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Global mobility and the world context in 2018

The fallout from 2016’s turbulent political events has had a year to settle, yet in many ways the future seems even less clear now than it did this time last year. Global events upset the established world order and, collectively, we are still assessing the consequences.

The UK’s negotiations with the European Union rumble on, the new US administration continues to surprise and confound commentators, and change continues to roll through the Middle East. And all the while, the quiet ascent of China and its neighbours in Asia continues apace.

So, given the numerous negative headlines we see and hear every day, are we heading for further turmoil? Or are there signs of a return to a new normality?

The politics of 2017 have been dominated by the B-word and the T-word: Brexit and Trump. But despite the near certainty of ongoing turbulence in the short-term, there are grounds for longer-term optimism.

The end of the EU, or the start of a new beginning?

The UK’s decision to leave the European Union has started to have tangible effects on the UK’s economy and the cost of living for its residents.

The sharp decline in sterling’s value against the euro immediately after the June 2016 referendum has persisted, with it dropping further as the complexity of the negotiations, and the consequences of the decision, become apparent.  At the same time, inflation has risen as the costs of imported goods and supply chain components have increased. The UK’s inflation, which has been below 2% since the end of 2013 and was 0.4% at the time of the Brexit referendum, now stands at just under 3%.

While Britain tries to negotiate its exit in as orderly a way as possible, the remaining 27 EU states have come together for the common cause. Proponents of the ‘European Project’ of further integration are understandably alarmed by Brexit and are planning for a post-Brexit future. Cohesion so far between the EU-27 is strong, and the continent as a whole is enjoying greater prosperity and stability than it has for over a decade.

A White House like no other…

Over in Washington, DC, many had hoped that the often inflammatory rhetoric that won Donald Trump the presidency would be toned down once he assumed office. Sadly, that has not been the case.  Barely a day goes by without a provocative statement, tweet or action that confounds observers, and often contradicts a previous position.

Although Trump protests that the mainstream media refuses to report his achievements, objective analysis suggests they’ve been modest at best. His promise to clean up Washington has produced more like a changing of the guard, with the revolving door introducing different establishment figures, but establishment figures nonetheless.

Trump, who prides himself on being a dealmaker like no other, has been fiercely critical of agreements negotiated by his predecessors. Domestic healthcare coverage, dubbed ‘Obamacare’, has long been in his sights, while internationally, the NAFTA free trade deal, the Trans-Pacific Partnership, the Iran Nuclear deal and the Paris Climate Accord have also been targeted. Trump has been repealing, re-negotiating and withdrawing left, right and centre. But in terms of positive engagement with the rest of the world, little has been achieved.

Democracy gone wrong?

Many commentators have questioned whether Britons’ vote for Brexit and Americans’ vote for Trump were triumphs, or failures, of democracy. In all likelihood, they were a bit of both. Either way, the outcomes were influenced by rising populism in an electorate feeling politically and economically dis-enfranchised, with growing divisions between wealth and poverty being a lasting legacy of the financial crisis of a decade ago.

This dis-enfranchisement, particularly in the US, has been exacerbated by an ever-diminishing trust in mainstream media. According to pollsters Gallup, Americans’ trust in mainstream media peaked at 72% as long ago as 1976. By 2016 it had slumped to 32% - and only 14% among Republican supporters.

Many middle Americans believe that mainstream media is too liberal and global in its outlook and has completely lost touch with their own everyday lives. As a result, they have turned to local (and increasingly social) media to get their news.

In August 2017, a Pew Research Center report showed that 67% of American adults now receive news through social media. This significant shift in media consumption habits has arguably created the greatest concentration of power over the world’s information since the invention of the printing press in the 15th century. Yet at the same time, there is so little responsibility for how it is exercised.

Given their power, Facebook, Google and others may have a moral duty to promote veracity over virality, but they are commercial organisations whose objective is to provide a financial return to shareholders. So, when it comes to priorities, is their incentive to promote truth, or to keep people within their platform by showing them content that they are more likely to ‘like’ and share?

Did populism win elsewhere?

