Working from home – sometimes – found to be good for the economy

Working at home could boost productivity, the government’s own analysis has found, as a major report reviewing the pandemic economy concluded hybrid arrangements are not to blame for Australia’s stagnating growth.

The Productivity Commission’s first assessment of the “productivity bubble” at the start of the decade found workplaces that allow employees to work some days in the office and others at home can lead to improved worker satisfaction while maintaining the benefits of interactions at the office.

The first major study by the commission on how the pandemic has shaped workplaces notes evidence on work from home is still evolving. However, initial findings pour cold water on the argument that employees should be in the office five days a week.

The Productivity Commission found work from home is unlikely to be a cause for stagnating growth.Credit: iStock

“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 report said.

Before the pandemic, 11 per cent of employees worked remotely but by August 2024 the Australian Bureau of Statistics found 36 per cent of people reported they usually worked from home.

The commission also found remote work can improve workforce participation – particularly for mothers, workers with a disability and other workers who might find it harder to come into the office five days a week.

“Allowing for remote work reduces geographical barriers to employment and expands the geographical pool of potential employees and employers, which could improve job fit and thus productivity,” the commission said.

The right to work from home turned into a key debate throughout the 2025 election as then-Coalition public service spokeswoman Jane Hume revealed in a March speech that federal bureaucrats would be expected to return to the office five days a week under a Liberal-National government.

Internal polling on the public service remote working ban was so unpopular that then-opposition leader Peter Dutton backflipped on the policy in the first week of the election campaign, and Coalition MPs said it triggered a false impression the party wanted to end work-from-home provisions in all workplaces.

“We’ve made a mistake in relation to the policy. We apologise for that,” Dutton said in April after announcing the backdown.

“And I think it’s important that we say that and recognise it.”

Work from home has been cited by business and industry groups as a cause of stagnating productivity growth – the rate of growth has fallen 1.2 per cent, including in each of the past three quarters.

The commission added in its report that full-time remote work was also not the solution, saying less experienced workers could suffer under that model.

“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.

Some employers have begun mandating a return to the office, including Amazon and Tabcorp, as bosses argue five days a week at the office is crucial to improving productivity.

In September 2024, David Harrison, the chief executive of property investment company Charter Hall, told The Australian Financial Review there was a shift to bringing back full-time office work.

“All this work-from-home nonsense is completely changing,” he said.

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