If confidence is the key to a strong global economy, the debt crisis in the Eurozone has imposed a deep sense of self-doubt in markets throughout the world. By Dominic Tidey.

The mobility industry is a clear thermometer for what happens within the global economy: when the multi-nationals sneeze, relocation providers get the flu.  With the recent second bailout for Greece and the announcement of €530bn of cheap loans to 800 banks across the EU, we all hope to see growth kick start again across the continent. 

Jacqueline Biersma, Relocation Director for TEAM Relocations agrees that the mobility industry is amongst the first to be at the receiving end of corporate change. “By tradition, our industry is one of the first to be hit when economies slow down,” she said.  As the traditional mobile workforce is more expensive than employees recruited locally, programmes may be temporarily stopped, and across Europe companies are acting with caution. 

Greece has so far been the most wounded casualty in the debt crisis and the lack of confidence that markets have in its ability to service its debt is leading to profound social and political change and this is having a big impact on mobility. 

“The relocation industry in Greece has been affected by the general economic crisis for two years now, but it is in the last few months that Greece has experienced the roughest time we have seen in decades and our everyday lives have changed,” said Maria Christina Kouris, CEO for Corporate Relocations in Greece.

Other factors will impact on Greece’s immediate future and its relocation industry. The privatisation of large state-owned enterprises and land will bring in foreign capital and investment and already mostly Russian capital has begun to flow in to take over failing private companies, factories and touristic land developments.

Spain is also undergoing a profound change to its social and economic infrastructure. 

“Spain is currently going through one of the bigger crises of its history with an unemployment rate of over 20%,” said Susana Bourne, Managing Director of Antares Relocation in Spain.

A new government was elected last November and has started to implement new reforms, much anticipated by the Spanish people. Historically there were few companies investing overseas, which is a big change. “It seems that many more are doing so now and therefore there has been a shift from incoming multinational expatriates to outbound Spanish professionals,” explained Susana.

A change in assignment structure is one of the major changes that the relocation companies are seeing first hand.  “Multi-nationals and expatriates are a part of Greece’s economy and have been very affected by the current crisis,” said Maria. The support for assignees’ relocation and assignment durations has been reduced and companies are not re-filling those expat positions.  “Over the next 2 years we expect a further decrease in relocations within existing multi-nationals,” Maria concluded.

Susana Bourne also confirmed that the issues facing the Spanish economy are translating into big changes in assignment types. It has been noticeable that the relocation packages for international companies bringing people into Spain have been reduced to just covering basic local registrations. “Bringing nannies over, for example is now almost impossible,” she said.

Ireland was the first nation in the Eurozone to get into a debt repayment crisis and provides an interesting model for countries that may be going through this at present.  Now a year or more after the Irish bailout, the austerity measures imposed seem to be having an effect and the outlook is more positive. 

Germany remains the strongest economy in Europe and as we have all watched as the debt crisis unfolded for Ireland, Greece, Spain and Portugal, economic recovery has hung on the willingness of the German government to continue to prop up the euro.  The German economy is functioning well but the European debt situation is still serious and there is huge uncertainty on its impact. “Indicators for the immediate future of the German economy are contradictory,” said Helmut Berg, CEO of RSB Deutschland.  “What is certain to me,” said Helmut, “is that this crisis will not take months to be solved – it will take at least five to eight years for the financial system to re-align itself, but we all hope that that painful adjustment maps out a far better way forward for both global markets and national economies.”

Innovation in service changes for clients seems to be the key to gaining business.

Portugal has been struggling for some time and although bailouts have hopefully begun to increase confidence and stability, the impact on the mobile workforce has been profound.  “We are adapting our portfolio to the market,” said Portuguese Isabel Cudell, Managing Director of Moving On, based in Lisbon. “Our service globalisation has to follow the country’s economic development, which in our case is going to natural markets in the African Portuguese speaking countries of Angola, Cape Verde and Mozambique.”

Mima Hiller is the founder and CEO of TTH Relocation and has tailored her company’s services to meet the changing demands of her clients. “At TTH we have a very broad range of clients with diverging service needs,” said Mima. “What I am seeing with our clients is a difference in the type of expats coming into the UK and our successes over the past three years are due to our ability to tailor our services to their changing needs.” 

The same factors have encouraged Chris Winning, CEO of Corporate Care based in Cork, to look at the development of her company in the light of new service requirements. “The mood in the relocation industry in Ireland is very positive, but only for those who have listened to their clients and changed their service offerings to match the clients’ new needs.” There has been a big change away from the typical ‘ex-pat family’ to more short-term assignments (one to six months) for single individuals or to childless couples.

All countries have tightened their immigration rules to protect domestic jobs, but in most cases these rules, aimed at the blue collar service and administrative posts, are not the ones being filled by the globally mobile workforce and this is a great source of frustration for relocation companies and corporates alike. 

“We see inadequate and inaccurate laws being passed to attract French voters,” said Nathalie Gazal, the CEO of Expat Relocation France and on the Board of the National Mobility Association of the SNPRM. She is seeing big changes in corporate mobility and believes that diversification is the key to the future.

There is a great deal of uncertainty about how the future of the Eurozone will play out, but in terms of mobility the issues seem to be about easing restrictions and cutting costs.  So although there are no answers as yet, only trends, we can see that quality and talent retention coupled with diversification to meet client needs, will become the driving forces behind the future of international assignments.

Dominic Tidey

Dominic Tidey is the Operations Manager for EuRA, the European Relocation Association, who have 375 member companies in 56 countries offering professional relocation support to corporate clients.