As the world of work transforms, more and more talent are opting for a digital nomad lifestyle. Several countries are launching their own digital nomad visas, too, to accommodate these workers. How do we accommodate these workers and the shift in remote working lifestyles?

Opening your laptop on a Greek beach. Settling into your office for the day in a small village in Antigua & Barbuda. The pandemic has transformed the world of work, and more and more workers are moving abroad to enjoy the freedom of their remote jobs. 

 

Over the past year, the number of ads for remote jobs has risen more than 150% in some Western European nations, according to research from The Adecco Group. One big effect of growing remote work opportunities? More and more workers opting for a digital nomad lifestyle where they live in different locations across the globe. Prior to the pandemic, only a small portion of workers with flexible jobs chose a digital nomad lifestyle.

 

A growing number of countries are changing their immigration policies to cater to this new type of foreign worker. Estonia, the first country to allow foreign entrepreneurs to license an EU-based online business, offers a one-year digital nomad visa that allows internationals, working mainly in technology and finance, to work in Estonia.

 

Greece is also planning to introduce digital nomad visas that will allow internationals engaged in remote jobs to work from within its borders. The visa could be combined with tax incentives, which would attract permanent investments.

Photo: Matthew Waring via Unsplash

Antigua & Barbuda in the Caribbean offers a two-year Nomad Digital Residence (NDR) visa for remote workers with the means to support themselves and any family members joining them for the duration.

 

Other countries across the globe continue to design new policies to allow people to relocate to their countries and work for local employers, too. Singapore hopes that its new Tech.Pass visa program, designed to attract top tech talent, will help it fulfil its aspirations of becoming a major tech hub. Finland, meanwhile, is offering a free 90 Day Finn relocation package to lure more tech professionals from across the globe.

 

The way we seek and approach talent is changing at a faster pace than ever before, and countries and companies across the world will need to swiftly adapt to not get left behind. As more workers consider this flexible lifestyle, it’s time to consider the ramifications of such a shift – and how we can adapt to the new world of work.

 

 

Modernising labour policy

 

As the world of work shifts to more flexible arrangements, countries are working to accommodate that change. Certain countries have already responded by integrating the concept of remote work into their legislation and strategies.

 

Ireland has published a strategy for remote work that includes the implementation of a tax arrangement for both employers and employees. This promotes and supports remote work and actions to improve infrastructures that facilitate it; for example: a nationwide roll out of high-speed broadband. The country has also approved a “Right to Disconnect” code of practice as part of the National Remote Working Strategy. That “Right to Disconnect” policy gives employees the right to switch off outside of normal working hours, so they don’t have to perform additional duties like answering emails.

Photo: Diogo Palhais via Unsplash

Italy’s ‘smart working’ model is based around a legal framework providing greater independence and flexibility to employees in terms of when and where they work. Under this framework, employees have greater independence when it comes to their working hours and their working location.

 

Earlier this year Austria implemented a directive on remote working, specifying that telework must be mutually agreed by the employer and the employee.

 

Argentina, too, has implemented new legislation around remote working, including working hours, employer responsibility for the provision of equipment, and employee entitlement to expense reimbursement.

 

In response to some of the global workforce trends triggered by COVID-19, The Adecco Group has made some policy recommendations to governments, one of them advocating a return to an open economy via a modernised, demand-driven labour migration policy.

 

 

The challenges of a remote working model

Despite the many positives, flexible working arrangements also create challenges for companies, workers, and governments. Here are some of the challenges companies might face with a new, flexible remote working model with employees across borders:

 

  • Management: The effective management of remote teams, for example, requires different skills to the management of teams onsite, with a greater focus on empathy, agility and creativity. The reskilling and upskilling of remote workers also requires a different and more flexible approach. Coaching is the best way for leaders to acquire the soft leadership skills that are so in demand today.

  • Security of information: No matter the size of your company. Remote workers may access sensitive data through external WiFi, making companies are more vulnerable to cyber threats. Businesses might find they need to invest more in cyber protection and the upskilling of employees in IT security.

  • Taxation: Then there’s the complexity of taxes and the legality of having employees work across borders. In the U.S. alone, simply working in a different state can incur different tax liabilities. For companies, the arrangement will depend on the location of the worker and the duration of their ‘away from home’ working arrangement.

  • Corporate tax: When an employee works in a different country, companies will have to consider how corporate taxation works in the second country as well. Mistakes can prove costly, as can failing to update employees’ contracts when they relocate overseas, which may incur unexpected costs for the employer. That includes the setting up of separate payrolls in other countries.

  • Work-related expenses: Expenses, such as IT equipment, internet access, and basic utilities, also need to be factored in when employees opt to work elsewhere. Governments may be forced to legislate on which work-related costs should be borne by the employer.

  • Other Expenses: Miscellaneous expenses, such as remote workers’ social security contributions and how they will be covered for health insurance, will also need to be addressed by companies and countries. An individual who is not taxed overseas could still be liable to pay social security contributions there, as well as in their country of residence.

 

 

Levelling the playing field

 

Should employees who work remotely be paid differently based on where they live? Salaries for remote workers re a contentious issue and crucial one for companies to solve for their future talent attraction strategy.

 

Historically speaking, the location where an employee is based has almost always been a key factor in their remuneration, considering cost of living indexes and market rates to fix a salary. The last 12 months, however, have heated up the debate of location-based vs value-based salaries.

 

Some companies have decided to implement location-based salary policies for their new remote working frameworks. Tech giant Facebook has suggested that people who choose to work where the cost of living is lower should expect to be paid less. Spotify, on the other hand, will allow its staff to work from anywhere without any impact on salary levels.

 

The potential cost savings of a location-based pay policy could be reinvested by the business to boost growth, upskill workers, and expansion plans. However, the decision could potentially undermine the value of their talent, which is crucial to engagement, productivity, and talent attraction.

 

Photo: Avel Chuklanov via Unsplash

Staying competitive to attract and retain the best talent will also be a key factor to determine how governments and companies look at their remote working policies.

 

Remote workers who relocate to a new country could change to the local employment structure of the new country, facilitating a standardised approach in terms of salary, payroll tax, employee tax, and social security.

 

There are some big advantages to a fully remote model, where employees can work from whatever location they want. It opens up diverse talent pools in locations that might be too far for the company to normally recruit from. In addition, giving current employees more freedom to pick their location could allow them a great degree of personal satisfaction. But changing to new remote models requires a great degree of transformation for companies, overcoming new administrative challenges and adapting leadership and performance management styles.

 

Flexible working could prove to drive economic development in many underserved areas across the globe. However, the strategy could also backfire if recruitment bias towards candidates from lower-cost regions or countries come into play. It is vital that companies and governments rethink their talent strategies to reflect the realities of this massive shift towards a more flexible future. While the future of the world of work is flexible, there are many questions that need answering to ensure that the outcome benefits all parties.

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