Hybrid work model best for productivity, says Australian government report on working from home

A landmark government report has revealed working from home is actually more productive than coming into the office - in moderation.
WFH really took over during the pandemic with more than a third of Australians now doing their job at home.
With managers trying to get staff back into the office more often, the Productivity Commission has concluded work from home arrangements are in fact more productive, as staff are spared the long commutes.
'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 are more likely to be the primary carers of children, making them the key beneficiaries of flexible arrangements.
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.'
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 cited the case of IT firm, during the pandemic, spending 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.
'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 staff to return to the office three days a week.
Former Liberal leader Peter Dutton lost the last election, and his own seat, after dumping an election policy plan to force Canberra-based public servants back into the office, as other public servants working from home across Australia feared they would 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 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, when Sydney and Melbourne were in lockdown.
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, wasn't 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.
Economists are hoping artificial intelligence could revive Australia's faltering productivity - regardless of whether staff are based at home or in the office.

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