Localization of Salaries

 

Google, Facebook, Microsoft, Twitter, Upwork, Slack, Amazon, PayPal, Salesforce etc have all extended their work from home model beyond Covid lockdown.

Twitter and Facebook have told most employees they can work from home permanently. However, Facebook will be adjusting salaries from 1st Jan based on employee’s location. “We’ll localize everybody’s comp on January 1” – Zuckerberg

In theory, localization of salaries based on cost of living seems to make sense. The reality however is that it may not be that easy to roll out. There have been numerous polls that show employees will accept a pay decrease to for the convenience of a WFH model. Critically however, the level of acceptable decrease is relatively small at around 5%. Anything above this level and I suspect employers could expect significant push back.

Jeremiah Owyang @jowyang did an interesting poll on twitter. In summary 44% of people would accept a 10% drop to WFH, but 56% say they either continue to go into the office, or look for another job.

 

 

What does this mean for the Irish recruitment market?

 

Using Numbeo to compare total cost of living across Ireland

 

Dublin 100%
Cork 83%
Galway 81%
Kilkenny 75%
Limerick 73%
Waterford 71%
Donegal 69%
Sligo 67%

 

The reality is that even if there will be some salary localisation for remote workers in Ireland, the likelihood is that they would still be paid above market rates for most locations. Also, as extra perks with some tech firms – free food, onsite gym, napping pods etc will be stripped back, they may need to rely on their ability to pay higher salaries to attract talent.

 

The upshot of all this is that an already heavily candidate driven market will become even more so, as tech employees across Ireland suddenly have far more options. Of course, in general more choice is a good thing, but not if you run a smaller tech business in Tralee for example, and are now competing directly for talent with large tech firms paying Dublin (or very close to it) salaries.

 

It will be interesting to see how the Irish tech recruitment market evolves and changes over the course of the next 12 months!

 

Let us know your thoughts on the topic!

 

Dave