Why are regional workers being paid less?

A study has found that some employers pay their staff who are working from regional areas less than those near cities.

Forty-three per cent of Australian employers have split their pay into two tiers: one for staff working remotely in regional areas and another for metropolitan workers, according to research from Robert Half.

Nicole Gorton, director at Robert Half, commented: “The simple truth is that the way we work has changed. Naturally, with that change comes adjustments to how businesses operate. In a world where decentralised workforces are now widely adopted, remote workers need to take many factors into account when considering their overall job satisfaction.”

“Being able to work remotely has a big impact on work/life harmony, and job seekers interested in remote opportunities should have a sense of how their salary might be impacted based on the company’s pay policy.”

While 55 per cent of companies still offer a one-tier pay system, 19 per cent of them are planning to introduce this regional pay policy in the future.

In a clear attempt to save money, there is a fine line being walked by these businesses, said Ms Gorton.

“Implementing a two-tier pay system can be a delicate balance between fairness and financial sustainability. It’s too soon to tell how the rise of remote work will affect salaries long term,” she explained.

“What we do know is that employers need to offer competitive compensation to attract and retain the best talent. No matter what, employers need to stay on top of salary trends to offer fair and competitive pay. And beyond salary, employers need to promote their full compensation package, which includes sought-after benefits and a strong corporate culture.”

Smaller businesses were less likely to have this policy than medium to large businesses, at 42 per cent and 45 per cent, respectively. While it may seem like an effective money-saving strategy, Ms Gorton noted that it could have negative consequences on company morale.

“Larger companies typically have the infrastructure to support remote working compared to smaller businesses and may be using the method to cast a wider net when recruiting. But regardless of size, employers need to be aware of the potential pros and cons of a two-tier pay system for remote staff,” Ms Gorton said.

“This set-up could result in friction between colleagues who perform similar roles and are paid differently, which could ultimately sap employee morale and result in staff leaving for higher-paying opportunities.”

Robert Half recognised that cost-of-living increases are the reason behind companies introducing two-tier pay systems. Sydney and Perth were more likely to have this policy in place, reportedly due to the high cost of living in these cities.

Queensland and Victoria were less likely, which Robert Half said is due to the large regional areas within the states.

Jack Campbell

Jack is the editor at HR Leader.