The rising tide of populism did not win everywhere. In France and the Netherlands, the more extreme candidates were not as electorally successful as had been feared. The meteoric rise of Emmanuel Macron in France was a triumph for a new, and unashamedly pro-EU party. His choice of Beethoven’s 9th Symphony, the European anthem, as the backdrop for his victory rally rather than La Marseillaise (the French national anthem) was no accident.

The Middle East

Change continues to roll through the Middle East as the price of oil remains considerably below the persistent highs of the decade up to 2014. The improving economics of shale production combined with decreasing costs of solar energies means there is little sign that oil will recover to the $100+ per barrel any time soon.

While most vehicle owners were delighted that the price of petrol dropped at the pump, the decline in profits at the major oil and gas companies reduced their numbers of internationally mobile employees. The impact was also felt across supporting industries including engineering, exploration, transportation and mining as those companies adjusted their mobility programmes as part of cost-saving initiatives. After a tough four years, confidence is beginning to return to the sector. With a slowly-rising barrel price, and re-developed mobility models, companies are more optimistic about assignee numbers and are focusing on quality people to lead and deliver value.

Over in Saudi Arabia, the government is drawing up a 20-year plan to reduce its dependence on oil. A crackdown on corruption, including the arrest of dozens of high-profile princes, businessmen and politicians, has sent a strong signal from the new generation of Saudi rulers.

The plan includes floating part of state-owned Saudi Aramco to fund new private sector businesses that can bring money and employment into the country. There are also attempts to modernise, with restrictions on women driving and attending sports events being relaxed, and limited forms of public entertainment starting to be promoted. The crown prince is looking to provide a more meaningful role for women in society and hopes they will be able to replace expatriate workers across all sectors of the economy.

This change in the working population structure will be a gradual one. Currently, only a fifth of the private sector workforce comprises skilled and qualified Saudi nationals. The gradual exodus of expatriate families will likely produce a decline in demand for rental properties at the bottom end of the market. However, jobs for highly-skilled foreign workers will keep prices for luxury properties high. Success is far from certain, as there is sure to be significant opposition from powerful conservative and religious forces.

A land, sea and air blockade of Qatar, largely instigated by Saudi Arabia, began in June 2017 but has had limited effect. Seemingly started to punish Qatar for their alleged support of terrorism, other factors appear to be at play. Influence over the Gulf Cooperation Council, isolating Qatar’s ally Iran (a Shia-Sunni tension) and a long-held frustration with criticism from the Qatari government-backed Al Jazeera news channel appear to be the real concerns.

Blockades seldom work in the long term and this one appears to be no different. While there has been limited impact on the overall cost of living in Qatar, food prices have risen amid the economic embargo. But Qatar is both wealthy and resourceful. To date, the availability of goods and services has largely been maintained, and the effect has been the opposite of the intended one, with the blockade driving Qatar closer to, rather than further from, Iran. 

A glorious future?

With troubles around the world, it’s easy to be pessimistic about the future. But look beyond the headlines and there are strong signs that better times are ahead.

The world is heading back to a more normal range of inflationary measures, with many countries recovering from deflation in 2017 to more normal levels of contained inflation.

And as the US talks of building walls, implementing tariffs and withdrawing from international agreements, over in Asia, China is assuming the mantle of champions of free trade.

The $1 trillion they’re investing in the ‘One Belt, One Road’ project re-linking the old silk road towards Europe by land, and connecting ports in Asia and Africa by sea, will bring untold benefits to cities and countries along its routes. The cities and countries to benefit most will be the emerging economies of Asia and sub-Saharan Africa.

The next industrial revolution will see the rise of artificial intelligence and could make many jobs obsolete. This will force employers everywhere to re-evaluate how they train, recruit and retain talent, but will also give a much-needed boost to global GDP. The McKinsey Global Institute estimate that global productivity will increase by between 0.8% and 1.4% over the next 40 years, meaning that this new industrialisation could have a greater impact than any of the previous industrial revolutions since the invention of the steam engine.

Conclusion

The pace of change shows no sign of letting up. In planning for the future, we should all look beyond the headlines and tweets of today and examine the long-term consequences of more fundamental shifts in politics, economics, demographics and technology. By anticipating their progress, we can be prepared for the future whatever it looks like and whenever it comes.

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