Will the Flexibility of Remote Work Become a Liability?

During the worst parts of the pandemic, remote work was a necessity. Then, as conditions eased and the global economy picked up, remote work became a highly coveted benefit and a potent enticement when hiring top talent.

Now, however, with the global economy teetering on the brink of a recession, and both interest rates and inflation on a seemingly endless upward trajectory, are remote workers at risk? Early signs suggest they might become among the first casualties of an economic slowdown if employers are forced to reduce head count.

Much of the concern comes from two heavily reported polls that came out in the United States in the past two months.

First, a survey from Goodhire, an employee screening platform, found that 78 percent of American workers fear that those working mostly in a remote context would be the first to lose their jobs if layoffs became necessary. Nearly seven in 10 respondents (68%) said their fear was based on the sense that remote workers might be considered lazier and thus of less value than in-office workers.

Could those responses just be paranoia? Not necessarily.

A second heavily reported survey, this time from presentation software developer Beautiful.AI, asked U.S. hiring managers about the impact of possible layoffs on remote workers. Confirming some of the worst fears from the first survey, 60 per cent of hiring managers said it is likely remote workers would be laid off first in the event of downsizing.

Again, it’s unclear whether the fears in the first survey, and the tendencies described in the second survey, will come to pass. As noted in the LHH Global Labor Market & Regulations Insights report for October 2022, there is still no consensus about whether the global economy will slip into a recession. Many public and private sector chief economists think there is a strong chance for a 2023 slowdown, but many are hedging their bets.

One of the reasons for a lack of consensus is how unevenly the global economy is performing right now. The United Kingdom, for example, may very well already be in recession, according to most sources. In the U.S., however, two months of very modest contraction were followed by a month of modest growth which eased fears of a recession.

Economic conditions are also very different depending on which industry you’re talking about.

Companies in logistics, some areas of the manufacturing sector and technology have seen significant layoffs already. Many believe the tech sector will continue to suffer.

The tech downturn has impacted the biggest and most iconic companies: Google, Meta and Microsoft are all expecting lower-than-anticipated revenues and profits. Amazon and Apple, meanwhile, are slowing plans for growth for the foreseeable future. Elon Musk, the new owner of Twitter, has signaled the need to lay off as much as 50 percent of the company’s workforce as part of a bid to make it more profitable.

However, the slowdown has also impacted companies in related sectors such as the gig economy, crypto currencies and even chip manufacturing, as a global shortage of precious metal takes its toll. Online retailers and service providers – including companies such as Amgen, Cazoo, FedEx Europe, Tech Mahindra, Noom, International Distribution Services, Peleton, HelloFresh, Skip the Dishes and Wayfair – have also started reducing headcount.

How does this downward trend affect the future of remote workers? All these companies have several critically important characteristics in common that could – under the right combination of circumstances – change the trajectory of remote work.

First is the sector’s need to burn through a lot of capital in search of the next big technological advancement. Astronomical burn rates and skyrocketing interest rates make for a very bad combination. That scenario is already forcing many tech companies – both those that develop new technology and those plying their trade online – to look at cutting costs.

And second, tech is among the sectors most reliant on remote talent. Even as many huge employers began formulating plans to bring most if not all employees back to the office, tech firms embraced the new human capital trend and used it as a carrot to lure new talent.

It is hard to believe that the remote work genie, released from its bottle during the worst parts of the pandemic, could ever be fully contained again. There is still a global skills shortage and if there are more job openings than eligible candidates, employers will have to make concessions. It seems certain that one of those concessions will continue to be the ability to work at home at least part of the time.

However, what is true for some may not be true for all. With an uneven, unpredictable economic slowdown looming, many workers may find no change in the remote-work equation. Others, however, may find that remote workers are the first to be sacrificed on the altar of cost cutting.

If employers are taking a long-term view of their skill needs, the decisions they make about remote workers should not be just about how much time they spend in the office. Regardless of where someone works, employees that have invested in, and demonstrated a capacity for, fit-for-future skills need to be retained at all costs.