Digital Nomadism in Latin American and Labor Law Considerations | reesmarxGLOBAL
Jenny Dalgleish

Jenny Dalgleish

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Digital Nomadism in Latin American and Labor Law Considerations

Before the events of Covid-19 mandated a ‘work from home’ rule wherever possible, full-time remote work was rare. Certain sectors had already explored and approved professionals to work from home on a part-time basis. Some employees were fortunate enough to demonstrate that they could adapt to remote work, without a loss of productivity.

However, there were many misgivings and considerations regarding work-from-home arrangements. Employers were concerned not only about a drop in productivity, but other issues including:

·         Network data and information security

·         Loss of corporate culture

·         Problems with isolation and continuity of communication between teams

·         Difficulties assessing work performance for home-based employees

·         Potential for moonlighting or subcontracted work on ‘company time’

Many companies were forced by the circumstances and need for social distancing, to transition their remote work policies. Businesses had to rapidly evaluate which functions could be performed successfully from home. And what members of the team could adapt to remote work without disrupting the quality or consistency of task performance.

The rapid adoption of remote work during Covid-19 also meant a big leap for executives, and management teams. Learning how to supervise, lead and collaborate with a dispersed team was a hurdle. And so was understanding how to keep a team socially and professionally connected.

After the world has recovered from the Covid-19 pandemic, labor experts are predicting a new age of digital nomadism. The hurdles of uncertainty are now behind many businesses, in a variety of sectors. They have seen how remote work can work.Not just for the employee, but in economies of scale.And in some cases, remote work arrangements can significantly lower expenses for employers as well.

Are we ready for an era of digital nomadism? How will that impact regional labor laws, when a business in headquartered in one country, with national and perhaps international employees?Let’s take a look at what the future of work may look like, as economies recover, but employers consider the value of remote work accommodations for their team(s).

Digital Nomadism as the Cure for Skill Shortage in Competitive Markets?

Regions with high economic growth potential can be quickly stifled by a lack of skilled and experienced human capital. Companies struggle with recruitment, and it becomes highly competitive. This is a significant detriment for start-ups.

And it is also a consideration that can deter foreign investment. The availability of production labor and skilled professionals is a key factor in determining global expansion into regions like LATAM. Without a balanced labor pool, companies understand they will face significant challenges hiring, and retaining the help they need.

Now the rules have changed.Not only can professionals work fulltime from home (if they have proven the ability to do so), but employers are embracing the idea strategically. If you think about the potential applications for global business expansion, that is not limited by the local labor pool? That means any country with supply chain, production or strong commodities for manufacturing could be ideal for global business expansion. If recruitment and retention were not an issue.

That is why LATAM countries have started to innovate, to meet the demand for skilled labor.Both Latin American and Caribbean countries have introduced long-stay visas for foreign workers, who are equipped to work remotely.Latin America is eyeing exponential growth through foreign investment, and attempting to diversify the national labor pool by augmenting skilled professionals. Even if they are non-nationals.

Countries like Antigua, Barbados, the Cayman Islands and Bermuda all have created new legislation that permits non-residents to enter the country and stay long-term.Providing the professionals can prove that they are gainfully employed by a local business.There are also some solvency requirements, such as proof of income, and criminal background checks that candidates must meet in order to qualify.

Costa Rica is now moving in a similar direction, crafting legislation to address skilled professional labor shortages. Candidates will be required to prove that they can earn US $3,000 or more per month as the basic qualifying income as a freelance or remote worker. In Costa Rica, the new subcategory for employment will augment the Estancia immigration regulations.

Will International Business Travel Become Unnecessary in a Post-Pandemic World?

While countries grapple with managing the healthcare response to Covid-19, nations that have most heavily relied on international talent are experiencing problems. In the United States for example, the previous administration led by President Trump paused the issuance of H1-B Visas.A significant blow to fintech and software firms that relied heavily on global recruiting.

Under President Biden, the restrictions to the H1-B visa have been lifted. With other accommodations that will allow children born in the United States of parents with H1-B visas, to apply seamlessly for citizenship. The move to dismantle some of the Trump era immigration policies that have restricted the hiring of foreign professionals has been lauded by Facebook and Alphabet (Google).

Labor laws become complex, when issues of legal residency arise.If an employer is located in Latin America, but the remote hire and professional resides in the United States, conflicting national laws may complicate income tax requirements. There are also pension considerations for businesses. Hiring internationally can create some significant obstacles and deterrents. Unless the right legal framework is in place to solve those problems.

However, as Latin American countries take note of how Caribbean countries are managing the problem, formulating new freelance or remote-hire laws in the Mercosur block is a priority. Latin American countries are known to have a viable manufacturing labor pool, but fewer professionals with technology or skill trade expertise.And the lack of balance between human capital could present a short-term obstacle for LATAM regions who want to attract foreign investment.

Business travel may become antiquated in the post Covid-19 global business climate. The rapid adoption of new conferencing software and connectivity apps demonstrates that the future will favor remote professional hires. And eliminate the obstacles for nations who are competing for limited human capital resources.

Are you planning a global business expansion into Latin America? Our team at reesmarx are recruitment specialists with local knowledge of employment laws in the Mercosur bloc countries.Contact us today to talk to one of our human resource specialists.

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