Productivity gains from teleworking in the post-COVID-19 era: How can public policies make it happen?

The COVID-19 crisis forced firms worldwide to adopt teleworking on a large scale – often overnight. What began as a temporary fix during lockdowns may now lead to a more permanent transformation in the workplace. As companies and workers adapted, the experience created what many call a "forced experiment" in remote work. Now, attention is turning to how these changes could influence long-term productivity, well-being, and workforce structures.

While not every job can be done from home, the pandemic showed that many more could than previously thought. Telework was often limited to specific roles, sectors, or countries pre-crisis. But during the pandemic, it became widespread across industries—especially in knowledge-based services like IT, education, and professional consulting. In some countries, over 90% of firms adopted some form of remote work. This rapid shift revealed the potential for broader use. It highlighted deep inequalities: low-income and less-educated workers, often in physical or front-line roles, were far less likely to benefit.

Teleworking’s Mixed Impact on Productivity

The short-term productivity effects of widespread remote work were unclear. While some surveys (e.g., in Japan) reported drops in worker performance, others (notably in the U.S.) showed improved efficiency. Much of the variation stemmed from poor working conditions during lockdown – parents juggling child care, inadequate home offices, and little choice in working arrangements. Still, the crisis accelerated familiarity with remote work tools and habits, which could create lasting productivity gains once conditions stabilize.

In the long term, teleworking could reduce office costs, increase job flexibility, and support worker satisfaction. However, there are risks: loss of collaboration, reduced innovation, and “hidden overtime” caused by blending personal and professional life. These issues could limit the benefits or even reverse progress if left unaddressed. Innovative public policies and coordination between employers and workers are essential.

The Role of Policy and Workplace Culture

Governments and firms are vital in ensuring telework remains efficient and beneficial. Investments in broadband access, digital tools, and training are foundational. Equally important are supportive management practices emphasizing trust, autonomy, and results rather than time spent online.

Telework should be a choice, not a requirement. Some workers thrive in remote settings; others need the office's structure. Policies should promote hybrid models that combine flexibility with in-person collaboration. They should also address mental health, burnout, and fair access to opportunities for advancement.

Pre-Crisis Teleworking Patterns Reveal Policy Gaps

Before the pandemic, telework adoption varied widely by country, industry, and occupation. In some Nordic countries, over half the workforce engaged in telework. In others, like Portugal or Italy, it was closer to 25%. These differences reflected job structure, digital readiness, and workplace culture.

Notably, occasional telework was far more common than regular remote work. This suggests that many workers could work from home but chose not to, possibly due to lack of support, poor home conditions, or fears of being seen as less committed. That hesitation shows room for improvement through better workplace policies and stronger digital infrastructure.

Industry-Level Trends

Telework was common in high-skill service sectors such as ICT, finance, education, and public administration. It was least common in jobs that rely heavily on physical presence – manufacturing, transportation, retail, and hospitality. Interestingly, some construction, agriculture, and energy jobs also saw notable levels of remote work, possibly reflecting management or planning roles within those fields.

Even within sectors, adoption rates varied. For instance, public administration saw less telework than some private firms doing similar tasks – suggesting institutional inertia or cultural barriers. This could change with the crisis acting as a wake-up call, especially for the public sector. If embraced more widely, telework could spark positive spillovers in productivity and innovation across industries.

How Common Was Telework Across Occupations?

Before COVID-19, telework was mainly concentrated in high-skilled occupations – managers, professionals, and technical roles – where tasks often rely on digital tools and independent work. These jobs naturally lent themselves to remote setups. Meanwhile, telework was far less common in roles requiring physical presence, such as care workers, retail staff, and factory employees.

Interestingly, some lower- and medium-skilled roles still showed moderate levels of remote work, especially among self-employed individuals like agricultural workers and market vendors. This suggests that flexibility and control over one's schedule, rather than skill level alone, can make a difference.

However, the overall trend was clear: higher-skilled roles had more access to telework. Without policy action to expand digital access and training, this gap could worsen inequality in the workforce as remote work becomes more common.

Which Firms Are Most Likely to Use Telework?

Not all companies embraced telework equally. In Germany, firms that use trust-based working time (TBW) – where output matters more than logged hours – were significantly more likely to use telework. This flexible model aligns well with remote work; data shows it’s more common among high-performing firms.

Larger companies are also more likely to adopt TBW and telework because they have better digital infrastructure, modern management systems, and more resources to implement flexible policies.

