The knowledge economy is disrupting global patterns of investment in two main ways. Companies are going light on assets and heavy on remote work. In the US, office vacancy rates are at historic highs of more than 18.9%, JLL figures show, right at a time when unemployment is close to record lows. Where is everyone working from? Many are in the cloud. The scores of ubiquitous remote workers are growing by the day as companies embrace ‘work from anywhere’ policies and hybrid work arrangements.
San Francisco is once again the icon of this emerging trend, but for all the wrong reasons this time. “This change is profoundly weakening the Silicon Valley network effect,” wrote Ben Horowitz, one of the most established venture capitalists in the Valley.
Digital technologies have enabled individuals and teams to carry out meaningful work interactions from anywhere they choose, as long as they have access to a decent broadband connection. There are drawbacks, certainly — developing a corporate culture and stimulating empathy when most communication happens remotely raises challenges. But so does office life. For decades, métro-boulot-dodo, a French expression for the typical commute-work-sleep routine, has been the symbol of modern alienation.
Eventually, it comes down to a trade-off: “Mitigating the cultural issues associated with remote work turns out to be easier than mitigating the employee satisfaction issues associated with forcing everyone into the office five days a week,” Mr Horowitz adds. In places with high adoption of remote work, like the UK, Canada and Australia, more than 20% of workers would quit their job if told to go back to a full-time office role, according to a survey by wfhresearch.com.
The consequences for policy-makers and economic development are deep. Global competition for investors is gradually shifting towards competition for talent. Urban areas that, for years, have had to give in to the pull of established business hubs now have a chance to carve out their niche and attract remote workers and entrepreneurs. Their hope is to trigger a virtuous cycle where talent attracts talent and anchors investors, and eventually gives local youngsters good reasons to look no further than their backyards for job opportunities.
In a recent LinkedIn poll of selected investment promotion and economic development leaders by fDi Intelligence, the majority (80%) of respondents believe talent availability is the single most important factor that will impact site-selection decisions moving forward.
Remote work is not just about corporate identity — it relates to individual identity, too. In the digital age, citizenship has become fluid. To some extent, it’s been so for some time now thanks to citizenship by investment programmes, whereby the wealthy could effectively buy multiple citizenships. Talent visas change this paradigm. As many as 44 countries have now introduced visa and residency programmes aimed at attracting and retaining talent. Skills and perhaps merit — so long as it’s not exclusively dependant on the access to costly higher education — stand out at the heart of these schemes, which dramatically widens the pool of individuals able to apply for different visa options and 'upgrade' their citizenship status.
I suspect that remote work will reshape corporate and individual identity as much as the old Taylorist model reshaped industrial relations and society in the past 100 years or so. Time will tell, but certainly métro-boulot-dodo is no more.
This article first appeared in the August/September 2022 print edition of fDi Intelligence. View a digital edition of the magazine here.