Global labor mobility still key to business growth plans, finds KPMG International survey

Examining the future employment intentions of businesses operating in 11 major economies, KPMG found that despite the economic slowdown and the effect of increased recruitment and wage costs as a result of hiring from overseas, the urge to source skilled labor from other countries remains strong.

More than eight out of ten (82%) agreed that better labor mobility gives them a greater pool of talent from which to choose, and 73% said that it allowed them to hire better quality people.

69% of respondents felt that hiring people from other countries fosters better understanding of global markets, with 76% saying that foreign workers help develop a valuable global mindset.

But each country has a different pattern of overseas employment, depending on its history, its particular economic strengths and its future plans.

In the Asia-Pacific region, countries tend to rely on a small number of other states for workers. Companies with operations in Japan, for example, take significant numbers of workers from Korea (14%), Taiwan (14%) and Australia (16%).

China relies heavily on Singapore and Hong Kong for labor, but the relationship between the three is complex, with substantial two-way traffic.

19% of companies with operations in China bring in workers from Singapore, while 21% of Singapore based companies use Chinese labor. A quarter of companies based in Hong Kong use Chinese labor, while 19% of Chinese companies use workers from Hong Kong.

By contrast, companies in the UK, Spain and the US show no particular preference as to where their workers come from.

Among the European states there is a slight tendency to take workers from other European countries, but the largest groups of foreign workers among companies operating in the UK is Australians (12%) Indians and French (11% each).

For companies in the US, the largest single group of workers comes from the UK (14%) followed by India (9%) China and Germany (both on 7%).

But looking ahead just three years, several countries seem set for major changes in their foreign workforces.

The UK influence in Australia is set to decline sharply in favor of workers from China, India and Hong Kong. Companies in India expect to take far fewer workers from the US and UK, and more from China, but a large number do not know, or would not say, where their future workforces would come from.

In Japan, Australians are expected to remain the largest group of foreign workers, but Koreans are expected to be pushed from second to third place by a significant increase in the number of workers from China. Four percent of companies with operations in Japan say they employ Chinese now, but that rises to 12% in three years' time.

Chinese workers are expected to feature heavily in future international workforces, with companies operating in Australia, India, Japan, the UK, Spain and the US all planning big increases in the number of Chinese they employ.

But, as Brian Ambrose, KPMG's Head of Global Mobility and partner in the US member firm, points out, it is possible that the supply of skilled workers in China will decrease over this period, as the smaller number of children born as a result of the One Child Policy of the 1970s feeds through into a reduction in the adult workforce.

The alternative may be India, where demographic projections show a steady increase in the number of available workers up to 40 years ahead.

"The interviews for this survey took place at the end of last year," said Muhammad Saloojee, from KPMG's Saudi member firm. "but respondents might not have guessed the extent to which the financial crisis would impact the global economy and their businesses."

"What we are starting to see in terms of people flows, is a tale in two parts. There is mounting pressure in many countries to protect domestic labor. Secondly, for the first time in a generation, unemployment and the economic crisis may be creating the impetus for skilled labor and professionals in the worst hit developed countries to emigrate in search of greener pastures," continues Saloojee

"In the medium to long term our survey indicates that multinationals will still depend on a free movement of people from country to country. Many called for reductions in immigration restrictions to facilitate this movement, alongside tax incentives to attract business into new countries. This suggests that a global mindset has become embedded in the world's big companies, and that international availability of labor is and will remain a key part of their business planning. Economic turmoil may cause a short term hiatus in government immigration programs but the global economy looks here to stay," he adds.