There are many terms to describe the new demographic of mobile workers that are making up an increasingly large part of multinational workforces: digital nomads, telecommuters and accidental expats. But mobility means more than increased work for the HR function; it is an ongoing compliance, tax and immigration challenge. To avoid rising costs, companies need to make sure their policies, systems and benefit packages are designed in a way that minimises the risks of mobility while capitalising on the benefits for confident management.
Technology is removing many of the barriers that have typically limited the ability of many companies to recruit talent. The ability to work from any location that has enough space and a good quality internet connection means that multinationals can access the best talent on offer without being limited by geography. Those looking to break into new markets no longer have to set up a dedicated office first, and workers are free to exploit global demands for skills without having to uproot their lives.
These ‘digital nomads’ are an increasingly important part of the world’s workforce. According to PwC, the mobile population in large organisations grew by around 25% in 2020. The global shift to remote working caused by Covid-19 played a role in this and could accelerate the trend over the short to medium-term. Figures from KPMG show that 53% of employers in Europe and 47% in the Americas expect an increase in remote working in 2022.
But working remotely is only one part of global mobility. And while the pandemic may be speeding up the trend, the global mobile workforce was already growing before it appeared on the world stage.
Trends driving a rise in mobility
Aside from the unprecedented global disruption caused by the global pandemic, several other structural trends are driving an increase in the global mobile workforce.
Demographic factors are widening a global talent gap. Research highlights the potential scope of the problem with a talent gap of 85.2 million people by 2030. This represents a leap from 3% of the global workforce in 2020 to 11% in 2030. Declining birth-rates in most advanced economies are creating a shrinking pool of workers, but technology is also playing a major role. With many more manual or repetitive tasks being automated or eliminated by digitalisation, the skills that companies are looking for are changing. Individuals with skills relating to data and emerging technologies are in high demand but companies also want those that can think critically, lead effectively and navigate change.
Demographics are changing the makeup of the global economy in other ways too. The last half a century has seen the traditional business hubs of New York, London and Paris begin to be outgrown by cities like Mumbai and Shanghai. These population shifts are not only changing the places that companies will look to do business, but also where they can access the best and brightest talent.
These changes represent a huge opportunity for companies looking to take advantage of a globally mobile workforce. But there are also significant risks too.
Balancing risk and reward
Depending on an increasing number of globally mobile employees creates more complexity for companies around compliance. Not being aware of where employees are as they move around may create foreign income tax and social security obligations. This could mean heavy penalties and even legal action for employers. For “accidental expats”, crossing borders may inadvertently create issues around local employment laws, visas and anti-corruption and lead to fines, denial of entry and other legal action.
Around the world governments are becoming stricter about the ways that multinationals classify and report on overseas workers. Visa misuse is one area where there seems to be alignment among many states. This is also an area that companies may currently be overlooking when it comes to their mobile workforces.
The pandemic-related shift to remote working has also led to a decrease in business travel. With many companies realising that it can be more efficient, responsive and cost-effective to hold meetings remotely, more are likely to become receptive to virtual employment as well. According to McKinsey, hiring is still favoured over internal skills-building by companies looking to address skills gaps. This creates even more opportunities for individuals looking to embrace the benefits of global mobility.
HR functions are vital to the success of global mobility programmes. They can ensure that a company’s policies and processes support its continued development. The employee benefits and support packages they create are not only essential for attracting the best talent in the first place, but also ensuring that it is retained and risks to the business are minimised too.
For digital nomads and accidental expats, the overriding concerns are the same as employees that are based in a single location. They want to be confident that they will have income in retirement, protection if they suffer an injury or require medical care and that their families will be provided for in the face of unforeseen events.
HR functions may initially think that providing these benefits for their mobile workforce creates more complexity, but this is increasingly not the case. Solutions such as tailored life insurance policies can offer the flexibility and security that employers want while making sure that employees are supported no matter where they are.
The growth of global mobility is another way in which technology and changing attitudes are freeing employers and their employees from the limitations of the past. Embracing the opportunities of a mobile workforce means empowering people to work in a way that supports their commercial and personal goals. Tailored employee benefits are an important way of ensuring people never have to sacrifice their financial security for mobility and that they can lead a self-determined life with confidence.