Kicking against the BRICS

According to a recent announcement by Goldman Sachs, “2016 could be the year emerging market assets start to find their feet.” The general growth rate in emerging economies might soon accelerate again. If the prediction should come true, this would obviously be greeted with relief by the global economy. However, as founder and co-CEO of the world’s largest network and information site for expats, I cannot help seeing this potential in personal rather than financial terms.

Some of our largest and most vibrant expat communities are located in emerging markets: Over 22,000 of 1.9 million InterNations members worldwide live in the Shanghai area, with a further 19,000 each in such metropolises as Moscow or São Paulo. Thus, I naturally envision what a renewed interest in emerging markets could mean for a highly qualified and globally mobile workforce. This could affect the German engineer coming to work on an environmental technology project in the Chinese manufacturing industry, or an IT consultant from the US providing input on data management in Brazil’s logistics sector. What will their lives – and jobs – abroad be like?

How expats rate life and work
in the BRICS

An expat survey conducted by InterNations in 2015 holds some valuable insights. For our annual Expat Insider study, we asked more than 14,000 expatriates from across the globe to rate and provide information on various aspects of living abroad, from quality of life and ease of settling in to their work environment and personal finances. The 2015 results include five topical indices, including the Working Abroad Index, as well as an overall league table for 64 destinations.

The survey data for the BRICS countries paints a less than rosy picture of what expatriates in emerging economies think about living and working in their host country. In the overall ranking, China’s score is best, ranking 40th out of 64 countries overall, followed by South Africa at rank 49. The other countries do not make it out of the 10 worst-rated destinations, with India ranking 56th, Brazil coming in 57th position, and Russia finishing last at rank 60.

In the Working Abroad Index, a similar order of countries emerges: China (17) again comes in first – but by a far wider margin – and Russia ranks last in position 61. South Asia and South Africa have traded places, though, with India (51) beating South Africa (54) among the respective expat population. Brazil keeps trailing behind, landing the second-to-last rank, just a little ahead of Russia (58).

An emerging re-definition of expatriate

Confronted with this damning judgement of expats working in the BRICS countries, we began to wonder if that negative outcome might be due to the heterogeneous makeup of our survey audience. We generally interpret the definition of ‘expat’ in a more modern and therefore broader sense: Since an ever-increasing number of people choose to live abroad for a multitude of reasons, the strict meaning of expatriate that denotes an executive on a foreign assignment is slowly becoming obsolete – it refers to a subgroup of the international community rather than an exemplary type.

There is a noticeable trend for expats in the BRICS states to see their own job security more positively than the national economy. Most do not have much confidence in the latter: 69% of respondents in Russia, 61% in Brazil, and 57% in South Africa are not satisfied with this factor. In Russia, 15% even go for the worst possible rating. By comparison, India and especially China fare a lot better. In India, one-third of expats are neutral on economic development, and 72% of those in China give it a favorable judgement. These subjective impressions – both positive and negative ones – fit the actual economic climate in the BRICS countries in early 2015

About one-sixth of the 2015 respondents are foreign assignees, though, and every fifth participant works in management. Their work experience, and thus their survey ratings, may differ significantly from that of a graduate student spending a gap year as an EFL teacher or an expat who moved for love and is struggling to rebuild his or her career. At least, that is what we assumed.

Therefore, we also came up with an alternative take on the Working Abroad Index that applies to 26 countries where a significant number of respondents work in middle or top management. This ranking still features four out of five BRICS countries, with the exception of Russia, where the overall pool of participants in upper management positions was not statistically relevant.

For the B(R)ICS states, the list of preferred destinations among expat managers largely mirrors the Working Abroad Index (see chart below).

Brazil and India fare slightly better among managers. However, the latter judge working conditions in China or South Africa somewhat more harshly than the average foreign resident. Nonetheless, these minor differences do not change anything about the overarching results.

An in-depth analysis of what expats in management positions think about working in the BRICS states only confirms the opinions of the general survey population. But what exactly does the Working Abroad Index refer to? Let’s dig a little deeper.

Expats in China still optimistic
about job and career

The Working Abroad Index includes three sub-categories: Job & Career, Work-Life Balance, and Job Security.

In the Job & Career category, China is the obvious winner, a BRICS country that truly shines. It is even featured among the top three destinations worldwide: three-quarters of the respondents express general satisfaction with their job. Moreover, two-thirds judge their career prospects positively.

The most important fields of employment for China’s foreign community are education, research, and translation, where three out of 10 respondents have found work, and the manufacturing and consumer goods industry (16%, more than twice the global average of seven percent). The latter sector is particularly important for the foreign assignees that make up 28% of China’s expat population. Among the assignees, 56% of whom have attained a management position, every third is employed in manufacturing.

However, China’s national statistics bureau just announced that manufacturing output has fallen to the lowest level in years – a statement that draws attention to the fact that the positive Goldman Sachs analysis does not refer to all emerging markets equally. In fact, Goldman Sachs concluded that the world’s biggest economy will keep trundling along on a rocky road. How might that influence expats’ outlook on China?

