Should remote workers be paid less than their city counterparts?

There are home offices among the gum trees, near uncrowded surf breaks and high in the ski fields across Australia and New Zealand. As the pandemic swept the globe, companies realised many of their workers could be just as efficient — if not more so — at home, and the world of remote work opened up.

Recruitment director Emma Hoar says, "The pandemic created more open-minded ways of working and embracing that has positively impacted so many organisations globally."

For a statistically significant cohort, this has meant moving somewhere far from the city, where homes are cheaper and life runs at a regional pace. Atlassian  is currently on a drive to hire people outside of capital cities. For many regional residents, it’s a dream to have a thriving tech business welcome applicants from Mataranka to Moree.

The Australian Financial Review  points out the open invitation comes with a small catch, there’s a two-tier pay system with workers in NSW and Victoria earning more than other states.

As co-founder Scott Farquhar puts it, "We pay slightly differently in some of the major metro regions to recognise the cost of living" adding that these jobs come with higher salaries than you’d ordinarily find in a regional area.

Atlassian is not alone. During the pandemic, many US-based tech companies including Alphabet, Amazon, Apple, Meta and Microsoft (LinkedIn’s parent company) lowered pay for staff choosing to permanently leave expensive cities like New York and the San Francisco Bay Area.

Does this makes sense for an Australian and New Zealand context?

Mentor Natasha Mitchell says the process has not entirely come as a surprise.

"Cost of living has always appeared to be a factor into salary setting, so location usually does matter. If companies are able to isolate the 'cost of living' component versus the value for work done, then maybe there is a case for a different salary based on where you are located or if you are working remotely."

For some, the practice still rubs the wrong way. Recruitment director Louise Hall-Strutt says, "I think people should be paid on the value they are bringing to the business and it shouldn't make any difference whether they are working from home, regionally or from the office."

"A good employee is a good employee regardless of location or work preference and should be recognised as such."

IT leader Graham Lott points out that remote workers have unique advantages for employers.

"An employee working from home represents less of a cost to their employer due to the decreased amount of office real estate that is required."

"It could be argued that because the employer cost base has gone down, more profits should be redistributed to their employees who do work from home."

Skills trainer Nicole Field made the move from metropolitan Melbourne to regional Victoria, and says, "I know I would earn more in city areas but I enjoy the challenge and reward of seeing our cohort into jobs." She believes pay should be determined by ability and output. Venue Partner Luke Lazdins  is a remote worker and agrees, telling LinkedIn, "Just because I work from home does not mean my productivity or ethic differs from those who are in an office."

What about those who currently live in the city, near work, and want to ask to move to a new area? Recruitment director Sheryn Leach suggests, "If you want to work from home then I feel that can be negotiated. We have candidate shortages everywhere at the moment. However, there is no shortage for the work from home opportunities, so as I see it, supply and demand."

Do you think people should be paid a premium for living in an expensive but central location? Should remote workers take a small pay cut to work somewhere more affordable? Share your thoughts in the comments below.

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