New York and London’s white collar workers are among the highest paid in the world and for good reason. Skill levels are high, competition is strong, and cost of living is nearly prohibitive, especially housing. Smart working, if it continues beyond the immediate future, as Schroders’ announcement last week seems to signal, could change all of this.
Granted, some jobs require locally trained staff, for example accountants and lawyers need to be locally trained to be able to practice in a particular jurisdiction. But many other high skilled jobs, such as investment bankers, brokers, IT specialists, programmers, real estate professionals, have universal skill sets. Once the pandora’s box of working from home is open, it doesn’t matter if home is in Sussex or Long Island, or in Ukraine, Mexico, France, Israel, Ireland, places where talent is abundant and cost of living is much lower.
Governments should think very hard about the horizontal repercussions of continued smart working, including with regards to real estate prices, local micro economies, such as restaurants, pubs, shops, and crucially employment. If the marketplace for skills is now worldwide (as long as you speak English), then the cost of labour is bound to go down, unemployment in rich countries to go up, and social peace to suffer. Tinker with the system at your peril.