Robert MacCulloch
Robert MacCulloch is a native of New Zealand and worked at the Reserve Bank of NZ, before he travelled to the UK to complete a PhD in Economics at Oxford University.
The working-from-home, sometimes called ‘remote working’, debate has heated up in Wellington with the prime minister and finance minister pushing for more public sector workers to return to the office.
What does labour economics have to say about this matter? A lot. One of the most important theories of wage determination is called “compensating differentials”. It says that a worker who has harder job conditions, like one who has to be away from home a lot, maybe has the chance of being assaulted at their work-place, like a police officer, or has to work at odd hours, like nurses at weekends, for example, should be ‘compensated’ through higher wages. Conversely, people with easy work conditions can be recruited and retained more easily. What has this economics theory got to do with working from home in Wellington?
Everything. Remote working has made a bunch of office jobs way, way, easier, in terms of not having to spend time and money on commuting, being able to sleep in for longer, and generally being more comfortable during the day (i.e., being able to raid the fridge) compared to being a teacher standing up in front of a class, being a police office on the beat, or a nurse who has to be physically in a hospital.
The upshot is that now in NZ, the professions who have to turn up for work should be getting a 20 per cent pay rise compared to what they get now, and the working-from-home-crowd a 20 per cent pay cut, reflecting the “compensating differential” that has arisen out of the use of (Zoom-style remote) technology these post-Covid years. In the private sector, markets can make these adjustments on their own. But not in the public sector where wages are not so flexible and come under powerful union influence.
The total wage budget of the public sector should be kept roughly the same, but ‘front-line workers’ should be handed huge pay rises and the remote crowd big pay cuts. Yet the Public Service Association, which has concepts like “pay equity”, which means everyone should be paid the same, at the center of its ideology, which is so out-of-date that even Joseph Stalin would have changed with the times were he still around, will have none of it. That’s okay if you’re a communist, but at the same time, let’s be honest and up front about what is the consequence of the association’s stance: an exodus of NZ nurses, teachers and police officers to Australia.
Why? Because wages that should be paid to them are going to tens of thousands of ‘working from home’ bureaucrats whose jobs are now easier (and who are saving money through less travelling) compared to before Covid when they had to get moving each day into the city. The has thrown those who have to go into work, the hardest-working folks in NZ, being the likes of nurses, teachers and police – to the wolves to support those sipping coffee and plonking away on their laptops at home. You can’t get less ‘equitable’ than that.
This article was originally published by Down to Earth Kiwi.
