A landmark government report has revealed working from home is actually more productive than going into the office – in moderation.
WFH became the norm for white-collar workers during the Covid lockdowns, and had since become entrenched in many industries, with more than a third of Australians now doing their job at home.
Some companies are pushing to get staff back into the office more often in the belief it is a more efficient way of working, but the Productivity Commission has concluded the opposite.
‘Allowing workers to work from home some days can improve worker satisfaction and allows people to benefit by avoiding the commute to work, meaning they have additional time for other purposes,’ it said.
Working from home has proven particularly popular with women, who can save on childcare costs and spend the hour or two they save by not commuting toward other home activities.
A hybrid model, mixing work from home and the office, was seen as the best approach to encourage creative interactions.
‘Workers do not need to be in the office full-time to experience the benefits of in-person interactions,’ it said.
‘As a result, hybrid work (working some days remotely and some days in the office) tends to be beneficial to productivity, or at least, is not detrimental to productivity.’
A landmark government report has revealed working from home is actually more productive than coming into the office – in moderation – in a major win for Aussie workers
WFH really took over during the pandemic with more than a third of Australians now doing their job at home
The Productivity Commission, however, said in-person interactions were more likely to spark initial breakthroughs.
‘A key reason for this is that in-person interactions may be better for collaborative tasks and idea generation,’ it said.
‘Experimental evidence from engineering firms indicates that idea generation benefits from in-person interactions but in-person and virtual teams were equally effective in evaluating and selecting ideas that have already been developed.’
The report also cited the case of IT firm which during the lockdowns, spent more time on meetings ‘which reduced the time available for work tasks; meaning hours worked increased while output declined’.
‘The evidence on working from home is still evolving. However, given most studies find hybrid work to be either neutral or positive for labour productivity, there is no evidence to suggest that the trend towards hybrid working has contributed to the productivity loss phase of the productivity bubble,’ the commission said.
But it warned that less experienced workers may struggle with work from home, as they miss out on mentoring and networking.
‘For less experienced workers, in-person interactions may be an important avenue for skill development as there may be a greater knowledge transfer from senior workers and junior workers through informal in-person interactions,’ it said.
Working from home has become a divisive topic with the Commonwealth Bank and ANZ requiring staff to spend 50 per cent of the time in the office, while Woolworths wants corporate staff to return to the office three days a week.
A hybrid model, mixing work from home and the office, was seen as the best approach to encourage creative interactions
Former Liberal leader Peter Dutton lost the last election, and his own seat, after vowing to force Commonwealth public servants back into the office, creating a fear among other WFH staff that they will be next.
The policy was so disastrous politically that Jane Hume, who devised that unpopular WFH plan, was dumped as the Opposition’s finance spokeswoman and sent to the backbench in new Liberal leader Sussan Ley’s reshuffle.
Before the pandemic in March 2020, just 12 per cent of Australians reported working from home on all or most days of the week.
The proportion of Australians working everyday from home more than doubled to 31 per cent by September 2020, after most of Australia had experienced lockdowns.
After those lockdowns, 27 per cent worked from home at least some of the time during the week, indicating increased popularity of more hybrid work arrangement.
By August 2024, 36 per cent of those with a job reported that they usually worked from home.
‘As working from home is a fundamental change to how people do their jobs, it is likely to have implications for labour productivity,’ the report said.
Australia is in a productivity crisis, where output for every worker declined by 1.2 per cent in 2024.
The culprit, however, was not work-from-arrangements but a lack of new investment in technology that would make workers more productive.
‘Capital matters for productivity because more capital (the machines, equipment and other durable goods that are used as inputs in production) means workers can produce more goods and services,’ it said.
During the 1990s to the mid-2000s, productivity in Australia grew at an annual pace of more than two per cent as the introduction of the internet enabled companies to more efficiently share data.
