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  • Writer's pictureShaun Brien

Productivity without the city

Last week I spent time with my Year 12 class talking about recent aggregate supply side factors which have been impacting the goal of strong and sustainable economic growth. One of the most interesting recent AS factors is the increase in productivity since the onset of working from home (WFH) through the pandemic.

At first, I'd only really thought of the business expenses aspect of why this occurred. All of a sudden, businesses were able to save on expensive rent and utilities of maintaining large scale offices in city business precincts which mean that costs of production were severely reduced. Also throughout this time many businesses were receiving grants and wage subsidies such as JobKeeper which were helping to minimise wage costs.

However it wasn't until earlier this week I stumbled upon some economic research (yeah I know, I'm doing wild things in my leisure time) which showed that on average in Australia, people were saving 70 minutes a day in transit time. Not only does this add up to almost 6 hours of the week back to individuals, but this research also discovered that individuals were using this time half to complete more work and half to enjoy leisure activities. So in actuality both households and businesses were better off.

So it is very interesting now to view the end of the WFH era and the potential impacts this may have on our productivity. There are a lot of very strong economic arguments for the return to the office as there are a lot of economic ripple impacts through the income spent on transport, cafes, restaurants and other social activities but all of this places capitalism before the individual. It makes for a very interesting economic argument that we're willing to forgo some productivity and make individuals on average materially and non-materially worse off because it will overall increase the overall levels of production and therefore create nicer growth figures for the government to pat itself on the back about.

Now there have been some positives in all of this as some businesses and industries where it is possible, have allowed employees to split their working hours between home and the office therefore creating a happy medium. These are the businesses we should really be supporting as they try and balance people and profits.

Thank you for reading my anti-capitalism rant loosely tied to the VCE Economics curriculum. Let me know if you enjoy this type/level of analysis and if I should do more.

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