Short contracts are on the rise as multinational companies shift their people around the world.
Migrant labour was once the domain of poorly skilled workers and higher-paid employees who were relocated by their companies on long-term contracts, but global demand is seeing a growth in short-term migrant labour practices among skilled employees.
A review of 900 global companies has shown that employees are increasingly working in other countries on 18-month contracts, or for two- or three-week stints before returning home for short periods.
A report by PwC, Talent Mobility: 2020 and Beyond, found that the number of workers taking on global assignments is expected to increase by 50% in the next decade.
The main reasons cited were skills shortages — particularly in emerging markets — and a workforce looking for new experiences, particularly with the emergence of a new workforce dubbed the “millennials”, who are choosing to work outside their home country during their career.
It is cheaper for companies to invest in short-term contracts than to relocate staff, and it reduces paperwork and stress caused by increasingly stringent migrant requirements in most countries, PwC said.
Women are expected to take up a quarter of these assignments in the next decade.
No right talent
According to Gerald Seegers, PwC’s director of human resources for Southern Africa, “many companies are facing the reality that they do not have the right talent in the right places to fulfil their global growth ambitions”.
“Skills gaps in overseas markets, the changing business world and preferences of a new generation of employees will force many organisations to increase global mobility opportunities for staff,” he said.
“The era where assignments meant a three- to four-year relocation is coming to an end. Long-distance commuting, virtual mobility, project-based and assignee-led projects are all set to become the norm.
“These will offer greater flexibility to employers and employees and should reduce mobility costs.”
The mobility levels of the workforce have increased by 25% in the past decade and are predicted to increase by another 50% by 2020.
The trend towards stringent immigration requirements are expected to be one of the “major contributors to the increase in short-term assignments and businesses travellers by 2020”, the report said.
“The economic turmoil of recent years combined with political instability and unrest in many parts of the world had pushed immigration on to the political agenda.”
The flow of talent is still predominantly from West to East, or intracontinental, but companies are beginning to tap into talent in emerging markets in China and India in particular.
There are, however, also moves to lure skilled employees from emerging markets, which Brazil has been particularly active in encouraging, the study found.
Multinationals from developed countries are also having to deal with competition for talent from developing-country organisations who are beginning to match or even exceed remuneration and career development requirements.
In the report, Jouko Karvinen, chief executive of pulp and paper manufacturer Stora Enso Oyj, sums up the fast-changing environment in which most businesses see themselves as operating: “We’re deploying our assets and operations in a more flexible manner so that we can control costs not only with regard to predictable business cycles, but also cope with unpredictable macroeconomic events.”
Only 30% of the 900 companies reviewed said they have the talent they needed to fulfil their growth ambitions.
Asia has very high staff mobility, with a 15% resignation rate, against 6% in Latin America.
Global mobility was initiated between 1990 and 2010 as new markets emerged for companies to sell their products and services to, and to manufacture their goods at a lower cost.
Offshore exploration gathered pace and a new breed of workers emerged, who wanted more from their jobs than financial compensation.
Global mobility is expected to increase as multinationals face aging workforces in some countries.
China, seen as a key driver of economic growth, will have a workforce by 2015 in which a third are over 50, compared with the youthful populations elsewhere in Asia and Africa.
The creation of new cities in emerging markets caters for increased movement to urban centres, also creating demand for expertise.
The development of cities
China, for example, has encouraged the development of cities, such as Wuhan, though tax incentives.
Wuhan currently has a population of 10-million but has an economy that is growing at 12% a year.
“China is not alone. A similar pattern is emerging in Brazil, Mexico and India, albeit at a slower rate,” the report said.
A priority for organisations is that they have the right skills in the right place at the right time, so a number of mobile workforce options are being deployed, depending on demand, including short-term and project-based assignments, commuting and extended business travel, and rotational employee programmes used in the development of high-potential employees and reverse transfers — where top performers from emerging markets are moved into developed markets on short-term assignments to gain experience.
On another level, relocation of a business to be closer to its business interests, such as the move of the De Beers diamond division from London to Botswana, has also been identified.
William McNabb, chief executive of the Vanguard Group, said in the report: ”I think people have to be more global in their perspective. They will have to understand the interconnectedness around the world.”