Mobility in the Middle East and Africa

Despite the global recession, the number of expatriate assignments to the Middle East has grown significantly since 2002 – and has risen by nine per cent over the past two years alone. Asia Pacific is still the most popular destination, with 82,031 foreign (and mainly western) assignees located there in 2010, according to Mercer's Worldwide Survey of International Assignment Policies and Practices 2010. But the Middle East comes second, with 36,591, the majority of the increase accounted for by countries such as Qatar and Saudi Arabia.

The 2006 Nationalisation Survey shows that the percentage of foreign nationals in the workforces of the main Middle Eastern assignment countries is high: in UAE it is 90 per cent, Qatar 89 per cent, Kuwait 81 per cent, Bahrain 59 per cent, Saudi Arabia 47 per cent and Oman 33 per cent.

Saudi Arabia and Qatar are currently the biggest job-creating countries in the Gulf. Both enjoy large hydrocarbon revenues, accumulated reserves and massive government expenditure on infrastructure projects. And in the run-up to its hosting of the World Cup in 2022 Qatar should generate significant economic growth on the back of rapidly rising salaries and employment opportunities.

By contrast, Dubai, Kuwait and Bahrain have grown more slowly, with professionals from such countries increasing mobility flow in the region by moving to Saudi Arabia, Qatar and Abu Dhabi. The demographic mix of expatriates is also changing as a result of the number of Indian and Philippino expatriates returning to their home countries, where they can now command better jobs, salaries and benefits. Gulf States are having to cast their talent recruitment net more widely – to Africa, South America, the Far East and the United States – accordingly.

There are four common compensation structures for expats in the Middle East.

Expatriate (also known as the home/host or balance sheet approach) – foreign nationals working on expatriate assignment conditions linked to their home or headquarters country.
Local non-national (also known as local plus) – foreign nationals working on local conditions. This is by far the most common approach in UAE, Qatar and Kuwait.
Expat light – foreign nationals on a hybrid of expatriate and local non-national packages.
Local national – home national working in home country. A significant number of this category of expatriates work in Saudi Arabia.

An emerging trend is the growth across the Middle East of local non-national – or 'local plus' – packages – a hybrid of the local package and the traditional expat package. Local plus packages include many of the features of the traditional expatriate package, but exclude things like hardship and cost of living allowances, foreign service premiums and rest and relaxation air tickets. There is limited provision for benefits such as healthcare and relocation support. Base salary is paid in the local currency and expats are entitled to other benefits provided under the local labour law.

Expat light packages, which are increasingly being used for intra-regional moves – within Europe or Asia, for example – comprise even fewer of the benefits of the traditional expatriate package. in the local currency and expats are entitled to other benefits provided under the local labour law.

While the increasing prevalence of local plus and expat light packages has been driven by companies scrutinising their costs much more closely after the global financial and economic recession, being able to differentiate between different types of expatriates and different types of assignments is allowing organisations to integrate their mobility strategies with their talent and leadership development strategies and their overall corporate objectives in a much more considered way than has previously been the case. in the local currency and expats are entitled to other benefits provided under the local labour law.

But because this differentiation might mean that you have different people on different packages doing ostensibly the same job, transparent and consistent communication is paramount. in the local currency and expats are entitled to other benefits provided under the local labour law.

Two factors might arrest the steady growth of expatriate assignments to the Middle East. One is the growing conflict and turmoil across the region: it is difficult to know exactly how this will play out, but several governments are taking steps towards reform. The other is the move towards 'localisation' of jobs typically done by foreign nationals – but this trend is pronounced in just a few countries at the moment, and foreign companies are working closely with governments to ensure a smooth (and slow) transition.

PepsiCo: mobility and talent management in practice in the Middle East

The AMEA (Asia, Middle East and Africa) sector is an important market for global food and beverage giant PepsiCo. With its head office in Dubai, AMEA is one of four global sectors, including Europe and two in the Americas. AMEA comprises around 100 large, diverse and complex markets. These include many emerging and developing countries, where GDP growth is expected to be double that of developed markets over the next few years. in the local currency and expats are entitled to other benefits provided under the local labour law.

The populations are younger than those in developed economies – 38 per cent of people in AMEA are under 19, compared with 28 per cent in the rest of the world – and the population of 5 billion today (73 per cent of the global population) is expected to rise to 7 billion by 2050, accounting for 77 per cent of the global population.

