In the pre-pandemic world, cross-border business travel was very much an everyday norm. Despite the specter of Brexit and other similar localized political issues, freedom of movement remained at a high, with sizable global opportunities both for workers and their organizations.
Since the pandemic started to emerge in early 2020, governments across the globe have understandably been quick to close borders, impose quarantines and stem the flow of visitors into their countries. While our ability to remain ‘connected’ through video calls and collaboration platforms is the topic de jour, physical mobility has very much ground to a halt. Organizations relying on that mobility to populate and distribute their workforce (through international assignments and expatriation) have felt the impact of COVID-19 more than most.
In this article, we’ll look at some of the implications of restricted global mobility on both these employers and their staff - and assess what the longer-term future might hold for international business.
A duty of care?
First, let’s note that while the closing of borders is an inconvenience for many in the western world, it’s a genuine crisis for others around the globe. As reported in an article for theconversation.com, some border lockdowns have left working migrants cut off and unable to work - such as in Tunisia, where many workers typically travel from neighboring sub-Saharan countries. Unable to cross the border and work, many people are now struggling to pay for food and rent as a result.
Such a scenario calls into question the duty of care that exists between employer and employee. The welfare of workers must always be a priority for any organization, but it’s incumbent on each business to decide where that duty of care starts and ends. This duty is particularly pertinent for international firms with staff stranded in other countries when the pandemic took hold. To what extent is it the duty of the business to help bring their people home?
The repatriation of international staff
Bringing staff home from international assignments is only part of the challenge. Once employees have successfully repatriated, there are ramifications for the individual and the business. From a company’s perspective, repatriated staff must be re-incorporated into domestic work settings with limited preparation and planning. At the same time, the international assignment (assuming it continues remotely) must be looked at afresh, given the change in parameters.
For the worker, the move back to their home country may have a significant impact on tax residence status and social security. The employee will likely be spending more time in their home country than initially anticipated - and tax, social security, and or payroll reporting obligations, previously registered in the host country, may now also be triggered at home.
Fortunately, governments across the globe are making changes to payroll, tax and social security laws to try and address the many economic and logistical challenges brought about by the pandemic. Some authorities have extended filing deadlines or deferred taxes that are due to be paid by mobile workers. Others have waived penalties on late tax payments for individuals and entities affected by COVID-19 and offered supplemental social security payments for some classes of individuals.
It’s the job of Payroll to keep pace with these changes across the globe, ensuring that both workers and the broader organization have information that can help them address any negative financial impacts. To assist, we have produced our own set of country guides, which provide links to essential government resources that track all in-country changes as they happen.
Disruption of global supply chains
As well as the disruption to globally distributed employees, many organizations have suffered from the disruption of international supply chains. With some suggestions that global movement restrictions could be in force for a matter of years, many businesses may now look to develop more localized supply chains.
However, as this piece from the Financial Review argues, the pandemic does not altogether spell the end for international supply chains. As long as businesses aim to deliver the highest quality products at the lowest possible prices, it states, “globalization will remain a fact of economic life.”
Even if COVID-19 does not entirely transform long term supply chain logistics, it may change the future of international workforces. It’s a simple fact that physical goods need transporting from place to place, but the pandemic proves that in many instances, people can connect efficiently and effectively without going anywhere.
Even once countries lift travel restrictions, it’s highly likely that some international assignments will become virtual assignments instead, providing positive financial and environmental implications (even if a little challenging from a time-zone perspective). This capability to work on global projects without crossing borders has consequences for the entire workforce and suggests the use of international employee pools may soon be the new normal.
Will mobility return to pre-pandemic norms?
COVID-19 brought challenges to every person and business. For organizations reliant on global mobility - those challenges are amplified. However, in due course, the world will open up for business again, and the free movement of people and goods will return. It’s up to each organization and industry to decide whether returning to pre-pandemic business practices is warranted, or whether the procedures established to navigate this pandemic become part of the new normal.
So, will global mobility return to the record-breaking heights registered before the Coronvirus? Just a few months ago, ‘people’ were the most globally mobile than we had ever been in the history of humankind, according to the Henley Passport Index. The inventors of the index, Henley and Partners, recently suggested that the quality and health security of a country will be a significant consideration for mobility in future.
This is a view shared by bestselling author Dr. Parag Khanna, who believes the combined effect of the COVID-19 pandemic on public health, the global economy, and social behavior could lead to much deeper shifts in our human geography. He stated, ‘Before the pandemic, Gen-Xers and millennials were moving to cheaper, second-tier cities in the Sun Belt or abroad to Latin America and Asia in search of an affordable life. Once quarantines lift and airline prices stand at rock bottom, expect more people across the globe to gather their belongings and buy one-way tickets to countries affordable enough to start afresh.’