Will digital nomadism go mainstream?
First, there was working from home. Now there is working a long way from home
It’s an iron law that every article about digital nomads must show an attractive youngster working on a laptop while sitting near a beach. I’m not about to trash that convention.
Back in the pre-pandemic Before Times, I was vaguely aware of a community of expat Australian content creators living like kings and queens over in Bali. I didn’t know any of these people well – they were acquaintances or, more often, acquaintances of acquaintances. But every so often images of luxury villas and breathless updates about how so-and-so was living the dream in Ubud would pop up in my social media feeds.
The impression I got – and, as mentioned, I wasn’t paying much attention so this may or may not be accurate – was that digital nomadism had a lot going for it but involved significant barriers to entry.
First, digital nomads had to work for employers or clients who were either unaware of or unconcerned with where they were located. This was less common prior to the pandemic-fuelled spurt of digital transformation than you may remember. Back then, many gig-economy types were expected to attend face-to-face meetings with clients and sometimes even complete their work on the client’s premises.
Second, digital nomads had to be unencumbered by things such as children, aged parents or health issues. Relocating to Seminyak for six months gets a lot more complicated if you’ve got to find a school for your kids to go to, or you’re leaving your ailing mother to fend for herself, or you’re not sure where you’ll get the necessary treatment should a physical or mental illness flare up.
To summarise, digital nomadism didn’t seem to be much of an option for anyone who wasn’t a twentysomething social media influencer.
But I believe that’s about to change.
Work from home, Stage One
As has been widely remarked on, during the pandemic many people made sea changes and tree changes. The affluent – disproportionately business owners or highly paid employees – decamped to their holiday homes while holding onto a primary residence located close to a CBD. The not-so-affluent abandoned their cramped and unglamorous dwellings in the city or its surrounding suburbs and moved up the coast, down the coast or inland to what was usually much more salubrious accommodation.
Work from home, Stage Two
It would be drawing a long bow to describe the sea changers and tree changers as digital nomads. In almost all cases, the pandemic-era relocators were staying in the same country, the same state and, most of the time, the same general region. Moving from Bondi to Wollongong or Gosford or the Blue Mountains is very different from moving from Bondi to Buenos Aires, Chiang Mi, Ho Chi Minh City or Prague.
Nonetheless, the sea change/tree change phenomenon that’s been occurring since early 2020 was the first step toward breaking free of what might be described as the ‘tyranny of nearness’. Once employers got used to the idea of employees being based hundreds of kilometres away and only showing up to the office once a week/fortnight/month, many of them became much more open to the idea of employees (and contractors) being based thousands of kilometres away and not showing up at all. Or perhaps just turning up occasionally to a foreign branch office or an annual team-building weekend.
In a recent letter to shareholders, the founders of Atlassian detailed their plan to onboard another 3,000 employees ASAP and declared:
The past two years have underscored the importance of scaling efficiently and flexibly. With our TEAM Anywhere program, we can offer employees the option to live anywhere within countries where we have a legal entity (hello, Australian Antarctic Territory!) and work from just about any other location on a temporary basis. We believe this has helped shield Atlassian from the massive employee attrition many other companies are experiencing.
It also means Atlassian is recruiting the most talented people to support our goals, even if they don’t turn up to an office every day. Over 40% of the new Atlassians hired in calendar 2021 live more than two hours away from the nearest Atlassian office. That number will keep growing as we ramp up the pace of hiring over the next several quarters.
Are we witnessing the birth of Globalisation 2.0?
The globalisation that occurred from circa 1980 – 2016 massively benefitted Capital, as well as a small and select class of employees. As neoliberal economists never tire of pointing out, it did have some benefits, such as cheap consumer goods and low inflation, for the hoi polloi. But they overwhelmingly got the rough end of the stick.
Globalisation 1.0 typically involved Company X firing (unionised, relatively well-remunerated) Western Worker Y and offshoring their job to (non-unionised, poorly paid) non-Western Worker Z.
(Readers of a certain age may remember when current-day paragons of woke capitalism, such as Apple and Nike, were regularly hammered by the Left for taking advantage of grim sweatshops located in nations such as Bangladesh, China, Indonesia and Vietnam.)
But the times, they seem to be a-changing. As discussed in my last Substack, Company X now usually must pay a Vietnamese software developer as much, or almost as much, as they would one based in Australia, the UK or the US.
What’s more, the step change in digital transformation, along with the accompanying shift in employer attitudes, means an Australian, British or American software developer can choose to base themselves in Ho Chi Minh and engage in cost-of-living arbitrage, aka geoarbitrage. That is, earn a developed-world salary while living in a developing country. After all, a salary of US$150,000 goes a hell of a lot further in Ho Chi Minh City than it does in Sydney, London or San Francisco.
The world is becoming your oyster
To use tech-industry jargon, technology has removed much of the friction from relocating to another country. Many developing countries, and even a handful of developed ones, are now making the process even more frictionless.
For example, Indonesia has just launched a Digital Nomad Visa that:
Will be available through a streamlined application process to facilitate the entry of foreign remote, freelance, or self-employed workers… The plan is now to launch an Indonesia 5 year digital nomad visa that will facilitate long-term stays, and allow the holder to live in the country without paying tax in Indonesia. The only Indonesia digital nomad visa requirements that applicants need to meet to apply is to have an income that comes from a business based outside of Indonesia.
The Indonesian authorities are presumably aware of the contribution the 1.5 million Americans who’ve relocated to places such as Lake Chapala, Tulum, Huatulco and Los Cabos make to the Mexican economy. They are no doubt hoping foreigners – largely but by no means exclusively Australians – will make a similarly significant contribution to the Indonesian economy.
Indonesia is far from the only nation now rolling out the welcome mat for remote workers. Antigua & Barbuda, Anguilla, Aruba, Barbados, Bermuda, Brazil, the Cayman Islands, Costa Rica, Croatia, Czech Republic, Dominica, Dubai, Estonia, Georgia, Greece, Hungary, Iceland, Italy, Malta, Mauritius, Mexico, Montserrat, Panama, Portugal, Romania, South Africa and Spain all already have, or are about to introduce, long-term visas aimed at ‘workcationing’ foreigners. The incentives and requirements vary from country to country. But, as a rule of thumb, if you can prove that you have an income derived from somewhere other than the nation you are setting up shop in, Bob’s your uncle.
What happens now?
Post-Covid, it has never been more feasible for the citizens of high-cost-of-living nations to relocate to cheaper ones while maintaining a first-world income. However, that doesn’t mean vast numbers of people are about to migrate from Australia, North America, the UK and Western Europe to the Caribbean, Central America, Eastern Europe and Indonesia. Most of us have ties that bind us to our current geographic location. Plus, even those of us who are footloose and fancy-free won’t necessarily want to deal with the challenges of living in a foreign country and navigating an unfamiliar culture.
All that noted, I expect to see a great deal more geoarbitrage occurring in coming years. That geoarbitrage will have interesting economic, political and geopolitical consequences. But a deep dive into how Globalisation 2.0 might pan out will need to wait until a future Substack missive.