Coronavirus, recession and global mobility: finding positives from precedents
Good evening, and welcome to recession time. As the coronavirus is sweeping around the globe, governments and businesses are struggling to cope with the lack of revenue and the widespread disruption caused by the pandemic.
Many expats returned home for their own safety, but it is the economic impact of COVID-19 that has threatened the viability of sending employees on overseas assignments. When companies tighten their belt, expensive expats are an easy target.
But is this a long-term indicator? Is global mobility really under threat?
We look back to see if past performance can be any kind of guide to future investment...
What happened after previous recessions?
In the last quarter of a century, expat numbers have grown – evidenced by the fact that more than half the companies surveyed repeatedly by ECA International during that time predicted an increase in expat numbers in any given year.
This is despite the various major economic events which – according to many commentators – threatened to slow global mobility.
There were short-term impacts following events such as the Asian financial crisis of 1998, the 9/11 attack on the World Trade Centre and the credit crunch of 2008. But the decreases in expat numbers failed to materialize.
The myth of the great expat exodus
In the immediate aftermath of the 2008 global financial crisis, for example, it was assumed that the monetary squeeze would lead to the repatriation of most global assignees. In many ways the party did seem to be well and truly over.
There were many reports of economic migrants returning home as their earning power suddenly evaporated. One particularly eye-grabbing article of the time noted that luxury cars were being left in the airport car park as Dubai expats caught the first plane home rather than default on an unsustainably expensive car loan.
But these stories distorted the true picture; expats remained important to global commerce and businesses knew this. A survey by PwC in 2009 showed that, although 40% of companies aimed to reduce expatriate costs in the short term, most expected the actual numbers to increase.
But is it different this time?
Perhaps it really is. The pandemic has caused an economic downturn as countries try to deal with the threat to national health. The end result is recession, but the underlying cause today is very different to 9/11 or the 2008 crash.
There are, therefore, social and health-related considerations that will affect global mobility in the short-term. But in a post-vaccine world, will companies still see value in global assignments? One thing is certain: the world’s largest companies are too competitive to let a downturn get in the way of progress.
Look more closely into how the global mobility industry reacted to other economic shocks, and we may have a better idea of how we should react to this one.
Adapt and survive
How has global mobility reacted in the past? There have been a number of changes, which have helped global mobility to become more efficient and deliver greater value to global organizations:
There is no longer a one-size-fits-all approach to global mobility. Different assignment formats have appeared over the last 20 years in order to accommodate a need for value – and a need to reflect the increasing diversity of the modern workforce.
Companies have also learned to adopt different salary and policy strategies. In 15 years between 2001 to 2016, the percentage of companies now using more than one policy increased from 11% to 26%.
Zoom meetings may be replacing international flights, but GM departments are also using technology such as artificial intelligence and blockchain to improve the efficiency of their operations. Technology is also the driving force behind the concept of ‘virtual’ assignments, which is gaining in popularity.
Strength in adversity
Service providers outperform themselves in times of crisis; they simply have to. FIDI members, for example, are proving their worth. Through value-added services, flexible working practices and local expertise, they are helping companies to be leaner and more effective in their deployment and management of overseas employees.
Change for better?
Times are tough, but global mobility remains a key strategic differentiator for a number of reasons and companies will continue to send good people to where they can be most effective. Indeed a recent survey by PwC showed that many companies expect to pick up where they left off before the pandemic. When asked about the impact of the pandemic on future mobility, the top answer (44% of respondents) was: “We'll return to business as usual as soon as possible with the same number of moves”
There is a will to carry on - it is now down to the global mobility industry to find new ways of doing so.
History shows us that we have responded to challenges before and will do so again.
Whatever the obstacles we face, we know that a happy expat is a successful one. Find out how to ensure assignment success by reading Expat happiness: the constant pursuit of success abroad.