More firms switch to home working



More than a quarter of companies have permanently reduced their office space with more people working from home, according to the latest Scottish Business Monitor.

It comes despite just one in 10 businesses saying they believe homeworking has improved productivity.

The regular survey of more than 500 firms, produced by law firm Addleshaw Goddard and the Fraser of Allander Institute at the University of Strathclyde, found business activity in the third quarter of 2020 had improved.

But concerns were raised about business activity and job losses over the next six months.

The report suggests economic and policy uncertainty “is accelerating nervousness around activity levels and job security” despite several firms reporting an increase in their volume of business on the previous quarter.

Working from home could become more prevalent, according to the survey, with 28% of companies saying they have made a “permanent reduction in office footprint”.

Asked about the impact of homeworking on staff productivity, 10% of firms said it has improved while 49% said the change has not improved productivity.

Almost three-quarters (72%) said homeworking has increased during the pandemic.

The tourism and hospitality industries remain the two sectors hardest hit, with almost 70% of businesses operating in this area expecting to cut jobs by the end of the year, although the survey was carried out before the UK Government announced an extension to the furlough scheme.

More generally, 40% of firms expect a drop in the volume of business over the next six months and a similar proportion (39%) said they expect to cut staff numbers between October and the end of 2020.

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On job losses, 23% of businesses expect to reduce staff numbers by between 1% and 10%, with a further 11% expecting a reduction between 10% and 25%.

Another 5% of businesses expect to make at least 26% of staff redundant, according to the survey carried out in October.

Fraser of Allander Institute director Graeme Roy said: “Unsurprisingly, the majority of businesses in Scotland remain apprehensive about the outlook as we continue to navigate our way through a turbulent economic period.

“The decision to extend furlough to March will clearly have been a great relief to many businesses and their employees.

“This survey found that many companies – across a range of staff – were planning on cutting back their staffing levels before the end of the year.

“But the lateness of the announcement won’t have helped many employees who will have been made redundant, particularly given that most businesses are predicting very weak growth over the next few months.”

Professor Roy added: “In the survey, we also begin to look ahead to the ‘new normal’.

“We find that for many businesses, the increase in homeworking is here to stay. 28% of businesses surveyed plan to reduce their office space in the future in response to homeworking.

“But interestingly, we find that only one in 10 firms believe that homeworking has helped their productivity, with a majority reporting challenges in managing staff and collaborative working.”

The survey also found business support of both the UK and Scottish Governments’ handling of the current crisis has declined since summer.

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While the Scottish Government is rated higher than the UK Government for its response to the health crisis, businesses said it has performed worse in understanding the challenges they face and supporting companies through the pandemic.

Tom Speirs, a finance partner at Addleshaw Goddard, said: “Despite the general feeling of apprehension within the Scottish business sector, we must take some positivity from the survey findings as a significant share of businesses feel secure about their finances and are not overly concerned about credit availability in the coming months.

“Although many organisations will have to make difficult decisions in the months ahead, we are optimistic that we will soon be working towards a robust recovery.”



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