Work from home experiment must find some common ground

 The rise of working from home is one of the most dramatic changes unleashed by COVID-19, and exactly what it means for many of us who have “office jobs” is still uncertain.

Sure, most big employers support some sort of “hybrid” model where it’s viable, and human resources policies have been updated accordingly. But making sense of these vague commitments is tough. Many firms supported “flexible” working years before the pandemic, but the vast majority of staff still worked in the office.

Working from home is still in an experimental phase.

Working from home is still in an experimental phase.CREDIT:MATT DAVIDSON

If you’re after a more thoughtful perspective on what lies ahead in the work from home revolution, the Productivity Commission this week published in-depth research on how this massive shift in society might evolve in years to come.

The authors don’t make detailed predictions, but use economics to produce informed opinions on the forces at play, and what it means for the economy.

The bottom line: employers and their staff have some common ground on the benefits of working from home, but they also have different priorities. Staff tends to want to work from home more than employers. As a result, expect much more experimenting and testing of working from home models, and negotiation between employees and employers, for years to come.

The good news is the commission thinks this process should be positive for the economy, not to mention for the wellbeing of millions of people who help make up “the economy.” So, the government should support the transition.

Like so many things related to the pandemic, the working from home phenomenon has come in “waves.”

The first wave was dramatic and remarkably quick. Workers who could do their jobs from home were ordered to do so, as occurred last year and is happening now in much of the country. The commission says this “forced experiment” has resulted in the share of employees working at home some of the time soaring from 8 per cent to 40 per cent.

Other major shifts in the labor force, such as the increasing participation of women in paid work, took decades to occur. This one happened in weeks. Working from home was technically possible for many of us before 2020, but lockdowns showed it was viable, and highlighted the benefits of avoiding commuting, seeing more of our families, and having more autonomy in our jobs.

The “second wave” of the work from the home shift is more complex, much like “living with COVID” is messier than pursuing the elimination of the virus. Once lockdowns lift, the second wave of experimentation involves asking: what does a “hybrid” model actually mean in practice?

The commission says the answer will be decided by employers and staff negotiating, trialing, and adjusting. Like all negotiations, there’s common ground between workers and employers, as both sides have an interest in changes that can improve productivity.

But the working from home phenomenon is different from other innovations that have lifted productivity, such as the introduction of electricity or computers, which initially benefited firms. In contrast, the main benefit of working from home is that it allows people to avoid commuting.

And that leads us to a key finding in the commission’s research: employees and employers want different things from the working from home revolution.

An empty platform at Waterloo underground station, during what would normally be the peak morning rush hour.

An empty platform at Waterloo underground station, during what would normally be the peak morning rush hour.CREDIT:AP

For staff, the commission cites survey data showing the biggest benefit is the time saved commuting – which averaged 67 minutes a day for full-time workers in the main Australian cities.

It says about three-quarters of people surveyed want to work at home some of the time, though most workers also want some time in the office. There are downsides to less physical activity at home, and isolation, but the survey suggests most of us do not want to head into the office five days a week.

Employers, perhaps not surprisingly, are more concerned about productivity and costs. The commission cites employer concerns that working from home can stifle creativity, reduce “serendipitous exchanges,” weaken a firm’s culture, and make it harder to manage staff. On the positive side, companies can save on rent by using less office space and may benefit if their staff are more productive at home because they can better manage their time.

These different priorities of staff and employers will set the scene for the second wave of experimentation with working from home.

The experiments could include having staff spending two or three days in the office and the rest at home, and companies are likely to tweak their policies as they learn from their experiences and those of their rivals.

Over the longer term, the commission says workers most keen on working from home will have the incentive to find a job that can combine working from home with good pay, and may switch jobs accordingly. Others may bargain with their existing employer to keep working from home by offering to accept lower wages, though this probably won’t be widespread.

As for the wider economic impact of all this, there’s cause for optimism. The commission says the effect of working from home on an individual’s productivity is “ambiguous.” But for the economy as a whole, it thinks the working from home shift won’t harm productivity and could improve it, as we all get better at making working from home easier and more effective. Ultimately, the commission says working from home arrangements that succeed for both workers and bosses should thrive, while others that don’t work will die out. Employers and workers will settle on “mutually agreeable outcomes,” and both sides will need to work on issues such as drawing a boundary between work and home life.

And putting aside these potential impacts on the economy, the fact so many people want to do some of their jobs at home suggests this is a change that could improve the wellbeing of millions of Australians. As the commission says: “The wellbeing benefit of working from home provides a clear and strong incentive to make it work.”

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