Would Australian workers take a pay cut to work from home?

Research from the University of South Australia (UniSA) has found that 45% of Australian workers would be willing to take a pay cut to work from home.

The study involved a survey of more than 1100 employees in 2020-21. It found the average worker who can do their work effectively from home, would be willing to give up between $3000 - $6000 (4% - 8%) of their annual wages.

And one fifth would be willing to sacrifice $12,000 to $24,000 (16% - 33%) of their annual salary.

Akshay Vij, associate professor at UniSA and lead researcher in the study, described one of the main reasons why employees choose to work remotely: flexibility.

“Having that degree of autonomy over where and when you need to be at work has some implicit value,” he told HRD Australia. “But obviously, it's also moderated by other factors — life circumstances in particular if you have caretaking responsibilities, if you have young children or older family members that you need to take care of — it helps to have that flexibility [which] allows you to juggle those opportunities.”

Digging into the remote work data

Vij acknowledged that 55% of Australians are not willing to take that pay cut in order to work from home. But for those who were okay with a reduced salary, it also depended on how much they earned.

“That one group which has been willing to give up such a large amount, they are also people who are usually very highly paid,” he said. “And so when we’re saying that 16 - 33%, that’s actually 16 - 33% of the average annual full-time wages, not specifically their wages. That dollar amount which we basically estimated they were willing to give up is about $12,000 - $24,000 in annual full-time wages.

“But these people also usually earn upwards of $100,000. To some extent, they have greater capacity to give up money. And that's potentially also why they have a high value attached to this flexibility.”

The study also found that women are nearly 30% more likely to value remote work than their male counterparts. So too were workers in their 30s – 50s. Workers in their 20s, however, valued remote working the least.

“It has to do with those HR concerns early in your career and that's when those opportunities for advancement are most important,” Vij said. “And that's when presenteeism and all the stuff associated with it can become a significant determinant of long-term career success and career prospects.

“Whereas if you're in an established career, you've already got the social networks and the experience to back it up, you're no longer as dependent on making those in-person connections. You've already got a network. And that's something that comes up not just in our study, but across other studies as well.”

How employees approach remote work

The study found that those who had more experience remote working before the pandemic didn’t place a positive value on remote working. This group was also more concerned about their relationships with their colleagues and supervisors, and about missing opportunities for career advancement.

One of the reasons for this is that these employees had been working at a time when everyone else was not working remotely, and remote working practices hadn’t been as normalised, Vij said.

“There weren't as many technical and organisational processes and protocols in place to support remote working arrangements,” he said. “If you're the only guy in the meeting dialling in, your experience is definitely going to be more negative. You will also implicitly or explicitly start to get isolated as well because you're that person who doesn’t come into to the office.

“We’re not in that paradigm anymore. It’s very normalised, every meeting has a Zoom option or a Teams option. You're no longer seen as a bludger for not being in the office nine-to-five. The norms have changed, processes and practices have changed, systems for support have changed. So, to some extent, you can make the counter argument that these people, their concerns may no longer be as typical.”

But what Vij emphasised was how many workers now value hybrid working.

“Study after study in the last two years have consistently found that most workers actually prefer a hybrid arrangement, they see value both to being at home but also being at the workplace,” he said.

“And ideally, they want to do two to three days. So most studies in the last couple of years, including more recent work that we’ve done, have estimated that on a given work day, on average about 20 to 25% of the workforce is likely to be working remotely.”

What HR teams can do for workplace flexibility

Where Australia ends up in terms the uptake of flexibility and remote working, will come down to a balance of power between employers and workers, Vij said.

“Right now, we're in a very tight labour market, so workers have significantly greater power than they would have had,” he said. “In normal labour markets, usually employers have greater power.”

Vij added that most businesses would actually prefer that staff work in the office as it would be too much work to have two sets of protocols for those who work in-office and those who work remotely. However, there are still benefits of remote working, such as needing fewer offices and desks.

“Most firms would actually prefer to outsource low value-add, low-skilled jobs that can be done remotely, that don't require as much collaboration and communication,” he said. “They're entirely remote, so those workers don't need a space, a desk, anything at the site. And then there's a benefit to the organisation. But for everybody else who wants a hybrid arrangement, the business would much rather that you'd be on site all the time.”

Ultimately, Vij said HR teams should ensure they support employees who work remotely.

“If you're trying to get the best workers, especially in those high-value and high-skilled jobs, those workers expect a certain degree of flexibility now that the genie cannot be put back into the bottle,” he said. “Your best option is to provide as much support as you can to make sure that people who work remotely aren’t disappointed in any shape or form when it comes to career advancement and opportunities for moving up the ladder.”