Workforce composition matters, too. Firms with younger and more highly skilled employees are more open to flexible arrangements. Skilled managers support these models more, likely due to better leadership and digital capabilities. On the other hand, firms with older employees are less likely to use telework – whether due to preferences, skill gaps, or cultural resistance to change.

How Can Policies Support Effective Telework?

Telework can improve productivity and worker satisfaction and even reduce environmental impact. However, to realize these benefits, public policy must support the right conditions, especially as telework becomes a permanent fixture in many workplaces. Innovative policies can ensure that firms and workers are equipped to make remote work efficient, equitable, and sustainable.

How Telework Affects Productivity

Remote work can both help and hinder productivity. Its success depends on two primary channels:

1. Workforce performance – Telework can boost employee satisfaction and focus by reducing commutes and distractions and offering flexibility. However, it may also lead to isolation, blurred work-life boundaries, or burnout, especially when home setups are inadequate.
2. Cost savings – Teleworking can lower expenses by reducing the need for office space and expanding access to a broader talent pool. It can also help retain staff by offering flexibility, potentially lowering turnover.

Still, not all impacts are positive. Too much remote work can reduce face-to-face communication, limit idea-sharing, and make it harder for managers to supervise effectively. These issues may lower long-term innovation and weaken workplace culture. Striking the right balance is crucial. Evidence suggests that moderate levels of telework, neither full-time nor absent, may offer the best mix of efficiency and well-being.

What Are the Main Policy Challenges?

Policies must balance flexibility with safeguards and long-term goals to support productive telework. Key challenges include:

• Avoiding overuse – Telework should remain a choice. Excessive remote work can hurt innovation and create burnout. Giving workers the option – rather than mandating it—often leads to better outcomes.
• Ensuring fair access – Not all workers can telework equally. Lower-skilled or rural workers may lack the tools or training. Targeted support can reduce this gap and prevent inequality from growing.
• Protecting workers – Hidden overtime and work-life conflict are real risks. Policies must promote clear working hours and ensure remote work doesn’t shift hidden costs (like utilities or childcare) onto employees.
• Improving digital infrastructure – Fast, secure internet and access to tools are essential. Support for broadband expansion, especially in underserved areas, can unlock telework opportunities nationwide.
• Supporting management practices – Firms need help adjusting to flexible work models. Training and knowledge-sharing about output-focused leadership can make telework more effective.
• Adapting legal frameworks – Rules around data privacy, remote contracts, and cross-border employment must keep up with new work realities.

Key Policies to Maximize Telework Benefits

To build a productive and fair telework system, governments and employers should focus on three main areas:

1. Invest in Infrastructure and Skills

• Expand high-speed internet access in rural areas.
• Support companies upgrading ICT tools.
• Provide digital skills training for workers in telework-limited sectors.
• Fund research into better remote collaboration tools (e.g., VR).

2. Overcome Cultural and Legal Barriers

• Promote the right to telework where feasible.
• Encourage collective agreements to guide flexible work.
• Streamline rules for digital signatures and remote contracts.
• Launch campaigns to highlight the benefits of remote work and balanced family roles.

3. Manage Risks and Protect Workers

• Encourage a “right to disconnect” to fight hidden over time.
• Offer subsidies or allowances for home office equipment.
• Create coworking spaces in underserved areas to support collaboration.
• Ensure remote work doesn’t weaken labor protections or data privacy.

Policy Area	Examples of Actions
Promoting Effective Management	- Share best practices through training and campaigns - Fund management development programs - Encourage output-focused leadership styles
Ensuring Worker Rights and Balance	- Establish a ‘right to telework’ for suitable roles - Enforce a ‘right to disconnect’ to prevent hidden overtime - Stimulate employer allowances for home office expenses
Strengthening Digital Infrastructure	- Invest in high-speed, secure broadband access - Support ICT upgrades for firms - Increase digital tools in the public sector to model best practices
Improving the Home Work Environment	- Reassess childcare and caregiving infrastructure near homes - Fund research on remote tools like VR - Create incentives for employers to support remote work conditions
Fostering Fair Access and Inclusion	- Promote upskilling via online learning, especially in rural or underserved areas - Encourage coworking hubs to reduce isolation and support innovation
Modernizing Legal and Regulatory Frameworks	- Adapt privacy and data protection regulations - Enable digital signatures and remote work contracts - Offer bilateral tax agreements for cross-border telework