Economic Update

Published 22 Oct 2020

With the Covid-19 pandemic inducing a significant shift towards working from home as companies maintain social distancing, in the Philippines co-working spaces are emerging as a solution for firms seeking to decentralise while ensuring a sound operating environment for employees.

In a sign of the economic fallout from Covid-19, in late September the Department of Trade and Industry said that around 90,000 businesses – or 6% of all those registered – had remained closed since the start of the pandemic.

However, adaptation has been key to ensuring business continuity for those that have stayed open or reopened.

Remote workforce

A report from multinational advisory firm Willis Towers Watson found that during March, when Luzon was under its strictest lockdown, 99% of office-based firms on the island  – home to the capital, Manila – allowed employees to work from home and 44% facilitated social distancing through minimal office staff and staggered shifts. The report noted that around half the companies surveyed had adopted multiple types of work arrangements for their employees.

While in many cases this shift has been essential, some members of the newly remote workforce have faced challenges such as a lack of adequate work space and poor ICT infrastructure. This is especially important as the digital shift increased strain on bandwidth in a country where internet speeds remain behind regional peers. 

The country’s average download speed for fixed broadband was 26.08 Mbps in September, compared to 226.60 in Singapore, 175.22 in Thailand and 138.66 in China, according to Ookla’s Speedtest Global Index.

Indeed, the move towards remote work has highlighted the importance of bridging lags in connectivity. In April a World Economic Forum report on worldwide changes predicted that the Covid-19 pandemic would “catalyse sustained collaboration between the public and private sectors to increase internet access beyond the current crisis”.

However, until that time comes, both companies and employees are likely to search for alternatives.

“In the Philippines people want to work near home, but not from home,” Lars Wittig, country manager of Regus and Spaces by IWG, told OBG. “This is because at home the internet connection is often poor, and it is not always easy to carve out a dedicated work space amid the noise from the neighbourhood.”

Co-working emerges as alternative

Given this lack of suitable space at home, co-working spaces could be poised to fill the void. During the post-pandemic recovery period such facilities have aimed to enable creativity and engagement, as well as enhance continuity planning for businesses, as companies look to reorganise the workforce and cut real estate costs.

To meet social-distancing requirements, co-working spaces have reduced capacity, created buffer zones, and reinforced cleaning and personal hygiene practices.

Indeed, WeWork Philippines’ enterprise memberships expanded by 10% between the lockdown period of March to July as large firms made flexible alternative arrangements for employees. Despite being down from the 25% expansion seen last year, this signalled co-working spaces have a role to play in the recovery.

“The pandemic sparked a new trend in the Philippines – one towards working not from home, but near home,” Jet Yu, founder and CEO of commercial real estate consultancy PRIME Philippines, told OBG. “Co-working spaces are perfectly positioned to fit this market sentiment.”

The emphasis on staying close to home has been compounded by a push by many large firms to decentralise operations and close offices. Doing so not only cuts overhead costs, but disperses staff and minimises the viral risk that a large portion of the workforce could be exposed to.

As OBG noted in May, the fact that companies around the world have shifted to remote work could lead to “de-urbanisation” and decentralisation in large population centres.

“The pandemic has led to an emphasis on flexibility in terms of workstations and work-from-home solutions,” Wittig told OBG. “Even before the outbreak of Covid-19 the co-working segment was booming. When the pandemic is over, people will no longer want to go to crowded downtown areas and, as such, suburban and provincial areas will see the most significant growth. At the same time, many large companies are looking to complement headquarters with satellite offices near employees’ homes – a trend that is likely to benefit co-working spaces.”