Canada’s remote workforce has been breathing new life into small cities, but that may come crashing down soon. The Government of Canada (GoC) has ordered its remote workforce back to the office starting next week. The reasons cited haven’t been particularly strong, but the impact on big cities has been. Downtowns have been hollowed out as workers moved to smaller regions and took their spending with them. Now big cities and their leaders have been trying to get workers to go back into the office, for just enough days to prevent them from moving too far out of their pricey regions.
Canada’s Public Servants Ordered Back-To-Office Next Week
Back in December 2022, the Treasury Board Secretariat (TBS) announced that public workers will have to be on-site for 2 or 3 days per week, or between 40-60% of their regular schedule. This came shortly after business leaders publicly called for an end to work-at-home policies in the Federal Government.
In May 2024, the TBS rolled out the “prescribed presence” directive for those working in public administration. This requires the public service to work on-site a minimum of 3 days for workers, and 4 days for executives. It goes into effect on September 9th, less than a week from today.
Government of Canada Cites Weak Logic, To Appear In Court
The GoC argues their back-to-office mandate is necessary. Officially, the reasons cited are strengthening confidence in public service, “fairness,” and attracting the best talent. In other words, all buzz-term objectives with no actual reason cited.
Most research shows workers generally perform better in a work-from-home environment. Studies show productivity increased by 22%, and office-free environments tend to attract higher-quality talent. Only a handful of studies show the opposite and largely attribute the decline to management.
Public workers aren’t keen on the idea. The Public Service Alliance of Canada (PSAC), representing 240,000 public servants, called the decision “arbitrary” and a one-size-fits-none policy. A survey of their membership showed 91% of respondents were against the mandate, and 75% were willing to fight the mandate.
The survey found that the biggest reason workers opposed the policy was the cost, with 91% of respondents agreeing. Other popular reasons include commute time (90%), work-life balance (89%), the environment (84%), and mental health (83%).
The GOC has been fighting an application for a full hearing in Federal Court. They lost that fight last Friday and it was granted last-minute, according to PSAC. A hearing doesn’t reverse the decision, just allows it to be heard publicly and fairly—an issue the GoC is more concerned about than PSAC, it appears.
Canadian Back-To-Office Mandates Are About Real Estate Demand
Like most issues in Canada, this is about real estate. Cities carry substantial premiums due to the proximity to amenities, such as industry. A high-traffic region of offices is also a big boom to the downtown core of major cities, breathing life and supporting further commercial real estate premiums.
Now the exact opposite is happening with work-from-home. The steep premiums don’t make sense to many workers, who are now fleeing to smaller regions. It’s created a lot of economic activity in smaller cities, reviving many sleepy towns. That’s left small cities with huge demand boosts and big ones with a complete lack of demand, and starting to look overpriced.
The great decentralization of office space has led to a major flight from downtown cores. Greater Toronto office space went from highly coveted pre-pandemic to a record fifth of space sitting vacant. Not quite as bad as downtown Calgary offices, where a quarter of the space is vacant. Ottawa office vacancies are double pre-pandemic volumes, while Vancouver is sitting at triple its rate. Even with Nova Scotia’s population boom, over 1 in 7 sqft of office space sits empty in Halifax.
Canada’s Largest Cities Want Workers (& Their Wallets) Tethered
Consequently, powerful people have been pushing for a return to the office. Most notably, the Canadian Chamber of Commerce and 32 business leaders penned an open letter requesting the GoC bring office workers back to office. The group, including the heads of the retail and restaurant associations, cited concern over the hollowing out of downtown regions—especially Ottawa.
Politicians are also urging a return to office from federal workers—some more directly than others. For example, Ontario Premier Doug Ford demanded a return-to-office.
“It sounds crazy. I’m begging people to go to work for three days — not that they aren’t working at home, but it really affects the downtown,” stated Premier Ford, at a press conference standing beside the Mayor of Ottawa.
Speaking of the Mayor of Ottawa, he is amongst a growing group of big city mayors indirectly calling for a return-to-office. The Mayor of Ottawa denies lobbying the GoC, but publicly voiced concern over the “hollowing out” of downtown Ottawa. There’s that term again.
The Mayor of Toronto is also publicly pushing for a return-to-office, citing the lack of activity downtown. While she voiced her concerns publicly, she opted to privately court office workers instead.
Provincial governments are also on the same boat. Both Ontario and Nova Scotia have respectively ordered public workers back to the office soon.
It’s worth noting that most of the government return-to-work orders don’t require a full back-to-office campaign. Instead they’ve largely focused on 2-3 days of in-office appearances, not even necessarily on the same day as their peers—not a great argument for improving peer-to-peer interaction. However, it’s just enough to prevent people from moving out of the city for more affordable housing, an issue typically seen at the peak of real estate bubbles.
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