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25 July 2022

Will a recession bring people back into the office?

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Posted by: Katy Mcminn

Will we see a recession in the UK? The big question on everyone’s lips now is whether the UK is heading for a recession in 2022/23. And if we do face dealing with a recession, what impact will this have on the new ways of working that so many organisations and workers have embraced since the pandemic?


The rise in cost of living

Many are already struggling to deal with the rapidly increasing cost of living. Gas and oil prices are leaping up and it is expected to jump again in the autumn of 2022. With inflation continuing to rise, we are now starting to hear experts talking about a looming recession on the cards. Both in the UK and on a global scale.

The technical definition of a recession is when an economy contracts over two consecutive quarters. So, over six months measured by its gross domestic product (GDP). The Bank of England has not formally stated they are forecasting a recession.  But they have predicted a sharp contraction of nearly 1% in the last quarter of 2022. With GPD expected to remain below 2022 levels throughout 2023.

A combination of significant factors has driven this. Starting with the COVID lockdowns having a huge effect on the economy. This is now accompanied by Russia’s invasion of Ukraine which has had a massive impact on the price of oil and gas on a global scale.

It is worth pointing out however that not everyone is predicting a recession. On 13th July 2022, it has been reported by the Office for National Statistics that the UK economy rebounded in the 3 months to May. Delivering 0.4% growth in GDP, and by 3.5% in the 12 months to May 2022.

Regardless of whether we see a technically defined recession, the likelihood is it may still feel like one. This is due to the rising costs facing both individuals and organisations. This will also have an impact on our spending habits and the financial choices we make.


How would a recession impact businesses?

Businesses, organisations and individuals are all battling with rising inflation and soaring costs. This is already starting to have a significant impact on day to day running and cash flow. The likelihood is that organisations will be looking to cut costs and bring in efficiencies where possible. The job market currently remains very strong. But this will inevitably start to slow down. As prices and inflation continue to rise organisations may have to consider restructuring, leading to job losses. Currently, candidates have strong bargaining power. Whether this be around remuneration or flexibility in how and where they work. It is likely candidates may not have the same level of bargaining power as costs continue to rise. But employment levels should fare better than in previous downturns. This is due to the number of job vacancies still open for the time being in comparison to unemployment levels.


recession wfh

Will we see working from home decline in a recession?

An interesting question is whether we will see a decline in working from home if a recession does hit. Following the pandemic, hybrid working has become the norm rather than the exception. Most employees now see working flexibility as a hygiene factor rather than a perk. Many organisations have embraced this and have enjoyed higher levels of productivity and engagement as a result. There are many organisations however who have never been fully on board with this.  But have been almost forced to go on the journey to retain and attract talent.

With organisations facing rising costs and having to make decisions about their workforce, the balance of power will inevitably start to move more in their favour. This could potentially lead to many employers taking a harder line. Particularly, what they will agree to from a hybrid working and flexibility perspective.  Employees are facing higher costs personally. And with increasing anxiety around job security, the likelihood is employees may start to feel less comfortable making these demands. So, the likelihood is they may return to the office on a more regular basis if they feel this is what the organisation prefers. Potential redundancies are likely to be on the cards. So, employees may start to feel they need to invest in those face-to-face relationships with key stakeholders in the business. This could result in an increased office presence to try and secure their role.


Remote and hybrid working

It is important we do not lose the learnings and benefits that both employers and employees have gained because of the pandemic. It has helped to dispel misconceptions around remote working.  Remote workers not being productive or not putting the same effort and hours in as those working in the office is no longer the general perception. Organisations have benefitted from increased loyalty, higher levels of engagement. And increased levels of flexibility from their teams by being able to enjoy a more flexible working pattern.

It is recognised by most that the ideal arrangement is a hybrid way of working. Employees can enjoy working from home on some days combined with days in the office. Individuals can use working from home days to balance their own personal commitments and focus on specific areas of work. Days in the office are widely accepted as being beneficial for collaboration and teamwork. As well as overall engagement with the organisation’s goals and culture.

It is therefore unlikely we will see a return to full time office working, with hybrid working continuing to be the norm for most organisations. We may however start to see employers feeling they are in a stronger position to introduce more structure. Whether this is a set number of days in the office or an annual entitlement to working from home days which can be managed in line with the needs and demands of the business.


Author: Katy McMinn, Co-founder and Director of HRi and Director of Task HR