The biggest change to workplaces in 50 years is here to stay

Chair of the Productivity Commission, Michael Brennan, said “in less than two years we have gone from less than 8 per cent of Australians working from home to 40 per cent”.

“While this percentage may not always remain so high, it is inevitable that more Australians will work from home.”

The report investigated the economic impacts of a shift to working from home – as well as its impacts on an individual’s income, employment opportunities and health and wellbeing considerations.

It found that “on balance, working from home can unlock significant gains in terms of flexibility and time for employees and could even increase the nation’s productivity”, Mr Brennan said.

While the first working-from-home wave was forced upon many businesses at the onset of the pandemic in March 2020, the Productivity Commission’s report noted that the transition “was better than expected for many, and attitudes and norms have changed”.

Prior to the pandemic, the technology that allows many people to work from home did exist – but the Productivity Commission notes “very few took it up”.

It’s offered a number of reasons as to why there was such low enthusiasm for work-from-home arrangements: management practices, cultural norms, and stigma associated with remote work.

In addition, the report said firms “would have been reluctant to invest in the technology and systems for large-scale working from home, given uncertainty about its benefits”.

It went so far as to highlight the words of Morgan Stanley CEO James Morgan in April 2020, who had said: “If you’d said three months ago that 90 per cent of our employees will be working from home and the firm would be functioning fine, I’d say that is a test I’m not prepared to take because the downside of being wrong on that is massive”.

And while there is a long history of technology enabling different ways of working, Mr Brennan has observed that “the forced experiment of COVID-19 has greatly accelerated take-up of technology including that which assists working from home opportunities.”

Now that it’s been shown that working from home can work on a large scale, the Productivity Commission report has noted Australian business as entering a so-called “second wave of experimentation” by workers and firms alike – negotiating, trialling and adjusting work from home scenarios “to see what best works for them”.

Involving both employees and employers, businesses are now proactively looking to implement work-from-home models that work for both parties.

Moving forward, it’s set to have an impact on both businesses and employees alike.

“Working from home won’t suit everyone or every business but for many employees, working from home arrangements will be a factor in deciding which job to take,” Mr Brennan outlined.

So, what do workers want?

According to the report, most workers want to work from home at least some of the time – and highly value an ability to do so.

A survey undertaken by the Productivity Commission revealed around 75 per cent of workers consider themselves to be at least as productive working from their home as they are in the office.

The primary benefit of working from home, as cited by employees, was the time and money saved on commuting.

This being said, few workers prefer fully remote work, with most wanting to spend at least some time in an office environment.

“There are actual or perceived costs to working from home, such as reduced opportunities for collaboration and networking, reduced face-to-face interaction with managers, and consequences for long-term career prospects,” the report revealed.

That being said, Mr Brennan acknowledged that some employees have indicated they would be prepared to take less pay in return for increased flexibility.

What do workplaces want?

Cost is a major factor driving business attitudes towards remote working.

The report indicated that employers are “largely driven by the actual or perceived productivity and costs”.

On one hand, the report said “working from home may increase co-ordination costs, reduce serendipitous interactions and knowledge-sharing, stymie creativity and decrease the effectiveness of collaborative processes.”

It also highlighted that separation from managers “may also afford workers the opportunity to slack off”.

It’s a position with which Mr Morgan agreed. He’s suggested the practice “doesn’t work for people who want to hustle, doesn’t work for culture, doesn’t work for idea generation”.

But on the other hand, workers may be more productive at home due to having better control over their time, as well as better work-life balance, which in turn can improve productivity and staff retention – both important considerations for business.

Some businesses have also benefited from the realisation of office rent savings.

“That said, firms may be locked into long-term leases and may be reluctant to relinquish office space while they are still experimenting with working from home.”

Local, state, and federal governments are being encouraged to support the work from home transition – and have been advised they don’t need to take any immediate or direct action on the trend.

The Commission’s report says that at this stage governments should support the work from home transition and don’t need to take any immediate direct action.

According to Mr Brennan, current “risks” can be managed, “but we should keep an eye on them and be ready to intervene if necessary”.