How long before wages start to fall?

[Esceptico]

Although it isn’t certain it looks like Covid is leading to a fundamental change in work for those people used to working 5 days a week in offices. Employees and companies alike have discovered that working from home is viable and doesn’t affect productivity (significantly). Employers win by reducing office costs and employees can save significant amounts on travel costs and commuting time. At the moment this is an unexpected windfall for employees. However, how long before employers start factoring these savings into the wages they offer? Many jobs carried a “London” weighting or equivalent to offset the high travel costs from having to commute in from long distance or offset high rents. However if people are working from home and London/urban house prices drop because demand falls will wages drop too?

[powerstroke]

Esceptico said:

Although it isn’t certain it looks like Covid is leading to a fundamental change in work for those people used to working 5 days a week in offices. Employees and companies alike have discovered that working from home is viable and doesn’t affect productivity (significantly). Employers win by reducing office costs and employees can save significant amounts on travel costs and commuting time. At the moment this is an unexpected windfall for employees. However, how long before employers start factoring these savings into the wages they offer? Many jobs carried a “London” weighting or equivalent to offset the high travel costs from having to commute in from long distance or offset high rents. However if people are working from home and London/urban house prices drop because demand falls will wages drop too?

Yes not a good time to be a pen pusher ...

[Einion Yrth]

You've suggested that employers are winning on the deal by reduced costs. Why should employees receive any less than they do now, if everybody is better off as things are?

[CubanPete]

In London at least.

[bristolbaron]

I can’t see current wages dropping, even within London. However as more jobs are advertised on a WFH basis there may be more companies choosing to keep salaries in line with other companies that already offer this.

Pound in pocket, 99% of people will likely be completely unaffected.

[AngryYorkshireman]

Depending upon your skills, working from home full time can be a double edged sword. Why stop at paying existing employees less money? Can this work be done cheaper in another country? I'm sure these are questions being asked by senior people in some (especially multi-national) companies.So yes, there could be a considerable decrease in wages. How long this takes to filter through is anyone's guess. But, it will be a snowball effect. People get made redundant, less jobs to choose from, people accept lower wages etc. Hardly anyone is indispensable, anyone who thinks they are is naive.Why would anyone just because they work in London be immune to this?

Edited by AngryYorkshireman on Thursday 27th August 20:41

[moles]

Maybe government will start taxing companies/employees for working at home.

They can fund the benefit payments that will need to be payed to the people who used to work in city bus drivers, sandwich shop workers, taxi drivers...........

[V8 Stang]

Einion Yrth said:

You've suggested that employers are winning on the deal by reduced costs. Why should employees receive any less than they do now, if everybody is better off as things are?

Because businesses are there to make money, if there is now more demand for jobs, they won't need to pay as much.

Besides If an office job could be done from home, then it can most likely be done from India etc.........

[Einion Yrth]

V8 Stang said:

Einion Yrth said:

You've suggested that employers are winning on the deal by reduced costs. Why should employees receive any less than they do now, if everybody is better off as things are?

Because businesses are there to make money, if there is now more demand for jobs, they won't need to pay as much.

Besides If an office job could be done from home, then it can most likely be done from India etc.........

My company already employs people in India, Belarus, the US, even Nottingham. I don't feel terribly threatened at the moment.

[anonymous-user]

V8 Stang said:

Einion Yrth said:

You've suggested that employers are winning on the deal by reduced costs. Why should employees receive any less than they do now, if everybody is better off as things are?

Because businesses are there to make money, if there is now more demand for jobs, they won't need to pay as much.

Besides If an office job could be done from home, then it can most likely be done from India etc.........

A lot of work has to be done within U.k. only

[monkfish1]

bristolbaron said:

I can’t see current wages dropping, even within London. However as more jobs are advertised on a WFH basis there may be more companies choosing to keep salaries in line with other companies that already offer this.

Pound in pocket, 99% of people will likely be completely unaffected.

Of course they will go down.

Firstly, because more people looking for work will, inevitably push salaries down.

WFH will add to that pressure. Why do you want to pay the same "london" money when you can employ someone in, say, Durham, on significantly less money? Might not affect existing staff anytime soon, but certainly will with new starters.

[Gecko1978]

Einion Yrth said:

V8 Stang said:

Einion Yrth said:

You've suggested that employers are winning on the deal by reduced costs. Why should employees receive any less than they do now, if everybody is better off as things are?

Because businesses are there to make money, if there is now more demand for jobs, they won't need to pay as much.

Besides If an office job could be done from home, then it can most likely be done from India etc.........

My company already employs people in India, Belarus, the US, even Nottingham. I don't feel terribly threatened at the moment.

Basically it comes down to availability of skills. Cities like London attract people for many reasons and so you get a wider pool of people with those skill sets. Cities like London also offer a specialist environment in London's case its financial services, so you find more derivatives analysts in London than you do in say Sheffield. In time this may well change and the "City of London" may be no more but currently if thoes people work from home odds are its near (in the majority of cases) london and so to attract those people you need to pay them so they can afford to live in their London home. You can't as at today pay less and get someone in say Sheffield or Hyderabad.

