Australian employers paying remote workers less | Information Age

Companies employing a two-tiered pay system are treading a fine line. Photo: Shutterstock

Nearly half of Australian employers are paying remote workers less than those living in metro areas, a new study has found.

Specialised recruiter Robert Half conducted a survey of 300 hiring managers, including 100 CFOs and 100 CIOs across Australia, finding that many are introducing two-tiered pay systems to take into account the differing cost of living in regional areas versus metropolitan hubs.

Of those surveyed, 43 per cent of the Australian employers said they are currently paying their remote workers less, while just under 20 per cent are planning to introduce a two-tiered system in the future.

Larger companies are more likely to pay their remote workers less compared to SMEs, the research found.

“Larger companies typically have the infrastructure to support remote working compared to smaller businesses, and may be using the method to cast a wider net when recruiting,” Robert Half director Nicole Gorton said.

“But regardless of size, employers need to be aware of the potential pros and cons of a two-tier pay system for remote staff.”

Such a pay system could create tension within a company and lead to remote workers seeking employment elsewhere, Gorton said.

“This setup could result in friction between colleagues who perform similar roles and are paid differently, which would ultimately sap employee morale and result in staff leaving for higher-paying opportunities,” she said.

“Implementing a two-tier pay system can be a delicate balance between fairness and financial sustainability. It’s too soon to tell how the rise of remote work will affect salaries long-term.

“What we do know is that employers need to offer competitive compensation to attract and retain the best staff.”

CFOs are particularly in favour of paying remote staff less, with 37 per cent currently doing this and 25 per cent planning to introduce such a system.

Employers based in New South Wales are most likely to have a two-tier pay system, the research found, with Sydney being the most expensive city in Australia to live in.

The least likely state for this to happen is Victoria, where regional hubs such as Ballarat and Geelong are located close to metropolitan Melbourne.

The popularity of remote work has skyrocketed in recent years following the pandemic, with many workers not returning to the office despite the lifting of restrictions, and many also moving away from major cities.

“The simple truth is that the way we work has changed,” Gorton said.

“Naturally, with that change, comes adjustments to how businesses operate. In a world where decentralised workforces are now widely adopted, remote workers need to take many factors into account when considering their overall job satisfaction.

“Being able to work remotely has a big impact on work-life harmony, and job seekers interested in remote opportunities should have a sense of how their salary might be impacted based on the company’s pay policy.”

The latest research is in contrast to a study conducted last year which found that remote tech workers are paid nearly twice as much as full-time office staff.

This study was global but did not include Australia, and was focused solely on tech workers.

It’s not all about money too, with a study finding recently that remote workers are happier and better employees, and would consider quitting if they could no longer work remotely.

The University of Melbourne’s Work Future Hallmark Research Initiative team found that 55 per cent of workers without access to remote work are feeling exhausted, while 45 per cent of those who do work remotely are feeling this.

The study also found that remote workers are more motivated at work and more productive.