Be warned: WFH spells white-collar job losses

If you can do the job from home, someone can do it from Dhaka. WFH is about lifestyle, not safety.

Surveys in Britain have suggested office workers would be willing to sacrifice 20 per cent of their pay to work permanently from home. They might have to.

Last month Goldman Sachs global chief executive David Solomon said he wanted all his staff back in the office in New York by the end of the northern summer. Working from home, he said, “is an aberration that we are going to correct as quickly as possible … It’s not a new normal”.

That would have been news to Australia’s white-collar workforce, the bulk of whom are still working from home, at least in part, a year on from the first lockdown. Occupancy of commercial office towers in Sydney and Melbourne was half and a third respectively the level of a year ago last month, according to the Property Council of Australia.

Few could seriously claim to be afraid of the coronavirus any more. WFH is about lifestyle, not safety.

American writer Truman Capote once said more tears were shed over answered prayers than unanswered ones. And so it might be for the much-loved (for now) concept of WFH.

Politicians were fond of saying we all shared the burden of the pandemic. But for many white-collar workers, far from a burden, COVID-19 was a prayer answered: a pleasant respite from commuting, dry cleaning bills and office small talk; an unexpected drop in mortgage repayments and the opportunity for huge capital gains on the sharemarket.

One former chief executive of a large multinational company recently told me white-collar workers should be champing at the bit to get back into the office to keep their jobs.

“If you can do the job from home, someone can do it from Dhaka … jobs will melt away one by one to Manila,” he told me. “In a contest of politicking in the office or politicking online, I know on whom my money is.”

Is working from home really such a good career move?

This could be the biggest catalyst ever to take large chunks of service and support, and subject them to what manufacturing has been subject to for decades. Moreover, it’s much easier to fire someone if you don’t know them.

Why would a business keep Australian-based data analysts if it rarely saw them in person, when there are Indian and east Europeans as smart and available for a quarter to half the price?

Why bother employing receptionists, as one major law firm was last week, when they are working from home? Time zone challenges aren’t insurmountable. The quality of overseas workers’ output doesn’t have to be as good either; it has to good enough for the price.

COVID-19 may have unwittingly initiated an economic Armageddon for professionals. Tata chief executive Rajesh Gopinathan told Harvard Business Review that WFH had ushered in a “talent on the cloud” model.

The COVID-19 crisis has opened senior leaders’ minds to the idea of adopting WFA (work from anywhere) for all or part of their workforces, the Review wrote in December.

The surprise drop in the unemployment rate to 5.8 per cent last month from 6.3 per cent only a month before has raised hopes that wage growth could pick up, too. But economic forces unleashed by COVID-19 could mean white-collar wages stagnate or even fall.

A prominent US study published last year found 37 per cent of jobs in the US could be performed entirely at home. These jobs paid more and made up 46 per cent of the US wage bill.

Dogs have loved the working from home trend.

Downward pressure on wages for even a sizeable minority of these jobs would have significant implications.

White-collar jobs that require face-to-face interaction, such as physiotherapists, will be immune. But that’s a small share of the total. It’s not clear initial consultations with medical practitioners or lawyers, for instance, do require face-to-face interaction.

Universities should be most worried. If more student time is spent away from campus, in front of a laptop, why bother attending an Australian institution if a more prestigious foreign institution were to offer its degrees remotely? The global demand for academics would collapse.

Solomon’s banking colleague JPMorgan chief executive Jamie Dimon said recently he’d noticed his employees were less productive on Mondays and Fridays when working from home. And that’s JPMorgan in cutthroat New York.

Imagine Monday and Friday productivity in pockets of the public sector under a WFH regime.

Certainly, surveys illustrate workers think they are more productive when working from home. Whether they are is debatable. More peace and quiet and greater flexibility could boost output. Lack of meaningful interaction with colleagues could reduce it. One senior official recently told me Zoom meetings with colleagues abroad were useless for fear the transmission was being bugged. “People only say what they are willing to say in public,” the official said.

It’s common to believe COVID-19 has taught us that we can work at home just as effectively. Yes, inertia plays a part in human affairs. But to believe we were too unintelligent before COVID-19 to unlock massive productivity gains from having swaths of the workforce at home is to believe we were profoundly irrational.

He should be worried: “If you can do the job from home, someone can do it from Dhaka’’.

Surely some business somewhere would have illustrated these gains, and others would have copied. That is traditionally how productivity improves.

Surveys in Britain have suggested office workers would be willing to sacrifice 20 per cent of their pay to work permanently from home. They might have to. Polish doctors might become as much of a threat as Polish plumbers.

For decades workers have been drawn to big cities in rich countries for high-paid professional and office work. The sudden preference for working from home threatens to reverse or at least slow this trend.

It won’t happen overnight — graduate and low-skilled white-collar roles will be in the firing line first — given regulatory and cultural resistance.

But longer term, we should be careful what we wish for.