Productivity Commission backs hybrid work from home model

West Australian

29-05-2025

A major new report by the Productivity Commission has found working from home, in moderation, is actually more productive than being in the office full-time, debunking claims that the national shift to remote work is dragging down Australia's economy.
The landmark report, released this week, concludes hybrid arrangements, where employees split time between home and the office, tend to benefit both productivity and job satisfaction, especially by cutting down on lengthy 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,' the Commission said.
It found the rise in working from home since the Covid-19 pandemic is not to blame for Australia's recent productivity slump.
'Remote work also reduces breaks and sick days, and results in less distractions, all of which are typically found to be beneficial for productivity,' the report said.
By August 2024, 36 per cent of Australians with a job reported they usually worked from home, up from just 12 per cent before the pandemic. During peak lockdowns in 2020, more than 30 per cent worked from home on most days.
Despite fears that staff would be less productive at home, the Commission found hybrid work (working some days remotely and some days in the office) tends to be beneficial to productivity, or at least, not detrimental to productivity.
However, the report noted not all workers benefit equally. While working from home is especially popular with women, many who juggle childcare responsibilities, less experienced workers may lose out.
'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.
'A key reason for this is that in-person interactions may be better for collaborative tasks and idea generation.'
The Commission cited evidence from engineering firms showing in-person meetings sparked more creative ideas, although remote and hybrid teams were just as effective when it came to evaluating and selecting those ideas.
The broader productivity crisis, which saw national labour productivity fall by 1.2 per cent in 2024, is instead being driven by a lack of new investment in technology.
'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,' the Commission said.
Treasury Secretary Steven Kennedy, speaking to the Australian Business Economists this week, said boosting productivity growth would be a key challenge for the Albanese Government.
'Australia's 20-year average productivity growth has declined from 1.8 per cent to 0.8 per cent over that period,' Mr Kennedy said.
While some employers, including the Commonwealth Bank, ANZ and Woolworths, are pushing staff back into the office three days a week, the report suggests a flexible hybrid model could be the best long-term solution.
Politically, the issue remains sensitive after former Liberal leader Peter Dutton lost his seat following his support for a plan to force Canberra-based public servants back to their desks, a move that sparked widespread backlash from remote workers.
The Commission said that although the evidence on working from home is still evolving, 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.