Employers seem to think so. And they want their employees to accept a pay cut because they don’t have to come into the office. The great debate about the connection between location and pay is heating up again.
For many years, companies have used local, average salaries as benchmark for their salary scales. But when work is borderless, what does that mean for rewards? If I pay $1000 for a certain task, does the location of that person determine the price? Or is it all about the expertise and outcomes?
This has always been a hotly debated topic. I know from personal experience that the majority of companies pay people a local salary when they move to a different country. They use local benchmarks based on local living standards.
The most important reason is that they want to treat employees fairly - you don’t want 2 people sitting next to each other doing the same job earn different salaries, because one used to live in a higher cost country and brought that with them.
But when you work from anywhere, you can rightfully ask: why is my expertise less valuable in a low cost country than in a high cost one? My value to the company does not change when I move.
It’s not an easy topic and companies have to tread carefully.
What I do find fascinating is that companies that were very vocal about pay equity, and made big announcements last year around equal pay for equal work, are debating whether working from home should come with a pay cut. Are office workers now more equal than others?
My best guess is that given the current labor shortage, this is more of a consideration than actual intent. In addition, in many countries it isn’t legal to adjust salaries downward. But that doesn’t mean that you can’t offer new employees a lower starting wage in return for working from home.
This is far from over, and I fully expect to revisit this topic in the next months.