26/09/2021

Workers and companies on the move

3 min
Workers and companies on the move

With the outbreak of the pandemic, we discovered the virtues of working from home. One, of course, is that it helped sustain the economy in a situation of extreme crisis. Another, more subtle, is that we have learned that there are many, though not all, tasks where we can save ourselves the trouble of commuting and, by working from home, not lose effectiveness. Especially if the domestic conditions are suitable: availability of an office, children at school, etc. This has accelerated the realisation that the possibilities of teleworking in normal situations are greater than we had suspected.

Now, however, with the end of the pandemic, we are rediscovering the virtues of being in the workspace: face-to-face interaction stimulates more creativity and teamwork is better coordinated. There is a clamour for a return to the office.

We can therefore foresee that the starting situation in the new normal will be more face-to-face than during the pandemic, but still more telework than we had before. In the following comments I confine myself to the private sector. The public sector generates a different set of problems.

Let us imagine that companies and workers are not mobile and that the possibility of working from is opened up. In the first approximation, companies with jobs that are well adaptable to teleworking and also workers with the capacity to telework win. In both cases because their reference market becomes the world. In the second approach things are not so clear-cut, especially for workers. Companies can easily displace jobs, while it can be difficult for workers to get a new job, either because of a lack of digital skills or because, in a global context, their salary is not competitive enough.

The rise of remote work will inevitably have an impact on labour legislation. Let's think about the minimum wage. Within the EU, which is the relevant one: that of the company's domicile or that of the worker's residence? Trade unions will insist that legislation on working conditions, wages and social contributions be the same as in the country of the head office. But the possibility of circumvention is great. Thus, telematic communication also makes it easier for external workers to be formally outsourced to legally independent subsidiaries.

In reality everything is even more complicated because the possibility of teleworking has a strong impact on the mobility of companies and workers, with the consequence of a qualitative leap in the tension between the global character of markets and the local character of public finances.

Workers. In principle, the teleworker can be based anywhere and can therefore optimise where he/she lives. He or she can become a digital nomad. No doubt there will be intense competition between regions of the world to attract this type of resident. It should not escape us that the Mediterranean rim can be a very attractive place. Are we interested? I would say yes, as it is consistent with a programme to reorient the tourism industry towards long-term visitors. But if we are interested, it has to be facilitated, as Portugal or Italy, for example, have done.

The mobility of the teleworker has, at present, a limitation. I will explain it with a real example. A young Chilean doctor in computer science is hired by a multinational company to work at its headquarters in Seattle. She starts working and they tell her that she can telework and in fact, because of the pandemic, that she has to telework.... But she can't do it from Chile but only from anywhere in the U.S. Why? Well, officially, for tax reasons. I understand that these companies are careful, or they are afraid of being accused of reducing the size of the company in the US. They can hire foreigners but they are careful about outsourcing jobs.

Enterprises. These, and easily the smaller and more telematic ones, can choose where to locate. They do so in response to tax incentives. For example, Malta is concentrating distance education companies (and also online gambling). It is a problem, but Europe being Europe as it is, there will be no corrective moves until the distortion gains volume. Globally, it will be even more difficult to generate them.

And all this is just the beginning.

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