Australia’s bosses have quietly abandoned their hardline stance on forcing workers back to the office, conceding defeat after months of backlash and resistance, a new KPMG report reveals.

The 2025 Global CEO Outlook, which surveyed 1,350 chief executives across 11 countries including Australia, found a dramatic reversal in attitudes towards office mandates over the past year.

Once confident that full-time office life would soon return, most CEOs now admit hybrid work is here to stay – a sign that employee pushback has reshaped the future of work more powerfully than any corporate directive.

A return-to-office U-turn

In last year’s version of the same report, more than 80 per cent of CEOs said they expected employees to be back in the office full-time within three years.

This year, that figure has plunged to just over 20 per cent, meaning only one in five bosses still believe daily office attendance is realistic.

Three-quarters of Australian CEOs now expect hybrid work to become a permanent fixture, well above the global average of 66 per cent.

Nearly half want staff in the office three days a week, while fewer than one in ten favour just two.

None foresee a fully remote workforce.

“The majority of CEOs have said that they’ve found three days a week in the office to be the sweet spot, but I think ultimately it’s about what works for each business,” KPMG Australia CEO Andrew Yates said.

“The numbers confirm what we have long suspected: a return to a fully back-in-the-office workforce in Australia is unlikely.”

The U-turn on return-to-office mandates may be due to the huge backlash that many prominent companies faced when trying to bring their workers back to the office.

Earlier this year NAB employees labelled the bank “tone-deaf” and “out-of-touch” after it tried to increase the number of days required on-site, while then-Opposition Leader Peter Dutton was forced to backflip on an election campaign commitment to force public servants back into the office.

Reports have found that up to 40 per cent of workers would quit their current role if they were forced back into the office full-time, while other studies have found that more senior executives are also likely to leave if flexible working conditions are removed.

Underinvesting in AI

While most Australian CEOs are talking up artificial intelligence, few are putting real money behind it.

KPMG’s report found nearly three-quarters of local bosses list AI as a top investment priority, yet almost 30 per cent are allocating less than 10 per cent of their budgets to it.

And 40 per cent of local CEOs said they are learning about AI on the go, compared to less than a quarter worldwide.

“Without a national plan and effective regulation around the responsible use of AI, Australians are unwilling to trust it, and without trusting there will continue to be a lack of investment,” Yates said.

“Without investment we won’t be able to reap the full productivity benefits.

“Australia stands at a pivotal moment in harnessing the power of AI, but adoption requires more than just enthusiasm, it requires a strategic plan that builds trust and confidence in its use.

“By empowering businesses to invest in AI and equipping the workforce with the necessary training, we can not only drive innovation but also ensure that the benefits of AI are shared equitably across the economy.”