Rory Sutherland

The economic case for flexible working

The economic case for flexible working
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Is flexible working better or worse for productivity? What is the correct blend of remote and office work? Billions of once-healthy pixels will die in the conduct of this debate. But is it possible that we are asking the wrong question entirely?

Instead of asking the proximate question ‘Do we want our employees to work remotely?’, businesses should perhaps be asking: ‘Are we ultimately better off if consumers can work remotely?’ If you are Pret, the Duke of Westminster or Southeastern trains, the answer is possibly no. For almost everyone else, however, the answer is a loud yes.

There is a tendency among the more moronic type of business to resist any concession to the quality of life of their employees; anything that seems like an ‘easy option’ is treated with suspicion. But this rigidity is itself profoundly anti--market — if, that is, you define the proper function of free markets as a continuous creative process of unearthing new voluntary arrangements of mutual benefit to two or more parties.

The same process of evolutionary discovery should apply to the job market as any other market. If people prefer flexible hours to shorter hours, or prefer not to give half their pay to a buy-to-let landlord, it makes sense to explore this. All other things being equal, rewarding staff with non--monetary goods is both more tax--efficient and more profitable than paying them more money for the same work. This process already happens naturally in industries with a variety of working patterns. One reason coffee shops are so abundant is that young people often prefer jobs which leave their evenings free — which restaurant and bar work can’t offer.

If you can make staff richer not by paying them more, but by freeing them from the depredations of London landlords and rail firms, go ahead. But there is a wider question, as I said above. Never mind your business: the productive economy will benefit overall if employees have more discretionary income. It works like a tax cut. Individual businesses obsess about the efficiency of their staff rather than the disposable wealth (and time) of their customers, because that is what they are held accountable for. But having richer, more leisured customers is just as valuable as having more productive employees.

There are several ways you can make consumers richer. You can give them more money. You can reduce the money they need to spend on unwanted costs such as rent or commuting. Or you can give them more freedom over when they do things. One of the greatest unquantified forms of wealth in an age of variable pricing and over-concentrated demand is the freedom not to do things at the same time as every other git. Britain would have a world-class rail and road network if only people weren’t all forced to move about at the same bloody time.

There are several instances where industries have successfully sought to change working patterns in the hope such practices will spread. The tea industry in India created the tradition of the chai break not out of altruism but to sell more tea. It was rumoured Unilever promoted ‘dress-down Fridays’ in the 1990s so office workers would launder their chinos rather than dry-cleaning suits. Hawaii created ‘Aloha Fridays’ in the 1950s to boost the local shirt industry. But greatest of all was Henry Ford’s introduction of the two-day weekend in all his factories — which then spread to the rest of US industry. ‘Leisure is an indispensable ingredient in a growing consumer market because working people need to have enough free time to find uses for consumer products, including automobiles,’ he said. In the style of Brave New World, Americans should perhaps say ‘Thank Ford it’s Friday.’