||Favourable conditions, including tax incentives, more important than availability of a well educated workforce in determining business location.
||Preference for local workers, but foreign talent fills gaps, can improve global understanding and provides insight into new markets. |
||Personal tax incentives, pensions portability and flexible immigration controls among ideas favoured to attract foreign talent. |
Tax incentives for businesses and migrants, cross-border portability of pensions and a significant relaxation of restrictions on immigration are important measures if governments are to attract businesses and foreign talent, a new survey from KPMG International has shown.
The poll covered 260 senior HR decision makers representing large multinationals in 12 countries, Australia, China, Hong Kong, Singapore, Japan, India, the UK, the US, South Africa, Germany and Switzerland.
Asked where they prefer to locate operations, nearly three quarters (74 percent) of companies polled said that they look for favourable business conditions, including tax incentives, and then either train local workers or bring in workers from elsewhere.
A similar majority (80 percent) wanted to see governments implement policies to encourage business to settle in a country, and then allow them to build the workforce that they need by hiring from wherever the best talent can be found.
There was, however, a preference amongst 60 percent of respondents to hire local people. Businesses said they are more socially stable, there is no problem with languages and the need to navigate immigration regulations is avoided.
"What our survey revealed is a marked shortage of local skills in some countries. More companies in Australia, China, Hong Kong and Singapore face a lack of local managers compared with other countries in Asia," said Lloyd Deverall, Head of Tax in KPMG's Asia Pacific region and a partner in KPMG's Hong Kong firm.
"While only a quarter of the companies polled worldwide said that governments have a responsibility to ensure the supply of labour to businesses based in their countries, this rises to 60 percent or more in China, Singapore and Hong Kong where this shortage in managers is felt most strongly."
"It's hard to avoid the conclusion that companies in certain 'hotspots' are not operating as efficiently or productively as they might because of a lack of local talent. They are looking to fill these gaps with foreign talent. In an age when companies are able to move from one country to another in search of favourable business conditions, the onus is on governments to create flexibility in the labor market in response to business needs."
Beyond simply filling roles, many companies believed that hiring foreign workers improves the company, with 69 percent claiming that they help foster better understanding of global markets, and 76 percent saying that foreign workers help develop a valuable global mindset. But for nine out of ten this also meant that governments would need to collaborate on reducing barriers to immigration.
On other measures to attract foreign talent, direct tax incentives for migrants were favoured by 55 percent of respondents, and there was support from seven in ten for harmonization of tax rates between countries to avoid the personal tax arbitrage that has distorted labour markets, particularly in the Asia Pacific region.
Steps to improve the portability of pensions were another popular idea, with 79 percent of respondents favouring harmonized tax treatment of pensions and relaxation of restrictions on where they can be paid into and drawn from.
"Our survey shows that business is keen to move to the next stage in globalization - a freer movement of people around the world to where they are needed." said Mr. Deverall. "Part of the challenge for governments seeking international investment will be the measures they take to develop the local workforce and attract foreign talent. At a time when global confidence is at a low point, it is far sighted action that will help countries ride out the storm and lay the groundwork for future growth."
Among the respondents in Hong Kong, 80 percent believe that governments should use tax incentives to attract business and in turn the workforce will follow. In addition, 70 percent believe that governments should use tax incentives to attract workers to their country, which will in turn allure companies to establish their businesses. Respondents in Hong Kong unanimously agree that flexible immigration policy will help attract workers in sectors where they are most needed.
"Hong Kong has always been in the forefront to attract business and talent. We have a low tax environment both in terms of corporate tax and individual personal tax. Hong Kong has also launched the Quality Migrant Admission Scheme, which aims at attracting highly skilled or talented people," said Barbara Forrest, Principal, Tax, KPMG China.
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Note to editors
KPMG Tax, Demographics and Corporate Location Survey investigates how the availability of skilled labor is affecting decisions on where businesses locate, and how government fiscal policy might interact with economic needs. Researchers asked 260 senior decision makers from a wide range of international companies about their experience of employing people from different countries.
The sample was drawn mainly from countries in the Asia Pacific region, specifically China, Hong Kong, India, Singapore, Australia and Japan. But to provide a basis for comparison with these countries, and give an indication of labour mobility issues elsewhere in the world, interviews were also carried out in the UK, US, Germany, Switzerland, Spain and South Africa.
A copy of the survey report will be available shortly on KPMG.com.
Information on responses from companies in each of these countries is also available.
The survey was launched at KPMG's 2008 Asia Pacific Tax Summit in Singapore. The Summit is a meeting of KPMG member firms' clients, guests and partners to discuss international business issues with a focus on tax. It is the latest in a series of Tax Summits. Past events have taken place in Lisbon, Mexico City, Beijing, Buenos Aires, Barcelona and Berlin.