There are other factors that come into play the bank I work at announced today a ban on remote working from overseas, so some staff who may have had a home say in Spain few out there in April and have worked from there. This has tax implications for them and the bank so the bank have put a stop to it from Sept 1st. My guess is HMG and HMRC want their money so don't actually want thoes high earners leaving to work from Italy or Greece etc.

So no wages won't fall because of WFH in the near term. Jobs will go though so if you don't have specialism then your job is at risk, if your job relies a lot on workers coming to a regualr work place then your job is at risk.

This was always going to happen. One final thought I have been starting to work with a piece of software that writes reports automatically in spoken English based on source data. No analyst required. This is a worrying thing as 1000's of peoples jobs are based on them analyzing data and then putting a report together......this software will destroy those sorts of jobs. I would point out today I don't seeing it being good enough but 10 years from now that will be a different story so those process jobs we sent off to India....they will also go.

[CubanPete]

Einion Yrth said:

V8 Stang said:

Einion Yrth said:

You've suggested that employers are winning on the deal by reduced costs. Why should employees receive any less than they do now, if everybody is better off as things are?

Because businesses are there to make money, if there is now more demand for jobs, they won't need to pay as much.

Besides If an office job could be done from home, then it can most likely be done from India etc.........

My company already employs people in India, Belarus, the US, even Nottingham. I don't feel terribly threatened at the moment.

There are a lot of skilled people in India. And they expect a skilled wage. We have plants in India, but mainly for access to additional resource. Skilled people aren't significantly cheaper in India than in the UK, and there is a significant overhead cost. It mainly suits us as we sell a lot of product to APAC and it makes sense as a production location (for some products) for that reason.

[Polite M135 driver]

you save on the commute but you need a bigger house with a home office, so...

[frisbee]

AngryYorkshireman said:

Depending upon your skills, working from home full time can be a double edged sword. Why stop at paying existing employees less money? Can this work be done cheaper in another country? I'm sure these are questions being asked by senior people in some (especially multi-national) companies.So yes, there could be a considerable decrease in wages. How long this takes to filter through is anyone's guess. But, it will be a snowball effect. People get made redundant, less jobs to choose from, people accept lower wages etc. Hardly anyone is indispensable, anyone who thinks they are is naive.Why would anyone just because they work in London be immune to this?

Edited by AngryYorkshireman on Thursday 27th August 20:41

Any company that is so st it has taken the pandemic to start considering that has far bigger problems. Clearing out the senior people that failed to be proactive might be a better place to start.

[Uggers]

I cannot see a fall in wages of existing workers, but can see a sustained period of no pay rises. New starts working from home will really take a hit.

Eventually the WFH workers will be realising the same 'take home' pay they had when they were commuting everyday. Just without the social part of the job and spending an unhealthy amount of time in the building they live in.

[abzmike]

I heard today that my place is likely to scrap car allowances. Now these are a bit of a legacy perk, I don’t actually need a car for work, but it’s effectively a wage cut for me. The rationale? I guess just because they can, and I should be happy I’m not one of the 30% that got redundo.

[fatboy b]

AngryYorkshireman said:

Depending upon your skills, working from home full time can be a double edged sword. Why stop at paying existing employees less money? Can this work be done cheaper in another country? I'm sure these are questions being asked by senior people in some (especially multi-national) companies.So yes, there could be a considerable decrease in wages. How long this takes to filter through is anyone's guess. But, it will be a snowball effect. People get made redundant, less jobs to choose from, people accept lower wages etc. Hardly anyone is indispensable, anyone who thinks they are is naive.Why would anyone just because they work in London be immune to this?

Edited by AngryYorkshireman on Thursday 27th August 20:41

Very apt username!

[valiant]

Polite M135 driver said:

you save on the commute but you need a bigger house with a home office, so...

Exactly.

Boss of a large finance company was on the news yesterday about employees returning to the office and said that while it’s acceptable for people to work from kitchen tables, sofas, end of the bed, etc whilst the crisis continues, it’s unsustainable in the long term to have people working in such unsuitable conditions. I’d wager that most of the newly WFH crowd do not have a suitable office environment at home and that could affect performance and efficiency. So, you either return to the office or start looking for a more suitable abode and that costs.

Add in the fact that presentism seems to be the default position from an awful lot of bosses and I’ll think you’ll see most workers return to the office eventually. May take a year or two and there may be an element of WFH during the working week (1 or 2 days for example) but normalish working will resume eventually.

[fatboy b]

abzmike said:

I heard today that my place is likely to scrap car allowances. Now these are a bit of a legacy perk, I don’t actually need a car for work, but it’s effectively a wage cut for me. The rationale? I guess just because they can, and I should be happy I’m not one of the 30% that got redundo.

In reality, a car allowance is a way to reduce the employers pension contributions.