Independent economist John Loos says the looming April fuel price hikes will likely lead to many requesting work from home or hybrid working models in the coming months.
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As major fuel price hikes for petrol and diesel are expected in April, an economist says the debate around working from home or hybrid work models will likely be in focus as households look to deal with the rapid increase in expenses.
Independent economist John Loos said the fuel price increases could be as much as R5/litre for petrol due to the elevated oil prices. The ongoing US-Israeli war against Iran has caused significant volatility for oil prices.
Loos said the fuel costs rise will imply a significant transport cost increase and many households will look for ways to manage such increases.
“While non-essential trips can be reduced, daily commuting for many households cannot easily be avoided, with many often using more fuel-intensive private transport.”
However he added that the Covid-19 pandemic lockdowns demonstrated that there is a significant group of office workers who have a potential option for lowering commuting costs through working from home (WFH) or hybrid working.
“The debate around the various office work models, i.e., WFH, hybrid work, or full-time office work, has been a heated one in recent years across much of the world. Employees as a group tend to lean more towards wanting flexibility in their work arrangements, while a significant group of employers have been pushing to get their staff back to the office, in certain instances on a full-time basis.
Loos said while the employers’ arguments that often focus on the human “culture and connection” benefits of in-person contact have merit, the remote work arguments are particularly powerful when it comes to reducing unproductive commuting time and financial costs.
“As such, I believe that we should expect the debate around remote and hybrid work to escalate once more, should fuel prices remain ‘elevated’ for sometime, with the employee group that is able to operate in a flexible way likely pushing for greater flexibility. While this may not be met with enthusiasm by all employers, certain labour market shifts could occur.”
Loos added that the second debate which higher petrol prices could conceivably bring this year, especially in the City of Cape Town (but not only in Cape Town), is the issue around relative housing in-affordability in certain parts of cities.
He said higher transport costs are likely to drive a higher number of people to seek accommodation closer to places of work.
“While WFH or hybrid work can potentially ease this need for some, many employees’ jobs are not of such a nature that they can work remotely. With a city such as Cape Town having much of its economic opportunity in limited areas such as the City Bowl and immediate surroundings, areas which also have very high property values and rental values, finding accommodation that is well-located in relation to places of work for many is near-impossible.
“Other major South African cities have such challenges too, but Cape Town’s home values and rentals are by a significant margin the highest. I would expect a period of significantly elevated transport costs to contribute to the intensification of this debate.”
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