Bosses want to kill off working from home. There’s just one problem with that

Is work from home dead? Bosses have made headlines during the past few months, ordering employees back to the office five days a week, and there’s been some grumpy rhetoric to match: “All this work-from-home nonsense is completely changing,” David Harrison, chief of commercial property giant Charter Hall, told a recent Australian Financial Review property summit.

But there’s a problem for those who want to drag our workplaces back in time: hybrid work will deliver economic benefits Australia can’t afford to squander.

Illustration by Simon Letch

Don’t take it from me; listen to the International Monetary Fund – one of the world’s most important financial institutions, and one not known for endorsing “nonsense”.

A recent IMF blog titled Remote Work’s Growth Gift spelt out how work from home can boost productivity and power economic growth. The author, Stanford University economics professor Nicholas Bloom, argued that firms, employees and society in general have all reaped huge dividends from remote work.

“In my lifetime as an economist, I have never seen a change that is so broadly beneficial,” he wrote.

Jobs that can be done remotely – around a third of positions in Australia – have a unique and valuable attribute: flexibility.

In every economy, there’s a diverse group of people on the edge of the workforce. Any change that makes access to employment easier, or more attractive, can draw them into work.

That’s precisely what remote work has done. For some, it has made employment an option or helped them increase the number of hours they work. It has allowed others to go full-time or switch to a job more suited to their skills.

Among the biggest beneficiaries are those who care for children or the elderly, those with a disability, and older people who would like employment.

Research by the Committee for the Economic Development of Australia think tank shows that carers, women with children, people with a health condition, and those with a disability “have significantly increased their workforce participation in occupations that have made large transitions to remote work since the pandemic”.

Remote work has “levelled the playing field” for groups that traditionally faced barriers to employment, the report concluded.

Those on fringes of the labour market often get much less attention than outspoken business leaders. But we must not forget how transformative the option of remote work has been for many within that group.

Two-thirds of Australians live in sprawling capital cities, where high house prices have forced families to locate a long distance from major job hubs. The ability to work from home, even a few days a week, has been an employment game-changer in those areas, especially for women with children. The long commute to a distant office is not the dealbreaker it once was. For some women with caring responsibilities, remote work has allowed them to take on a higher paid, more productive job that better matches their training.

Our economy has already benefited from these trends. But lifting workforce participation will become increasingly important as our population ages and the pressures that flow from a shrinking pool of working-age people intensify. The flexibility offered by remote work will be a crucial tool to help deal with that challenge.

Working from home also means fewer commuters on our overstretched road and rail systems, which in turn limits carbon emissions. “The WFH surge has curbed commuting traffic volumes across the US and Europe by an estimated 10 per cent,” says the IMF blog.

A little over one-third of Australian employees, including 60 per cent of managers and professionals, work from home regularly, according to the latest figures from the Australian Bureau of Statistics. That’s up from around 5 per cent before the pandemic. The Productivity Commission estimates about 35 per cent of Australian jobs can be done from home.

Yet only a small group does all their work remotely. Research by Swinburne University of Technology associate professor John Hopkins shows that about 10 per cent of knowledge workers in Australia work remotely full-time – roughly 3 per cent of the national workforce.

Hybrid work models, in which employees spend between two and four days a week in the office, have become the norm for workers with a job that can be done remotely.

Another study from Stanford University, published in June, compared the performance of hybrid workers with those full time in the office over two years.

A randomly selected group of 1600 workers from the travel agency Trip.com was divided in two, with half working full-time in the office and the other half working three days a week in the office and two days remotely.

There were no differences between the two groups in productivity, performance review grade, promotion, learning or innovation. But the hybrid workers had higher levels of job satisfaction, and their attrition rate was 35 per cent lower (this was most noticeable among female employees).

Melissa Wilson, a senior economist at the Committee for the Economic Development of Australia who researches remote work, says there is growing evidence that well-managed hybrid work can be just as productive as being fully in the office.

“We also know there are huge benefits from hybrid work in terms of recruitment, retention and reduced turnover,” she says. “I think those turnover costs are often underestimated by employers.”

New gadgets are also set to make remote work increasingly productive – Bloom’s research shows the share of new patent applications for technologies that support working from home has surged since the pandemic.

“Better cameras, screens and software and technologies such as augmented and virtual reality and holograms will increase the productivity of hybrid and remote work in the future,” he writes in the IMF blog. “This will generate a positive feedback loop between growth and working from home.”

Remote working in some form is here to stay. A return to the five-day office week would only set us back.

Matt Wade is a senior economics writer at The Sydney Morning Herald.