Colin’s Corner

Working From Home – Part II

By Colin Toll

This month my article is the second and final part of my edited version of the 2021 Australian Government Productivity Commission’s report on the concept of working from home (WFH).

How will working from home affect our wellbeing?

Working from home can affect various aspects of wellbeing, including physical and mental health, work–life balance, and family functioning. It may also open work opportunities for people who face barriers to labour force participation or full‑time employment, such as people with disabilities or caring responsibilities.

Working from home can improve physical and mental health by giving people more time and control over their day — to sleep, exercise and cook nutritious food, for example. But it can also worsen physical and mental health due to decreased incidental exercise, increased isolation, and the elimination of the boundaries between home and work life.

Should governments care about the increase in working from home?

Working from home represents a potential overall gain to society, and there is a strong case to allow workers and firms to negotiate mutually beneficial outcomes. This negotiation will happen largely at the individual (contracts) or firm level (workplace policies), and outside the formal workplace relations system.

Workplace health and safety

Australia’s work health and safety (WHS) system is set up well to handle more widespread working from home. Australia’s WHS laws are relatively broad and principle‑based. WHS is the joint responsibility of employers and workers, and this responsibility applies wherever work is carried out, including in the home.

But working from home creates more complexity for managing WHS risks, in that the employer has less visibility and control of the working environment. This may raise the perceived costs of working from home to the employer. Much will depend on the evolution of case law on what is ‘reasonably practical’ when working from home.

The union movement has called for a ‘right to disconnect’. The ACTU has said that there needs to be legal and reasonable limits on working time — including a ‘right to disconnect’ from work emails, telephone calls and other forms of contact outside of scheduled work hours.

The impact on central business districts (CBDs)

Working from home is largely a CBD‑centric shock. The ‘knowledge’ jobs amenable to working from home are currently concentrated in the CBDs of our biggest cities. And the people who work in those jobs tend to live in the inner and middle suburbs.

As more people work from home and avoid commuting into the CBD, economic activity such as demand for retail, hospitality, and personal services is expected to shift from the CBDs to the suburbs. And demand for office space could decline, as some firms look to downsize or relinquish their offices. This has prompted some to call for workers to go back to the office, to ‘save the CBDs’.

The death of the CBD has been greatly exaggerated. There are several compelling reasons why CBDs will remain attractive hubs of economic activity.

  • Many firms will experiment with hybrid or work‑from‑anywhere models and will maintain their CBD offices because of their central location and accessibility.
  • The benefits of proximity — sharing, matching and learning — remain strongest in high density areas such as CBDs, even with the advent of digital technologies.

Will working from home solve our congestion problems?

Congestion is a substantial cost in terms of time, money, and pollution in our populous cities. Unfortunately, increased working from home is unlikely to be the panacea to our congestion problems, at least in the short term.

Policy should support the transition to working from home

The shift to working from home caused by the COVID pandemic is a large and material change in the way many people work. Even if half of the people who could work remotely do so an average of two days per week, overall hours worked from home would increase from a pre‑pandemic level of just under 2% of all work hours to just under 7%. This is a large change that has happened very quickly but should be kept in perspective. The central workplace will remain the dominant model for the foreseeable future. But the increase in working from home is potentially of great benefit to a substantial portion of the Australian workforce.

As with past technologically enabled changes in work practices, the result of this evolution is likely to be overall positive. 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.

While it will take some time before the implications of this process of change are realised, on balance, the outcome is expected to be positive.