21 September 2021

Productivity Commission says governments should smooth the way for working from home

| Ian Bushnell
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Working from home

The pandemic has shown that many people could do their jobs at home just as well as in the office. Photo: File.

Working from home, in some shape or form, is here to stay and governments should not fight it but smooth the way for staff and employers, according to a new research paper from the Productivity Commission.

The Commission says the pandemic has resulted in a forced experiment that has been mostly beneficial, but also poses many questions about the future of work.

The public sector, in particular, dominated as it is by the kinds of knowledge workers who can work from home, has taken to the practice enthusiastically. Across the economy, 40 per cent of workers have tried working from home.

The research paper says that the experiment has shown that many people could do their jobs at home just as well as in the office, and they have also enjoyed the lack of commute, and the savings in transport and parking costs, and a better work-life balance.

It predicts that workers and employers will negotiate mutually agreeable outcomes, with many employers opting to experiment with the hybrid model, where workers spend two to three days a week in the office and two to three days working from home.

If all workers who could work from home did so two days per week, around 13 per cent of all hours would be worked remotely.

The paper says the hybrid model is appealing because it balances the benefits of working in the office, such as collaborating, innovating, and interacting with colleagues face-to-face, with the flexibility, quiet, and lack of commuting associated with working from home.

But it warns that the hybrid model may be more challenging to execute well due to increased management and coordination costs.

The paper says only a small number of employers are adopting fully remote models, including among high-tech firms where the use of collaborative technologies is commonplace, and access to a global talent pool is important, as well as low-skill jobs, such as call centres, where monitoring is easier, and collaboration is less critical.

The research also indicates a more fluid labour market as some staff seek out flexible work arrangements and possibly trade lower pay for that flexibility.

“Survey data from the US suggests that the ability to work from home two or three days per week may be worth a 7 per cent pay rise to workers, and about 40 per cent of workers who currently work from home would seek another job if their current employer required a full return to the office,” the paper says.

But the Productivity Commission says that an overall wage reduction was unlikely as employers experiment with different arrangements and retain those that work best.

It says the wave of experimentation and innovation taking place is a collective learning experience that is likely to reduce the overall costs of working from home and limit any risk of lower productivity.

“Individuals and firms will adjust their preferences in light of experience; we will learn more about the relative value of in-person interaction and how to make best use of it; workers will seek out jobs that better suit their desired mix of remote and office-based work; workers and firms will tend to get better at identifying and segmenting the tasks that can be done remotely; offices will adapt and technology will almost certainly continue to improve,” the paper says.

While there are still issues to sort out, such as remote staff working longer hours and when they can disconnect, a reduction in incidental exercise and potential isolation, the change overall is positive for employers, staff and the economy, the paper says.

“Governments should monitor the shift for any negative outcomes that require action, but overall should aim to smooth, rather than impede, the transition to different models of work,” it concludes.

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