The significant increase in Australians working from home during and after the pandemic is not to blame for the country’s persistent productivity struggles, the Productivity Commission has declared.

The Commission released a research paper Productivity before and after COVID-19 this week, focusing on the “productivity bubble” that Australia experienced during and after the pandemic.

Australia’s productivity rates reached record highs from January 2020 to March 2022, but by June the following year had returned to the pre-COVID levels of late 2019.

The Commission’s paper investigates why this happened and whether there are any lessons from it that can be applied to improve Australia’s lagging productivity in the long-term.

It found that there were three phases of this “productivity bubble”.

It began with the “reallocation phase”, where lockdowns were most severe and labour was moved to more productive industries, leading to an increase in productivity across the board.

This was followed by the “productivity gain phase”, where productivity continued to grow while lockdowns were lifted and economic activity rebounded.

Then there was the “productivity loss phase”, where these gains in productivity were reversed, and things returned to where they had started.

WFH is innocent

Despite the claims of some employers and big businesses, the report concludes that the large influx in Australians working from home is not to blame for the productivity struggles.

According to the report, before the pandemic just over 10 per cent of Australians worked from home at least once a week, while 12 per cent worked from home every day.

By April 2022, 18 per cent of people worked from home at least one day per week, and just under 30 per cent worked from home every day.

As of late last year, more than a third of all employed people in Australia typically worked from home.

Following a survey of available studies and research, the Productivity Commission concluded that hybrid work is often advantageous to productivity, and that working from home cannot be blamed for a decline in productivity in the economy.

“Workers do not need to be in the office full-time to experience the benefits of in-person interactions,” the report said.

“As a result, hybrid work tends to be beneficial to productivity, or at least, is not detrimental to productivity.

“The evidence on working from home is still evolving.

“However, given 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.”

According to Productivity Commission Deputy Chair Dr Alex Robson, the report found that there are “no shortcuts to sustainable productivity growth”.

“Tackling our productivity problem will require dedicated effort and reform from business and government,” Robson said.

“The Productivity Commission will be handing five productivity inquiries to government this year with recommendations that can guide us on the path to sustainable productivity growth.”

The benefits of WFH

Another report released this week found that working from home has had a hugely beneficial impact on workers, but employers are still divided on whether it improves productivity and efficiency.

Swinburne University conducted the research on behalf of the Fair Work Commission, and found that 42 per cent of bosses were approving work from home requests due to a belief it improves productivity and efficiency, while 35 per cent are declining them due to productivity concerns.

Just under 40 per cent of employees said they worked longer hours when they were based at home, while just 13 per cent said they worked less.

The overwhelming majority of workers said this flexibility has had a positive impact on their work-life balance, mental health and physical health.

The survey was focused on Australian workers on the Clerks Award.

Working from home became a key election issue when the Coalition announced a plan to force public servants back to the office.

Opposition Leader Peter Dutton was soon forced to backtrack on this policy after it was met with widespread backlash, while Prime Minister Anthony Albanese offered full support for the concept.

Just last week, NAB was met with an internal revolt over its plan to increase the number of days workers would be required to attend the office, something which the Finance Sector Union labelled “completely unnecessary” and “regressive”.