Introduction
Flexible working arrangements (FWAs) were globally adopted during the COVID-19 pandemic as a means to ensure business continuity amidst unprecedented challenges. Considering the work-life balance and productivity advantage they offer, these arrangements have persisted beyond the pandemic and thus not only reshaped traditional workplace practices but also influenced household expenditures associated with working from home (WFH).
Three key categories from the Household Expenditure Survey (HES) can be used to gauge WFH expenditure trends: ‘Housing & Utilities’, ‘Furnishings & Household Maintenance’, and ‘Information and Communication Technologies’. The first article in this series, “From Office to Home—Part 1: Impacts on Household Spending,” analysed these categories to evaluate how WFH trends affected household spending patterns.
Demographic characteristics play a crucial role in influencing overall WFH expenditures, as there is a large variance in demand based on factors such as geographic location, income levels, occupation, and many more. In this second part of the “From Office to Home” series, we examine how these demographic characteristics drive differences in WFH-related spending, shedding light on the diverse financial impacts of WFH on households across different strata, income levels, and occupations.
Work From Home Trends by Demographic Characteristics
Strata
Examining expenditures by strata provides insights into the demand for WFH categories among urban and rural households. As demonstrated in Figure 1, urban households consistently incur higher expenditures across all WFH categories, spending nearly twice the amount spent by their rural counterparts.
For housing and utilities (H&U), the spending gap in real terms between urban and rural households has widened over the years, reaching its largest disparity of approximately RM595 during the pandemic period (2019-2022). This difference is expected as house prices and rental rates are usually higher in urban areas than in rural regions. Additionally, urban households also benefit from greater access to better utilities and housing infrastructure in urban areas, contributing to a higher quality of life. However, these benefits come with a higher cost of living, resulting in greater expenses in this category for urban residents.
For furnishings and household maintenance (F&M), the urban-rural expenditure gap widened to over RM100 in 2022 compared to RM77 in 2019. While rural households experienced a higher real growth of 26% in F&M expenditures prior to the pandemic (2016-2019), they significantly curtailed spending during the pandemic, recording only a 5% growth. This suggests that rural households might have been prioritizing their spending on other urgent needs during the pandemic. In contrast, urban households maintained higher spending levels, reflecting their continued investment in home improvements during this period.
Similarly, urban-rural disparity within ICT expenditure has also continued to grow, reaching its peak of RM167.5 in 2022. This is primarily due to the higher demand that urban households have as the nature of work, and their lifestyle is inherently different from rural households. This may include requiring stable and constant internet connections to support remote work and online learning, alongside higher usage or number of electronic devices owned, contributing to increased ICT expenditure among this cohort.
Income
Figure 3 illustrates the spending patterns on WFH-related categories among households of different income groups, ranging from Decile 1 (D1, representing the bottom 10% of households) to Decile 10 (D10, representing the top 10% of households). Examining expenditure patterns according to income groups will give us additional insight into the priorities of each household income group at that time.
During the pandemic, households have prioritized housing-related investments, especially high-income households. D10 households recorded the highest growth rate, with CAGR rising from -0.6% in the pre-pandemic period to 3.5% during the pandemic years. This increase likely reflects a shift in spending priorities, with higher-income households allocating resources toward housing-related improvements or investments as part of prioritizing savings and investments during the pandemic years.
Meanwhile, F&M expenditures showed more variation across income groups. Before the pandemic, all income deciles reported positive growth, ranging from 2.8% to 7.0%. However, spending patterns diverged across income groups during the pandemic. Lower-income households (D1 – D3) experienced the highest growth in F&M expenditures, with a CAGR exceeding 8%. This likely reflects efforts to improve their living standards or meet additional needs for household furniture and equipment.
Conversely, higher-income households, particularly those in D10, recorded a decline in real F&M spending, with a negative real growth of 1.3%, marking an 8.3 percentage points drop from pre-pandemic levels. This suggests that many high-income households may have already owned the necessary items for remote work, virtual learning, and extended stays at home, reducing the need for additional spending.
Occupation
A comparative analysis of WFH expenditures across occupational categories provides insights into how employment status or professions influence household spending related to WFH arrangements. The data shows minimal differences in F&M expenditures across occupational groups before and after the pandemic. However, households headed by individuals in managerial and professional roles reported a notable increase of approximately RM200 in H&U expenditures between 2019 and 2022.
ICT expenditures demonstrated the most significant changes across all occupational categories. Households headed by skilled workers, such as managers and professionals, reported the largest increases, with an average additional spending of RM150 or more in 2022 compared to 2019. Other occupational groups recorded smaller increases, ranging from RM50 to RM130.
The widespread increase in ICT spending across all occupational groups underscores the pivotal role of digital tools in facilitating flexible working arrangements and adapting to modern lifestyles. The surge in ICT expenditures during the pandemic highlights the prevalence of WFH practices across various occupations and sectors, driving higher demand for ICT resources such as work devices and internet services to support remote work effectively.
Concluding Remarks
As highlighted in Part 1 of this series, higher expenditures in WFH categories of H&U, F&M and ICT reflect the behavioural changes of Malaysian households during the COVID-19 pandemic. Although the sharp increases in the WFH categories among certain demographic groups have returned to pre-pandemic trends, certain attitudes regarding WFH have remained. Statistics from “2024 Workmonitor Research in Malaysia” by Randstad revealed that two in five Malaysian employees are willing to resign if required to work at the office more frequently. This sentiment is found to be stronger among younger employees, with nearly half of Gen Z and Millennials expressing opposition to inflexible work arrangements. This opposition is attributed to pandemic-induced lifestyle changes driven by the rise of WFH arrangements. For instance, some households have relocated to bigger and more affordable houses, which are usually located in sub-urban areas, assuming that they can save on transportation costs with FWAs. But, with the shift back to office-based work, such households are likely to face rising transportation expenditures. Furthermore, government policies such as the anticipated fuel subsidy rationalisation next year are expected to exacerbate cost-of-living concerns. For these households living farther from their workplaces, the combination of increased transportation costs and reduced fuel subsidies may prompt stronger advocacy for continued FWAs to balance the rising expenses.