Over the past 18 months, in common with many other companies, PepsiCo has been examining its expatriate policy and package for the Middle East. Its current approach, which utilises a local plus-type package, was set up in the early 2000s when Dubai was a smaller regional office. There are now 250 associates there, comprising 50 different nationalities. in the local currency and expats are entitled to other benefits provided under the local labour law.

In the early 2000s the company moved all its non-US associates in the Gulf, regardless of their nationality, from the standard US home host expat package, paid in US dollars, to a local plus basis. The system was simpler for the company to manage, and employees had more money in their pockets and more flexibility to make their own arrangements for housing and so on. This has worked well for many years.

A couple of years ago PepsiCo implemented a new global mobility policy and, as part of that, decided to look at whether the approach used in the Gulf was still the most effective way to pay its associates there.

It benchmarked itself against other companies and found that its expat package was comparable. However, its package wasn't always compatible with its talent management ambitions. To develop its people PepsiCo needs to give them critical experiences in different countries around the world.

The company needs expats in the Middle East to fill critical skill gaps and to provide opportunities for growth and development. But it realised it needed a more rigorous approach towards determining both the business need for the assignment and the development needs of the individual.

As a result, its new global mobility policy focuses on ensuring that it moves the right people, into the right opportunities, for the right investment.

People. It selects international assignees based on the business need and the development potential of the candidate. To be selected for international assignments employees have to understand and embrace the value of international experience for their own development. PepsiCo is also building awareness that assignments are a privilege reserved for its most valuable employees.
Opportunities. PepsiCo will invest in mobility when the investment is justified by at least one of the following factors: the strategic importance of the role, a development opportunity for top talent that is not available at home, a critical need for skills not locally available. International assignments are now planned in the context of a career path and with a defined time horizon.
Investment. The company differentiates the support it provides to its expats according to the value that the assignment represents to the employee, the line of business and the organisation.

A spectrum of policy options enables the business to deploy its expatriates in a strategic and market-competitive way for the appropriate investment, while ensuring the continued mobility of talent around the world.

Newmont Mining: the challenges of mobility in Ghana

Ghana, in common with many African countries, is rich in growth opportunities for multinational companies. Although 25 of its 54 countries are among the world's poorest, its economy is growing and it is seeing increasing foreign investment, especially from China. Around nine per cent of total global expatriates work in Africa.

However, foreign companies wanting to exploit growth opportunities in certain African countries have to contend with their 'localisation' policies – that is, developing local talent to replace expatriates. Ghana is one such country, and US mining company Newmont works closely with Ghanaian government authorities to ensure that its operational and talent management strategy are consistent with the country's localisation policy.

Last year, Newmont secured a tripartite agreement with the Minerals Commission and the Ghana Immigration Service on what positions in the company would remain outside the localisation policy and that Newmont is allowed to fill with talent pool candidates, as required. These include regional vice-presidents. But aside from these exceptions, at every operating site the HR team has to identify the skills and qualifications of every single incumbent, who is potentially targeted to replace them, within what timeframe, and an agreed localisation date.

Nevertheless, in a country where age and experience are deemed to equate to talent, Newmont has had to reject highly qualified and skilled candidates for jobs because the authorities deemed them 'too young' (at 34 or 35) and wouldn't grant them work permits. This makes it difficult for Newmont to use Ghana as a development opportunity for its younger talent, and unless it can quickly develop local talent, compromises its own growth plans. Currently only about 5.5 per cent of the company's workforce are expats, and by 2013/14 the proportion will have fallen to 2 per cent.

Another challenge the company faces is equipping its expats with the skills they need to coach and develop locals to take over their jobs. Developing the skill sets of the locals is particularly critical, as Newmont is planning major investments in both Ghana and other countries in west Africa, and will need to deploy Ghanaian talent there.

Expat packages are still largely home-based, but this may be starting to change slowly. For one, it is expensive, and Newmont's Australian expats in particular are rapidly becoming one of its biggest costs due to exchange rates moves and recent Australian tax law changes. What's more, many Ghanaians who have been out of the country for ten or 20 years, and have British or other non-Ghanaian passports, are now starting to return home. Newmont has managed to employ many such people on local-plus packages – helped by the fact that they are typically employed at manager and senior manager level, both of which command a pay premium based on the shortage of talent at that level.