Disclaimer: Names of actual organisations are used in this post and I am in no way, shape or form associated to any of these organisations. All the hypothetical scenarios and assumptions made are my own.
COVID-19 has forced organisations to embrace work from home option for their employees. Almost three months ago, we went into lockdown phase here in Australia. Although the lockdown has now been lifted (it is now end of June,2020), many/most employees are still working from home. And no one is complaining of any drop in productivity.
Not all job types had the flexibility to work from home due the type of work expected of these job types. So, some part of the population saw the benefits of working from home whereas most parts of the population did not even have the option. This is not something new and was always the case. I am sure people working in certain job types, software engineering for example, always have seen “we provide work from home option” in job advertisements. Work from home option has been used as a flexibility feature to lure new hires to showcase that the organisation cares about work-life balance. Having been close to the technology industry, I know for a fact that this was the case. However, there were notable exceptions. If the organisation believes you were *too important to let go*, then they would go out of their way to help retain you. Monetary option was the first port of call, the next on offer was work-from-whereever-you-want. This is slightly different to working from home, I call this ‘working remotely’. Working remotely was an option that was available for very few elite and privileged employees.
The lockdown period has empirically proven that those job types that were previously not eligible for working from home option can actually work from home. Previous assessment of ineligibility to work from home could be due to trust issues (i.e. my employees will slack off, etc), difficult to co-ordinate (i.e. cannot partake in collaborative tasks, etc) or not having the right tools. This COVID-19 induced work from home has forced teams to evolve, forcing their hand on getting the right tools, forcing their hand in finding ways to co-ordinate and forcing their hand to trust their employees to deliver. Therefore, if they could deliver against their goals during this lockdown then there is no reason that one should deny these job types the flexibility to work from home. One of the better outcomes of this lockdown is that more job types and more organisations will now be actually looking at providing working from home as part of work-life balance package.
There are various articles claiming that working during lockdown has proven that employees need not be physically present in the office at all, hence, there will an exodus of people from costly cities such as Sydney to regional towns. Could this really happen? Can all of us ‘work remotely’? Can I move to Gilgandra?
I will explore this using a hypothetical example.
Let’s consider a Level-5 salary position at an university in/around Sydney (New South Wales), e.g. Level-5 @ Macquarie University This pays around approx. AUD 86K per year (excluding superannuation and no bonus). Let’s assume that the employed person (person-A) is currently living around Macquarie University. I will explore couple of scenarios with the assumption that the employer is happy for the employee to work from home and the idea is to explore the consequences of such scenarios to the employer. Now, you might ask, why am I exploring consequences to the employer and not the employee. Modern capitalism only panders to the to the top 0.001% of the people on the wealth scale. Exploring consequences to this top 0.001% of the people, who most likely are the employers will give us an insight into how this thing could pan out.
Scenario 1: Person-A decides to move further away to Goulburn. I cannot find any untoward consequence in this scenario so it should be good.
Scenario 2: Person-A decides to mover further down to Adelaide (South Australia). This is where it gets interesting. Similar roles at a local Adelaide university (University of Adelaide) pay approx AUD 80K. This 10% disparity is due to differences in living cost between Sydney and Adelaide. Although it is not much but it is something. There is an imbalance. Assuming the market finds it balance, there are a two ways that could happen.
- University of Adelaide raises it salary for HEO5 position to match Macquarie University. This might be a difficult option as we know that raising salaries for employees is not advisable according to modern Australian capitalism.
- Macquarie University indexes the salary levels to the location the employee is in. Facebook Inc has already taken this route. So, most likely this is the option that has the highest probability of occuring.
Person-A would not complain about Option-2 and Macquarie University is happy to be saving 10% from employee expense cost. What are the consequences? Macquarie University might now find it lucrative to hire (for new roles) someone residing in Adelaide because they can save 10% on salary expenses. This is a very simplistic view but it logically makes sense.
What if person-A decides to work from Philippines. Hallelujah! Macquarie University now finds itself in a gold-mine. This is an extreme scenario but an interesting scenario nonetheless. Now, Macquarie University might find it lucrative to hire (for new roles) in the Philippines because modern capitalism. Macquarie University could be quite happy with the arrangement. Also, just to be clear, this is not outsourcing, employer is hiring employees to be on their payroll.
This scenario has unfolded with Macquarie University as an employer without any consideration of any other employers. Lets add a new constraint that there is competition for employees everywhere.
Lets say they were unable to find someone suitable in other location i.e. below Sydney salary (AUD 86K). Now, they will try finding a local talent to fill the role. Will they get local talent in Sydney?
Let’s assume every organisation in the World is following this new found business model i.e. the one adopted now by Macquarie University. How would they be managing this salary conundrum? Some organisations, like Automattic, which powers websites like mine and million others, have their entire workforce working remotely from their respective homes in multiple locations spread across multiple countries. They work around the salary indexing problem by fixing the indexation to one currency (USD) and one location. USD is World’s reserve currency and most of their products and services are priced in USD, so it is easy for them to do it. And it is working well for them. Assuming Harvard University adopts this model, they are happy to index their salary to USD and some cheap location in the US, and arrive at a salary of USD 65K. Everyone in Sydney is fired up to work for Harvard University and gunning for a role there (of course working remotely) because USD 65K salary works out to be AUD 95K (as of today).
Will Macquarie University find good talent to fill their HEO5 role in Sydney in this environment? Quite difficult I would say. They now have only one option. Raise the salary to AUD 95K to match. Difficult option because we went down this route following the rules of modern capitalism so raising salary was never an option. Also, you are indexing the local salary to USD while earning in local AUD, again it does not make logical sense.
What is Macquarie University’s next move? Looks like we have a checkmate.
This is just from one very narrow perspective of a complicated maze of a World we live in. I have not touched on political and economical implications due to normalisation in cost of living, wages, people movement and trade. Remote working is feasible to employers only if they have market-leading offer with global reach and influence or if the entire globe is under one economic and trade umbrella.
So, in conclusion, my humble opinion is that working from home will be widely be accepted as a work-life balance a.k.a flexibility option. Job types previously not eligible for such perks will now be eligible. However, *working remotely* will not be an option for majority of employees and will remain a perk for the few elite and privileged employees, as was the case before. If you are not a part of the elite or privileged group then a sea/tree change to a remote regional town while holding your metropolis/city job is a myth even after COVID-19.
I don’t think I will be moving to Gilgandra.
I am neither an expert on this subject nor claim to be an expert in the field. I am sure there lots of counter arguments to my hypothesis, therefore would like to know your opinion or hypothesis on this topic.
Disclosure: I am mobile in terms of where I can work and who I can work for. If everyone embraces working remotely then it would definitely benefit me via normalisation of cost of living.