The price of working from home could be a pay cut

Lack of career progression is the risk for employees digging in their heels over the return to the office

‘It is a somewhat strange take, given fast business adaption to lockdown and the hard work of employees’

It’s almost déjà vu. In August last year, the Government started its campaign to get workers back to the office. The guidance was updated, the encouragement began. There were some harsh words of warning from ministers that a failure to comply could risk losing one’s job altogether.

One year on and the office rallying cry is back. Last week Rishi Sunak, the Chancellor, made his push, in the name of young people who have been losing out on networking and career progression as they have been forced to start their working lives on Zoom.

This week it’s ramping up, with reports that Cabinet ministers are preparing for a battle with civil servants who are resisting coming back to work. Once again, it’s not just the carrot that’s being invoked. There have already been calls to dock the pay of workers who won’t return to Whitehall.

Of course there is one major difference between last year’s office battle and this new one emerging. Like almost every other area of society, working vaccines have completely changed the game. Last year’s office push was short-lived, culled after a matter of weeks when the infection rate started to rise again and, alongside it, hospital admissions.

With England’s second lockdown following soon after – including the insistence that those who could work from home do so – the office narrative got lost in a sea of muddled policy, as the Government held out for the scientific cavalry to come to the rescue.

This battle is different: it’s not about signalling support for offices, or developing half-hearted responses to help struggling high streets, filled with shops and services dedicated to catering to the office worker. With the link between infections and hospital admissions significantly severed, and much of society now reopened, the future of work has reached a pivotal moment: vaccines mean we can return to our old ways of working, if we choose to do so. But is the appetite there, or have our working habits – and locations – changed forever?

It’s not surprising that the civil service has kicked off this debate. It’s a clear-cut case of the tensions arising, as jobs are funded by the taxpayer, making transparency around workers’ efficiency and delivery a matter of national interest. But switch civil servants out with most other desk jobs, and soon you’ll be see a similar story. Every office is about to have this debate, and some will be uglier than others.

In the best-case scenario, the ability to work from home will be adopted by businesses as a competitive offer to make to prospective employees (likewise, the offer of a guaranteed desk five days a week may appeal to others).

Looking to go into banking? HSBC and JP Morgan are embracing home working trends, while Goldman Sachs’ boss has been razor sharp with his words about hoping to undo what he views as a remote working “aberration”.

Differences of opinion in the private sector are no bad thing. Rather, they lead to more choice, benefiting employees and customers too.

Right now it is a worker’s labour market: that is, one where lots of employers are desperate for staff and having to bump incentives to get them through the door. Between the furlough scheme keeping possible workers at home and the Covid-brexit exodus of migrant workers, those looking for work in sectors hit hard by the virus are in a position to ask for more.

We shouldn’t be surprised if flexible working is towards the top of their list. It was a growing trend long before the pandemic hit and lockdowns have accelerated this. According to Yougov, well over half of workers now want to work from home at least part of the time and recent polling suggests most employers are willing to let them do so.

Yet just as we shouldn’t act surprised that the 18 months have changed people’s working preferences, workers must recognise the trade-offs associated with their requests.

Salary cuts are being spoken about as punishment for not going back to work – a somewhat strange take, given fast business adaption to lockdown (and the hard work of their employees) prevented a further historic GDP contraction when the second national lockdown was introduced. But salary negotiations are an inevitable reality of working from home.

Pay packages – that once took into account commuting and the cost of living in metropolitan areas – may well start to reflect these changes. Over in the US, Facebook continues to hint that while employees are welcome to work at home, the decision to move to a cheaper area may also involve a pay cut.

It also shouldn’t come as a shock that those showing up in the office might win more promotions in future: data from the Office for National Statistics this spring showed that between 2013 and 2020, full-time home workers were nearly 40pc less likely to receive a bonus than those in the office.

Nor can workers assume there will always be a desk available to them a few days a week. Yougov finds that only one in five workers want to work from home fully, suggesting many more want a pick-and-mix option. But office real estate is pricey, and with firms already looking at downsizing to save on costs, trading a home desk for an office desk several days a week may lead to no office desk at all.

Office absenteeism was always going to come at a price. For some, the benefits will outweigh the costs, but these trade-offs must be fully realised before employers and employees decide to proceed. Unlike last year, the path they choose now may prove far more permanent.