Digital nomads – Remote work visas for SA?

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Digital nomads – Remote work visas for SA?

Digital nomads – Remote work visas for SA?

The recent call by the Western Cape government for South Africa to introduce a one-year remote working visa to boost the tourism industry, has implications which go a long way beyond a small boost to a marginal part of the travel industry. ‘Digital nomads’ have been around for several decades and initially thought of as a sub-set of the global backpacking industry. These are frequently young people who enter countries on tourism visas and engage in part-time blogging or other on-line writing or other work.

However, the post-Covid 19 world may offer a far deeper and more enduring prospect for potential host countries. Lockdown and travel restrictions have demonstrated that many occupations can be productively conducted away from a brick-and-mortar office. Some of the literature in fact suggests that digital home workers tend to be more productive (by up to 70 percent) than the same individuals were when they had to commute to an office every day.

Remote work or digital nomad visas are an attempt to capture a part of this emerging market. A range of countries now offer one-year visas to foreigners who earn their incomes offshore. Estonia claimed to be first off the mark, amending its Aliens Act to offer digital visas from July 2020. Other countries have rapidly followed including Bermuda, Georgia, The United Arab Emirates, Greece, Portugal and Croatia. In November last year, Mauritius became the first African country to get into the game with the offer of a one-year Premium visum for those who wish to work remotely, have a second home on the island or retire there.

Most countries which offer remote visas require applicants to prove fairly substantial income levels by presenting recent bank statements. So far, only Mauritius and Bermuda pose no such requirement. Where required income levels are pitched is a good indicator of the employment demographic sought. Estonia requires an income of €3 504 per month, Barbados US$50 000 per year, Dubai US$5 000 per month and Norway €35 719 per year. These are not initiatives intended to appeal to professionals in digitally enabled lines of work.

From the host country’s perspective, it may be acceptable that remote visa applicants are coffeeshop intellectuals or amateur musicians over the weekend, but it would like them to be bankers, accountants, engineers, IT professionals and lawyers during the week.

Research since the onset of Covid 19 shows that the job categories best placed to do remote work are also the most desirable immigration demographic. Research by the US Census Bureau into the increase in remote work in response to the pandemic found that the phenomenon is directly related to household wealth. During the pandemic, the Bureau’s Household Pulse Survey found that 73 percent of the highest earning households (annual incomes of US$200 000+) switched to remote work. The figure was only 12.7 percent for household’s earning less than US$25 000.

The Bureau found a similar correlation between education and remote work. Households containing an individual with a bachelor’s degree or higher were three times more likely to convert to remote work than those with a high school graduate. While many will return to offices when the pandemic has run its course, a significant portion of the workforce will probably continue to work largely by remote means.

Global consultancy Mckinsey has analysed 2 000 workplace activities for 800 occupations and found remote work potential concentrated in a few sectors. It found that three-quarters of activities in finance and insurance can be done remotely without any loss of productivity. Management, business services and information technology lend themselves to about 50 percent remote work. University of Chicago economists Jonathan I. Dingel and Brent Neiman have produced even more spectacular figures. They argue that 97 percent of legal work and 88 percent of banking and financial services can be done remotely.

In the same study, Dingel and Neiman found that only three percent of transport related jobs and one percent of those in agriculture, fisheries and forestry are ‘remote -friendly’. Successful applicants for remote work visas can be expected to come mostly from developed countries and tend to be active in the services sector.

The traditional strength of South Africa’s tourism industry (15.8 million travellers in 2019, contributing seven percent of national GDP) makes it a candidate for the new market. It is not surprising the Western Cape has taken the lead among South African destinations. The province has looked to position itself as a distinctive South African destination for high tech, clean industries for over a decade. Institutions like the provincial government’s investment promotion vehicle, Wesgro, and public-private partnerships like Accelerate Cape Town have, for over a decade, pursued a mandate to convince local and international businesses to locate parts of their back and middle office operations in the province. There is now a track record of successes in Business Process Outsourcing (capturing 65 percent of the industry located in South Africa) as well as Information and Communications Technology (ICT).

The pandemic may have catalysed a deep shift in the nature of doing work for certain employment categories. Much remote work will be localised as employees spend proportionally more time in suburban home offices. Indeed, there is a burgeoning literature on how remote working will change the urban landscape in developed countries. But some work will relocate across international boundaries. The issue for developing countries like South Africa is to capture a portion of this new market.

About the Author(s)

David Christianson

David Christianson

David Christianson is a consultant. He has previously been a political scientist, NGO researcher and development banker. He entered business journalism in 1997 and was Diageo African Business Writer of the Year in 2006.

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