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Global business has changed, and is good for South Afri...

Defend Truth

Opinionista

Global business has changed, and is good for SA employment 

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Born in Cape Town, Natale Labia lives in Milan, Italy, and writes on the economy and finance. Partner of private equity firm Lionhead Capital Partners. MBA from Università Bocconi. Supports Juventus.

Much has been made of this ‘new world of work’ we have been inhabiting since the onset of the Covid-19 pandemic. But what does it actually mean?

It is more than two years since the first lockdowns forced the world of white-collar workers to stay at home and log in to Zoom. Once-sacred paradigms of commuting to the office, wearing ties and enduring drawn-out conversations over the water cooler have been shattered. But what has actually changed? What has stayed the same? And where is all of this going?

Listening to debates and interviews at the Davos World Economic Forum two weeks ago, it seems that a few fascinating trends are starting to coalesce. A frequent refrain was simply that “white collars are the new blue collars”.

After decades of manufacturing jobs being outsourced to ever-cheaper and more distant locations, with supply chains becoming ever more stretched and convoluted, now the opposite is happening. After Donald Trump, the pandemic and the war in Ukraine, the overwhelming trends in the world of blue-collar work are “near-shoring” as opposed to “off-shoring”, or in a clumsy phrase coined by Janet Yellen, “friend-shoring”. When it comes to manufacturing, questions have indeed been asked about globalisation and its discontents.

But the opposite seems to be happening on the once-hallowed turf of white-collar service sector work. As one CEO remarked in an interview at Davos: “If they can do it from Lake Tahoe [California] then I can get someone to do it in India.” Clearly, we are on the cusp of a new wave of skilled worker disruption.

As has become apparent, the pandemic altered the geography of where and how we work. Wealthy, remote workers in Johannesburg have moved to the Garden Route and digital nomads from Copenhagen have decamped for the summer to Bantry Bay.

Places of low tax and good weather have prospered, both in the US and Europe. Lifestyle counts more than it ever has done; why spend hours in traffic to Sandton when one can be just as productive with no commute and watching whales for company? It is no surprise that Hermanus has the fastest-growing property prices in South Africa, with estate agents remarking that the demographic of new buyers – young professional families – is markedly different from the golfing retirees of yesteryear.

Though we are at the very earliest stages of these shifts, two opportunities present themselves for South Africa and South African businesses.

First, in a world where location matters far less, South African companies can take advantage of seeking clients anywhere. Why should companies in New York or Singapore not look to South African firms for expert accounting, media, branding, legal and IT support? South Africa continues to have deep pockets of excellence in these fields. The weak rand, a central time zone and widespread use of excellent English are massive advantages South African companies have over other emerging market options.

Second, South Africa could position itself as a magnet for digital nomads from all over the world. Fantastic living standards, great weather and unbeatable value for money (by European and American standards) make it an ideal place for flexible white-collar workers to base themselves for a few months. Attracting such talent would bring much-needed investment and hard currency into the domestic economy.

Here, it is clear that the government has an important role to play. A specific visa category for digital nomads, as other countries such as Italy, Estonia and Portugal have created, would make a material difference to the attractiveness of South Africa. Daily Maverick reported this week that Bali has created exactly that – a five-year special digital nomad visa. A special tax category from which foreign remote workers who might become resident in South Africa could have a beneficial tax status would also be a huge drawcard.

Though overtaxed South Africans might decry giving non-residents benefits, it must be realised that these are people who would not otherwise choose to go to South Africa without measures to make it more attractive and more competitive compared with other options. Every additional foreigner drawn to South Africa who spends and invests is one who might not otherwise be here.

Given the challenges that confront them daily, South African policymakers and entrepreneurs are often preoccupied with the immediate domestic context. Consumed with the battle to merely survive locally, they can miss out on global trends and opportunities for growth. In this new world of work it is clear that South Africa has several extremely compelling competitive advantages. It is now time for local businesses to capitalise on them. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R25.

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  • Really good idea. Regional governments should pick up on this idea and lobby national government. Ride the trend and extract value from digital nomads. Allay their concerns about safety and grant them discounts to services via deals with private sector (housing, data, etc). Maybe throw in a “try it for 90 days and then opt out”. It is about give and get and there is more upside to this than. But the window of opportunity won’t be open forever.

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