The Bank of Korea: "COVID-19 Remote Work Helps Reduce GDP Decline"

'Presentation on the Spread of Remote Work and Economic Buffering Effects After the Pandemic'

[Asia Economy Reporter Jang Sehee] An analysis has emerged showing that working from home helped reduce the decline in Gross Domestic Product (GDP) in South Korea.

Oh Sam-il, Deputy Director of the Employment Analysis Team at the Research Department of the Bank of Korea, and Researcher Lee Jong-ha stated on the 20th in the 'Expansion of Working from Home and Economic Buffering Effects after the Pandemic' (BOK Issue Note) that "the utilization of working from home is closely related to economic resilience."

According to the report, despite a 2.89% decrease in workplace productivity and a 2.71% decline in total factor productivity (TFP, an indicator of efficiency in the production process) in the first quarter of 2020, working from home productivity increased by 4.34%, showing a buffering effect. In this context, GDP in that quarter only fell by 1.26%.

In the second quarter, although the decline in workplace productivity widened to -5.47%, TFP (1.31%) and working from home productivity increased by 1.01%, resulting in GDP decreasing by only 3.15%.

Working from home productivity continued to show positive values through the third and fourth quarters of 2020 and the first quarter of 2021, maintaining its buffering effect.

The report noted that the buffering effect of working from home tended to vary according to the intensity of quarantine measures, stating, "Using working from home can improve job satisfaction through saved commuting time and increased autonomy, which can enhance productivity."

It also analyzed that the proportion of working from home was higher among younger age groups and those with higher education levels. Additionally, the wage growth rate for those working from home (8.2%) was higher than that of non-working-from-home employees (2.7%).

The report added, "There seems to be little disagreement that working from home will continue even after the pandemic," and "Although it is difficult to predict, in countries like ours where commuting times are long and IT infrastructure is well-developed, there is significant potential for productivity improvement through the expansion of working from home."