lnflation doubles in a month and jobs impact this may have

 Continuing on from yesterday’s excellent comments. Today we have seen inflation reportedly rise from 0.7% to 1.5% inside a month. None of this is unexpected, big drops from a year ago when commodity market crashed are coming out of the figures now as prices rose again quite quickly into April/May 2020 after the Feb/March dip. 

Also, as touched on yesterday, we are seeing wage rises come back into play. The missing million of working age population who left post-Brexit and Coronaplague can’t come back yet. So now businesses are looking forward, there is a big “war for talent” as the HR-types like to say when they are feeling pseudo-intellectual.

At the same time, there are plenty of people not very keen on going back to the office, especially senior quite well paid people who are likely more productive without commuting thrown into their days. What do companies do in the short and medium term? These people are paid London level salaries but could now live in Wales in theory. That surely won’t last. Commuters who had to pay for season tickets just had a £4000 bonus last year. Equally, for more junior staff, they need the senior people to learn their skills from which does not happen so much over Zoom. 

My take on this is a hybrid model will out, where actually yes you might live further from London and only come in 2-3 days a weeks, but senior jobs will not really be allowed to be full remote in the longer term and if they are, they will be deemed specialist and not senior – thereby changing the pay over time for that role. So this will allow things to continue in a not dissimilar way to now. 

At the moment, companies have too much to deal with sorting out return to office, planning new office spaces, working in a newly busy market, trying to hire poeple etc, to really absorb any of the long-term lessons – which is why we see such divergence with HSBC saying most can work from home and Goldman’s saying none. 

Of course, this is a very South-East centric post, in the rest of the Country people generally did not live 80+ miles from work and so this is less of an issue, plus there are of course most actual jobs, which did not cater for the WFH world anyway.

One thing that leaves me cold is that somehow, this will all lead to all jobs going to India etc. adn that flexibility is a path to hell. “People can work from anyway so why not hire them where they are cheapest” and so careful what you wish for. If this were true it would already have happened (indeed it did, hence China), the new element is only that companies have realised they can survive more flexibility now, not that they need a whole new cheap team. The conundrum remains how do you fairly reward/price flexibility as an offer to your staff given it has big upsides for them over the company – but to go back to my earlier theme, in a war for talent, flexibility may just end up a priced in benefit for now.