how will permanent remote work impact what you pay employees?

In 2016, only around 4% of the Canadian workforce was working mostly via remote means. That's well before the COVID-19 pandemic, which sent vast numbers of Canadians home for months or more. By March 2021, approximately 5 million employees in Canada were working remotely, accounting for around 20% of the workforce. 

It's not a trend that will be reversed following the COVID-19 pandemic—for a number of reasons. And with a quick economic recovery expected (unlike the slow recovery following the 2008 recession), employers must be ready to support growth with a workforce that looks different than it did before 2020. One step toward that readiness is understanding how permanent remote work situations may impact what you pay employees.

the normalization of remote work

Prior to the COVID-19 pandemic, many employers simply didn't offer remote work opportunities, often telling employees who asked about these options that it was impossible, not profitable or otherwise impractical. When the pandemic forced businesses to rush to develop processes and invest in technologies that would support remote work environments, though, everything changed.

More than a year later, remote work situations have been normalized, and many people don't want to look back. According to a PricewaterhouseCoopers survey of Canadian employees, 64% of those who were working remotely were not confident they'd feel comfortable returning to the workplace. And even once they are comfortable, they might not want to work from the office all the time.

When PwC asked workers what their ideal work environment looked like, the answers were:

• 12% wanted to work 100% remotely
• 22% wanted to work mostly remote and come to the workplace for critical functions or meetings
• 29% wanted to split their time evenly between remote and office work
• 17% wanted to work mostly in the office with options to work remotely as needed
• Only 20% wanted to work entirely in the workplace

One factor driving this desire for increased flexibility may be the realization that technology allows some people to live anywhere as they complete all their work remotely. Employees are moving away from dense cities as a result to places with lower costs of living.

According to Statistics Canada, it's not just about benefits to the employees, though. Around 90% of people who were working remotely said they were equally or more productive when working remotely as they were when handling tasks in the workplace. 

Employers are also more likely to support remote work in the wake of the COVID-19 pandemic, as they've invested in technologies and processes and seen that they work.

rising salaries despite remote work perks

Prior to the normalization of remote work options, they were seen as a unique perk. Employees might even have negotiated for this type of flexibility in lieu of a higher salary. And with office workers and others moving into areas with lower costs of living, you might think you can continue to use remote work as that type of cost-reducing carrot.

The reality, however, is that compensation has increased in many sectors as the competition for talent remains high. The average Canadian wage in July 2020 was $26.79 per hour. As of April 2021, it was $27.53 per hour. In some sectors, the increase is much higher.

In fact, the pandemic has led to upskilling in many workforces that may have driven up some compensation. Employees had to learn new technologies and skills to be able to handle the same jobs from home, and in many cases, businesses shifted the work being done by various teams to adapt to new customer demands driven by the pandemic. According to PwC, 67% of office workers were provided with upskilling opportunities since the start of the pandemic. Almost half of non-office workers could say the same.

Employers should not expect to be able to pay employees less in the near future because they are offering flexible work solutions. Strong growth and low interest rates have many companies focused on growth and expansion, and they need more people. That's contributing to a hot job market where employers are competing for talent. 

In many cases, you'll need to offer higher salaries as well as flexible work options to land the best applicants for your positions.