The costs versus savings of working from home


Published on

The coronavirus pandemic forced an experiment in remote work over the past two years.

Up to 40% of workers trialled working from home throughout 2020 and 2021, according to the Productivity Commission.

This was a major leap from the number of people dialling in from home offices pre-pandemic. In 2019, the Melbourne Institute's Household, Income and Labour Dynamics in Australia (HILDA) survey suggested just 8% worked from home for some portion of their work week.

costs v savings of working from home

Considering the regularity of working at home, the Productivity Commission estimated this accounted for around 2% of hours worked at home overall.

Fast forward to January 2022. More than half of the workers surveyed in the Melbourne Institute's latest Taking the Pulse of the Nation (TTPN) study reported performing work tasks at home. The majority of these people (89%) would like to continue working from home in some capacity, with a third looking to work remotely full-time.

In April 2021, 44% of these workers' employers supported the proportion of the work week they were spending at home. By January this year, this alignment had dropped to 32%, suggesting renegotiations are underway.

In a panel discussion for the Committee for Economic Development of Australia (CEDA), Productivity Commission chair Michael Brennan said this represents the second wave of experimentation.

"This time, instead of everyone doing the same thing, firms and workers will be trying out almost endless different and individualised approaches and learning from that experience. Fully remote, fully centralised and all the possible versions of the hybrid model."

As workplaces begin to find the best balance for different people and teams, we consider the benefits and drawbacks - financial, professional and otherwise - that come with working from home.

Can we work productively from home? 

Naturally, someone's ability to work from home depends on the nature of their role, how they're required to operate in a team and their personal disposition. This variability makes it difficult to pin down any kind of average gains or decreases in productivity.

However, in broad terms the Productivity Commission sees any working from home impacts on productivity as either positive or neutral.

The core reasoning behind this is that ongoing work from home will likely only be agreed to by employers if there's evidence that productivity has so far been maintained. Additionally, the workers seeking out remote options will more often be those who are more adept at the process.

Revenue-based e-commerce investor Clearco set up operations in Australia last year around a hybrid work model.

Clearco Australia managing director Dan Peters says deciding on their approach - where the team meets up once weekly at a coworking space - was based specifically around the desires of employees. Following this route with the right people has proven effective.

"If you're going to work in this hybrid way you need to hire people who will be successful in that kind of environment. If you hire people that really want and need to be in an office five days a week and that's not your plan, then don't expect them to be successful," Peters says.

Professional development in a hybrid work model

In most conversations about remote work, there's the question of how this experience may impact career progression.

Judith Beck, financial careers counsellor and author of No Sex At Work, says a lot can be lost by missing out on office banter.

"Learning from bosses and colleagues by hearing what they are saying in the office is so beneficial - especially if you are just starting out," Beck says.

"[When working from home] you miss casual office conversations that help improve relationships. It's not easy to network from home and lots of accidental, important connections are made at work."

To help alleviate these issues, she advises managers regularly bring their teams together when working in hybrid models.

"In the past information flowed more freely in the office and everyone usually knew what was going on. Now we are more isolated and too many assumptions are made," she says.

"If people are not feeling connected or part of the team this will have an impact on staff turnover. People rarely leave a job for money, unless there is a huge increase. They are more likely to leave because of culture and lack of communication."

For Peters and the team at Clearco, it's all about using the right tools.

"Collaboration and innovation are reliant on really high-quality communication. And that means using the right format at the right time to the right audience with the right message," Peters says.

"What you're relying on is the tools you're using and what they can deliver - whether that's Google Workspace or Slack or Microsoft Teams - and everybody's comfort levels and ability to leverage those tools."

While the effectiveness of these platforms is a work in progress, Peters says they go some way in replicating the organic moments in offices which enable ongoing development. The rest, he says, comes down to the standard good management principles of regular communication, addressing the needs of teams and providing timely feedback.

"I don't think that's different based on the work environment, whether it's remote or in-person."

Balancing the working from home bill 

Beck says the immediately obvious benefit of hybrid work is the opportunity for greater work-life balance, which should filter through positively in workers' professional dealings.

"Not having to commute an hour to and from work in traffic gives people more time for what is important to them - like family, fitness, or other interests," she says.

The Australian Psychology Society agrees that this flexibility can have positive wellbeing outcomes, including increased work satisfaction, a greater sense of autonomy and reduced fatigue. However, it points out that a lack of face-to-face socialising and work management could increase stress, overworking and a lack of team cohesion or creativity.

The Productivity Commission also points to cutting the commute as a primary financial benefit. It estimated the average full-time worker in 2019 who drove to work in Australia's major cities spent around 67 minutes commuting each day which amounted to $49 in forgone earnings (not including vehicle costs). The average time value and transport cost rose to $57 per day for those using public transport.

As anyone who decked out their home office lately would know, these set-ups can be costly. Some employers may cover this bill, but if not, at least a portion of costs for things like desks, chairs and computer monitors can be claimed on your tax return. Keep in mind, items over $300 will be deducted based on depreciation over several financial years.

You can also claim a portion of your work-related home power usage back on taxes.

However, rising utility bills could put a larger dent in this part of a working from home budget. While the Australian Competition and Consumer Commission (ACCC) reordered electricity prices falling by 8% over the last two years, jumps in the price of coal due to floods in Australia and the Russian invasion of Ukraine threatens a new price spike for consumers in the months ahead.

This is in line with increasing cost of living pressures, so it's worth reassessing your budget and figuring out what might work best for you as Australia experiments further with new ways of working.

Get stories like this in our newsletters.

Related Stories

Olivia Gee is a freelance personal finance writer. She has a double Bachelor's degree in Journalism and Media and Communications from the University of Wollongong.