The benefits - and costs - of working from home

The number of Australians working from home is falling, as employers encourage staff back to the office. New data from the Australian Bureau of Statistics shows 37 percent of employed people regularly work from home, a 3 percent fall since August 2021. In 2021, NSW and Victoria were subject to a series of lockdowns to contain the spread of COVID-19. Victorians went through six lockdowns during 2020 and 2021 with Sydneysiders restricted to a 5km radius of home from August to October 2021. All but essential workers were directed to work from home.

As restrictions have lifted, however, many workers have been interested in retaining the option to work from home. The trend has resulted in office vacancy rates of 16.2 percent in Melbourne, 14.4 percent in Sydney, 12.6 percent in Brisbane and 18.5 percent in Perth, according to data service Statista.

In its 2023 Year in review, McCrindle research says cost of living pressures have influenced the desire to work from home, which it estimates to save the average Australian worker $6,359, or 9 percent of after tax savings.

“Three years on after the COVID-19 pandemic, hybrid work formats have become embedded into work culture,” the report noted.

However, not all aspects of working from home were considered positives, the research found.

“While positioned on flexibility, hybrid workers are feeling the impact of remote work compared to the workplace,” it said. “More than half of Australian workers (59%) suspect that those working in the workplace get better opportunities than those working from home.

“Seven in ten (70%) workers believe that working in the workplace leads to a greater sense of recognition and appreciation of their efforts to commute to the workplace.”

Australia is in the midst of a ‘baby recession’ with preliminary estimates showing the number of births in 2023 fell by more than four percent to the lowest level since 2006, according to KPMG. The consultancy firm says this reflects the impact of cost-of-living pressures on the feasibility of younger Australians starting a family.

KPMG estimates that 289,100 babies were born in 2023. This compares to 300,684 babies in 2022 and 309,996 in 2021, according to the Australian Bureau of Statistics (ABS). KPMG urban economist Terry Rawnsley said weak economic growth often leads to a reduced number of births. In 2023, ABS data shows gross domestic product (GDP) fell to 1.5 percent. Despite the population growing by 2.5 percent in 2023, GDP on a per capita basis went into negative territory, down one percent over the 12 months.

“Birth rates provide insight into long-term population growth as well as the current confidence of Australian families,” said Mr Rawnsley. “We haven’t seen such a sharp drop in births in Australia since the period of economic stagflation in the 1970s, which coincided with the initial widespread adoption of the contraceptive pill.”

Mr Rawnsley said many Australian couples delayed starting a family while the pandemic played out in 2020. The number of births fell from 305,832 in 2019 to 294,369 in 2020. Then in 2021, strong employment and vast amounts of stimulus money, along with high household savings due to lockdowns, gave couples better financial means to have a baby. This led to a rebound in births.

However, the re-opening of the global economy in 2022 led to soaring inflation. By the start of 2023, the Australian consumer price index (CPI) had risen to its highest level since 1990 at 7.8 percent per annum. By that stage, the Reserve Bank had already commenced an aggressive rate-hiking strategy to fight inflation and had raised the cash rate every month between May and December 2022.

Five more rate hikes during 2023 put further pressure on couples with mortgages and put the brakes on family formation. “This combination of the pandemic and rapid economic changes explains the spike and subsequent sharp decline in birth rates we have observed over the past four years,” Mr Rawnsley said.

The impact of high costs of living on couples’ decision to have a baby is highlighted in births data for the capital cities. KPMG estimates there were 60,860 births in Sydney in 2023, down 8.6 percent from 2019. There were 56,270 births in Melbourne, down 7.3 percent. In Perth, there were 25,020 births, down 6 percent, while in Brisbane there were 30,250 births, down 4.3 percent. Canberra was the only capital city where there was no fall in the number of births in 2023 compared to 2019.

“CPI growth in Canberra has been slightly subdued compared to that in other major cities, and the economic outlook has remained strong,” Mr Rawnsley said. “This means families have not been hurting as much as those in other capital cities, and in turn, we’ve seen a stabilisation of births in the ACT.”

The benefits – and costs – of working from home

As the hybrid working model embeds itself in Australia, new research reveals the ups and downs of working from home

Continued stagflation and cost of living pressures are causing couples to think twice about starting a family, new data has revealed, with long term impacts expected