Can Working From Home Survive the Cost of Living Crisis?

As we end 2022 with news that we are already in a recession and facing the highest levels of inflation in the last 40 years, businesses and individuals are set to make very hard decisions across the next few months with regards to spending and budgeting. How people live will be greatly affected as the economic turmoil we’re facing from the cost of living crisis is sure to impact businesses of all sizes and individuals from every tax band.

At the beginning of the year, we saw the flexible working model fully established across a number of industries. People working from home full time or part time are finally settled and understand the costs involved in this new way of working. However, it seems that a mere 12 months later, employees are now questioning whether it can be more cost effective to head back to the office on a more full-time basis.

The Implications of Rising Personal and Childcare Costs  

The news of the UK being in a recession comes as we enter into winter, while gas and electricity costs are set to rise by another 20% in April 2023. In light of this, it’s thought that employees would rather save on their personal energy costs and work from a heated office instead. This, of course, depends on the cost of travel compared with the cost of heating a home during the working week. However, this will need to be weighed up against what other costs returning to the office may incur.

For many, working from home saves people on not only travel but the cost of lunch and hot drinks throughout the working day too. Similarly, those who are now able to work on a more flexible schedule have managed to save significantly on wrap-around care such as breakfast or after-school clubs as they are able to break from the working day and continue later in the evening. While there is some government funding, such as the tax-free childcare scheme which does help towards nursery, breakfast and late clubs and some holiday clubs, this isn’t available to everyone and is also a complicated process to navigate.

For parents, the trend of flexible working following the Covid-19 pandemic has left them in a better financial position as well as giving them a better work-family life balance. Lockdown was particularly popular amongst men. As fathers aren’t usually the primary caregiver, working from home allowed them to spend more time at home and with their children. Of course, with rising costs and tax implications, this may now become a luxury once again and people may need to work from home out of necessity rather than pleasure. For parents the cost of nursery and/or nannies can total up to £3,000 a month which is a huge financial burden for anyone. 

Finding the Work-Life Balance

Since lockdown measures have eased, we have seen a huge trend in people valuing their time and wellness above other financial elements. People are investing in their mental health and social lives a lot more than they did prior to 2020 and are now using their time wisely, taking lunch breaks and balancing work and social lives much better. Unfortunately, the cost of living crisis is now set to affect the way people can enjoy their recreational time around working hours too.

Not only will people be forced to work more shifts, or longer hours, to earn more money for their rising living costs but it also means that disposable income will be less as the crisis continues. In August it was found that the average disposable income had reduced by 16.6% for those under 30. While in terms of the hospitality and travel industries, this will significantly reduce their ability to earn, people prioritising work over recreation may lead to more employees heading back to the office.

With flexible office spaces offering incredible amenities such as breakout areas, gym facilities, wellness events, social meetings and complementary stocked kitchens, the office could become a replacement for the social element of the working week too. The scope of offices has taken on a new purpose since 2020 and will continue to do so throughout the cost of living crisis. It is now much more than a place to work but a place to come together collaboratively.

Taking Care of Each Other

As the UK heads into another year of economic uncertainty, it’s become clearer than ever that fellow employees, friends, family and particularly employers must look out for one another. No two people’s financial positions will be the same which means that deciding where to spend and save on working from home or in an office will be a tricky and personal decision for everyone.

Employees will be looking for support and a sense of being valued by their employers, which in turn can lead to increased productivity for the business. Offering people flexibility to work out whether working from home or work will suit them financially can only lead to a better relationship between employer and employee and a much more positive office atmosphere overall.