Major American corporations were shocked to see fewer workers returning to work in spring as they began to openly welcome them back. Ford was one of those companies. They told reporters in April that initial numbers were lower than expected. Recent comments by IBM CEO, Mark Watson, show that most workers prefer to work from home.
Arvind Krishna, CEO of IBM USA, told Sara Eisen on Monday that only 20% of the company’s U.S. workers are present in the office for more than three days per week. Krishna said that he doesn’t see a situation where the balance of employees in the office ever reaches over 60%.
IBM was an early tech firm that pioneered remote work. In fact, it had as many as 40% of its employees working remotely in 2000s. However, it eventually reversed course and required workers to be back in office in 2017. The paradigm has changed again.
Krishna stated that he doesn’t believe it will ever surpass 60. “So, I believe we have learned a new norm.”
IBM had more than 280,000 employees worldwide at the close of last year.
Krishna expects employers to have some leverage when it comes to wages. However, it will be a lower level wage inflation than a reverse of it. Krishna stated at the Aspen Ideas Festival that “we will receive an adjustment in wages.” “I anticipate a decrease of the growth rate, a step back.”
He also stated that the market will determine how wage pressures vary.
“The 8-9% inflation and the 5% increase in wages are not consistent. He said that some pockets have 9-20 people in them. “Some pockets are almost flat and that will cause inequity as we move forward.”
Krishna also stated that IBM’s own inflation in hiring has been over 9%. He said, “Ours is at the top end, ours well above nine I would suggest for replacement workers.” It is difficult to find people.
He said that tech layoffs are mostly at unprofitable companies. Recent reports and surveys from the industry show that workers still hold the driving seat when it comes time to offer jobs and that many firms intend to continue hiring aggressively.
Krishna doesn’t expect overall inflation to fall quickly and will maintain a high level of inflation well above the Fed target of 2% next fiscal year. Krishna stated that IBM is planning for a period of “more sustained inflation” and that a return to Fed target of 2% in the next three to four years is not possible.
He doesn’t see a recession coming. However, he said that the current period with high inflation and a shortage of labor force is not typical. Past economic precedents are less important than forecasting tools.
Krishna stated that tech spending in the business-to-business segment is still strong, with many sectors spending more on technology, including banking and finance, retail, pharmaceuticals, and biotech.
He stated that there is no slowdown in B2B sales.