It has been well documented that both the recruitment market trends and economic trends mostly go hand in hand. Over the past 10 months we have seen the biggest dislocation from the old world of work and we have crash landed into a far more progressive, technology enabled world of employment.
Although the lasting economic impact of the COVID pandemic is yet to be seen, for the most part, technology has allowed the world to continue with some sort of a normal rhythm. None of which would have been possible even 20 years ago. Technological advances coupled with a horrific global pandemic has forced a new world upon employers and employees alike.
For those lucky enough to have remained in employment, there have been a few silver linings, many of which will transform how we work for years to come. One such ‘silver lining’ is of course the shift to remote working and the flexibility this will bring for most people going forward.
On a recent conference call with clients, we were asked how we see regional employment benefitting from this going forward. It sparked a very interesting conversation that threw up some unique predictions which I wanted to share with you all.
The current perception of employees having additional flexibility and remote working capabilities is that a number of people will take the opportunity to transition back closer to home outside of Dublin which will provide the regions with rich new talent pools for companies to perhaps acquire in time.
Here’s the issue in my eyes - I totally agree that the new way of working will provide the option for professionals to move back closer to home and continue to work remotely for Dublin based companies for example. This trend has already started, a quick look at the average house price increases across 2020 will show you the rise in demand, with some regional cities recording a jump of 10% average price increase for a 3 bed semi in suburban areas.
Traditionally if a professional had the burning desire to move out of Dublin, for example, and wanted to move back to Galway/Cork/Limerick they would absolutely be taking a drop in salary. At Phoenix, given our national focus, we have seen this many times over the past few years. For multinationals supported by the likes of the IDA, the regional cities offered a cheaper cost base to scale offices or manufacturing facilities and typically a sizable saving on annual salary cost when compared to a similar operation in Dublin.
The question we have is as follows - If individuals are now moving back to regional cities and are now maintaining a ‘Dublin’ based salary - how will regional SMEs or even Multinationals ever attract the talent they need? Will this force regional salaries to increase to be in line with Dublin based salaries in order to secure the talent they need to grow their business?
Arguably you could say - why should employers have to pay Dublin salaries should the individual choose to work in a more cost effective location. Well, we can already see an interesting trend starting in the US with the likes of Stripe offering a one-time payment of $20,000 to employees who opt to move out of San Francisco, New York or Seattle, but in turn must cut their base salary by as much as 10%. This blended approach will allow employers to ultimately pay a reduced salary over a longer period of time.
In Ireland, given the Government’s recent announcement regarding their National Remote Work Strategy, employers in Ireland will be legally obliged to grant an employee’s request to work remotely unless they have reasonable grounds to refuse it. However, unlike the US, we don’t imagine that employees would happily agree to a simultaneous salary cut simply because their agile working request has been granted.
Back to the above point, over the coming months and years, we predict that Dublin and Regional salaries will become more aligned and an employee’s location will play a reduced part in determining the package necessary to attract and retain the best - agile working - talent. In turn increasing the cost base for regional employers.
So the question remains, for regional cities being promoted by government backed bodies such as the IDA, will remote working actually work in favour of these cities or will the cost of key talent become a potential stumbling block for attracting multinationals to the regions? What do you think?