as they do hard work. The study highlights that during the prohibition against alcohol in 1920 America, the disruption to people’s social networks caused patenting to drop by up to 18% – innovation only rebounded half a decade after prohibition was ended.

“Cities are going to be more important as hubs of the collaboration and innovation at the foundation of developed economies,” continues Frey. “Walkable streets, bars, restaurants and cafes facilitate serendipitous meetings and help us identify problems that need solutions. Every new ‘knowledge industry’ job in a city also creates demand for five new service jobs that can’t be offshored or automated like teachers, healthcare workers and cleaners.

“Livable cities brimming with culture and experiences will continue to be the engine of economic growth and job creation for a long time to come.”

Finally, restoring the middle class, which has felt the pressure from automation and offshoring for some time now, can only be achieved by creating new middle-income jobs. “Policies, like the minimum wage, can help make existing jobs less bad. What is needed is investment in innovation to create the future of work. Most of today’s jobs did not even exist in the 1950s,” says Frey. To that end, the report makes several policy recommendations for how to boost innovation.

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