How bosses won the fight for power in 2023

Tension between workers and bosses has risen dramatically throughout the past few years – especially around the return-to-office battle. As employees seek to retain the flexibility they've prized for more than three years, employers have sought to instil greater rigidity, often through fixed working patterns that require employees at their desks.

Since the pandemic, workers have largely had the upper hand over executives, whether due to a favourable labour market or simple outright stubbornness to give up their remote set-ups. But 2023 marked a turning point: for the first time since Covid-19 hit, amid a weakening economy and cooling labour market, employers are coming out on top. Yet although this power struggle has seemingly ended in favour of bosses, workers haven't lost all they've fought for – millions of employees have ended up with greater flexibility, autonomy and pay than perhaps ever before. But going forward, say experts, the new hybrid working environment looks set to be dictated by employers for the foreseeable future.

How we got here

Fewer than four years ago, a full-time employee working from home even occasionally was extremely rare – a special privilege afforded to few, often under special circumstances. Then Covid-19 forced a mass exodus from the office. Suddenly, people had to work remotely, most for the first time, and many found they enjoyed the flexibility and autonomy it allowed them.

Even when lockdowns eased, and employers began attempting to call their employees back to their desks, many employees didn't budge for years. The immensely worker-favourable labour market during the pandemic – which saw employers clawing for a limited talent pool – meant employees had leverage to ask for what they wanted, or they'd leave. During this period, attempts by management to force a return to office were, in some cases, even the target of open revolt. 

But the tide began turning in autumn 2022. A weakening economy and rising interest rates led to wide-scale job cuts, particularly in tech. As the world slowly emerged into post-pandemic life, the economic downturn coincided with some of the biggest firms pushing for an office return with renewed vigour. The pendulum had seemingly swung back towards employers, many of whom announced hiring freezes – workers began having less agency in a cooling job market.

Bosses had largely incentivised workers to return to the office through perks like free food and yoga. Employees just didn't go – so leaders began switching carrots for sticks – Grace Lordan

By January 2023, against a backdrop of layoffs, some bosses pulled back workers' flexibility. Large corporations, such as Disney and KPMG, began mandating more in-person days and monitoring attendance.

"Beforehand, bosses had largely incentivised workers to return to the office through perks like free food and yoga," says Grace Lordan, associate professor in behavioural science at the London School of Economics. "Employees just didn't go – so leaders began switching carrots for sticks."

Spring and summer

Worker power was far from completely diminished though, particularly in the US.

Amid a culture of mandates, employee activism continued through spring, most notably with the protests of corporate employees at Amazon against the company’s return-to-office plans. Many workers also still refused to follow strict hybrid protocols – data from Kastle Systems, measuring entry swipes at office buildings, shows that the average workplace occupancy among 41,000 businesses in the US has hovered below 50% throughout 2023.

In the UK, soaring inflation and a cost-of-living crisis meant more workers were willing to quit and find new jobs – if they could. This was a marked difference from past periods of financial downturns, in which employees tend to stay in their current roles. "The cost-of-living crisis has spurred people to think, 'if my boss isn't giving me a pay rise that even meets inflation, it's about time I move on'," says Lordan. 

While employees remained emboldened in voicing their disapproval to bosses, a slowing job market meant they ultimately had much less leverage compared to just a year ago. Layoffs continued, and quit rates returned to pre-pandemic levels. By summer, the Great Resignation was declared "over" by experts. "So much of the power balance is dictated by the labour market," says Lordan. "When it's harder to go out and get another job, the power is with the employer."

Autumn and winter 

By September, the crackdown on remote working gathered pace, bosses' return-to-office rhetoric escalated and employee attendance increasingly became a disciplinary issue. Even companies synonymous with remote work, such as Zoom, began enforcing in-person working patterns.

"There was real momentum for the return to office in autumn 2023," explains Hannah Dwyer, EMEA head of work dynamics research and strategy at commercial real estate firm JLL, in Dublin. "There was a 'back-to-school' mentality."

As bosses' hybrid mandates intensified, their demand for new labour cooled – the traditional autumnal hiring spree was disrupted by a faltering economy. In the UK, Office for National Statistics data shows that estimated vacancies fell by 257,000 between August and October 2023, compared to the year before. In the US, a September spike in new jobs was met with a sudden drop in growth in October.

This recruitment slowdown weakened workers' power further still. LinkedIn data, seen by the BBC, shows that US hiring on the platform was down 13.4% year-over-year in October 2023, with UK hiring not only declining by 15.1% year-over-year, but also plummeting 7.2% below pre-pandemic levels. Conversely, job-seeker behaviour increased – the average number of applications per applicant in both the US and UK shot up by more than 21% over the same period.

Nela Richardson, chief economist at HR management firm ADP, in New York, says this supply-and-demand dynamic has meant fewer opportunities for workers – and jobseekers needing to be more willing to concede power to employers. "This leads to job searches taking longer, fewer fully remote roles available and sharper trade-offs required for workers: whether that's relocating for a hybrid role, less flexibility overall or a smaller pay hike than expected." 

There was real momentum for the return to office in autumn 2023. There was a 'back-to-school' mentality ¬– Hannah Dwyer

The result is that many workers have been left frustrated – an ADP September survey of 2,500 US workers shows that engagement has taken a significant hit through 2023. "We're seeing people less motivated and committed than last year, when workers had more power during the hiring crisis," says Richardson. "Much of it comes from the slowdown in pay growth and opportunities for flexible working." 

Where it leaves workers

As we head into 2024, employers hold more power than at any time since Covid-19. However, this doesn't mean the pendulum has swung entirely back to its pre-pandemic position.

Flexibility, for instance, has become entrenched in many jobs. Employee expectations have settled at a much higher baseline than at the beginning of 2020, says Richardson. "Two days a week working from home would have once been seen as a privilege, rather than the default business model at scale. Most companies are adding flexibility even if they're more office centric."

A small subsection of the workforce may continue to hold greater leverage over their employers. This will likely occur in the most in-demand growth sectors, such as AI. 

For example, the ousting of OpenAI CEO Sam Altman by its board in November led to staff threatening mass resignations – less than a week later, he was back in the job. "That's the type of scenario in which employees still have power," says Lordan, "where they're at the cutting-edge of certain industries, and possess skills that are hard to replace."

But, for most workers, there will be fewer opportunities to change jobs. As a result, they'll likely hold less sway when it comes to negotiating pay and autonomy – the two hallmarks of the hiring crisis, when firms were battling for talent.

This will likely remain the way until the next economic growth cycle, says Lordan. "There are two ways of having greater power as the worker: a buoyant job market, or being able to convince your firm you're a one-of-a-kind superstar employee; few can manage the latter. As we saw through the Great Resignation, a good job market creates the feeling that there's a shortage of talent, conferring power to the employee."

-bbc