Russia, in particular, stands in stark contrast to China’s positive ratings. Ranking 54th in the Jobs & Career category, it comes in last out of the five BRICS countries in this sub-index, too. About half the respondents in Russia (53%) are generally satisfied with their work, but fewer (48%) are confident about their personal career. Three out of 10 even feel very negatively about future career opportunities.

If we focus only on contentment with career prospects, though, rather than combining it with job satisfaction, South Africa has an even lower score. In the ranking for this specific factor, Russia comes in 49th out of 64 expat destinations, followed by South Africa in position 51.

India versus South Africa:
Rethinking work-life balance

While South Africa performs badly regarding career opportunities for expats, it does, however, come out on top among the BRICS countries in the Work-Life Balance subcategory, ranking 26th out of 64. China comes in second in position 47; Brazil (53) and Russia (54) are neck and neck; and India (64) appears at the bottom of the worldwide league table.

In South Africa, 69% of expats rate their work-life balance positively – more than the global average of 61%. Seven out of 10 are also happy with their working hours, while globally only 62% say the same. Nonetheless, they put in 44.0 hours at work each week. If we exclude part-time employees (nine percent), the average rises to 46.2 hours in a full-time job.

Ironically, this is barely any lower than in India, which receives a devastating rating. Here, only 48% of expats are satisfied with work-life balance, and 36% judge it negatively (South Africa: 17%). Even fewer (44%) provide a positive score for working hours, while three out of 10 expats in India express their dissatisfaction (South Africa: 16%).

However, expatriates in India clock in one weekly hour less than in South Africa (43.0 hours), though the country also has a higher quota of expats in part-time positions (13%). But the difference in the average work week for full-time employees is just a measly 0.3 hours more.

This factoid is a perfect example of an interesting tendency among all survey respondents – not only in the BRICS countries. When we looked for a statistical connection between actual working hours and satisfaction with work-life balance, we could not find any direct correlation between lower working hours and higher contentment with work-life balance.

The survey data for the BRICS countries paints a less than rosy picture of what expatriates in emerging economies think about living and working in their host country. In the overall ranking, China’s score is best, ranking 40th out of 64 countries overall, followed by South Africa at rank 49. The other countries do not make it out of the 10 worst-rated destinations, with India ranking 56th, Brazil coming in 57th position, and Russia finishing last at rank 60

The HR and global mobility industry should take these results seriously: Of course, this does not mean that every expat will be keen on a 60-hour-plus work week. But it means indeed that international employers, in the BRICS countries and beyond, may need to rethink how their staff defines work-life balance and what keeps them motivated. Only then can they offer the right incentives in the hunt for global talent.

Hard times, bleak outlook —
not only in Russia

For the last part of the Working Abroad Index, the Job Security subcategory, survey participants rated both personal job security and the state of their host country’s economy. Similar to the Job & Career category, China has the best ranking out of the five BRICS states, with position 13, and Russia is once again relegated to the bottom, ranking 61st out of 64. India (43), South Africa (56), and Brazil (57) are listed close to or among the last 20 expat destinations.

When the individual rankings for each factor are compared, there’s a noticeable trend for expats in the BRICS states to see their own job security more positively than the national economy. Most do not have much confidence in the latter: 69% of respondents in Russia, 61% in Brazil, and 57% in South Africa are not satisfied with this factor. In Russia, 15% even go for the worst possible rating.

By comparison, India and especially China fare a lot better. In India, one-third of expats are neutral on economic development, and 72% of those in China give it a favorable judgement. These subjective impressions – both positive and negative ones – fit the actual economic climate in the BRICS countries in early 2015, when the data was collected.

For example, Brazil’s GDP began to decrease after a year of minimal growth, while Russia slid into a full-fledged recession. South Africa was facing yet another year of mass unemployment and infrastructure issues.

However, the survey was conducted before China’s stock market crashed, and before it became clear that the Chinese economy would fail to meet the predicted GDP growth of seven percent – not to mention the bad news about the manufacturing industry. It will be interesting to see how expats in China react to this changed climate in the InterNations Expat Insider 2016 survey. Compared to 2014, when 52% gave top ratings to the economy, the respondents’ optimism has actually fallen somewhat short this year.

Or perhaps the Goldman Sachs analysts will have the last word and 2016 will bring the proverbial light at the end of the tunnel, at least to some of the BRICS countries other than China. If foreign investment picks up again, this could open up new career opportunities for expat executives and specialists.

Judging from the generally negative perspectives on living and working in these countries, though, employers might face a tough decision: Will they risk the costs of an intra-company transfer or the hassle of an international hire, even if their new staff is then discontent with their living and working conditions? Or do they prefer the homegrown talent that is also on the rise in emerging markets?

Here at InterNations, we are definitely looking forward to what 2016 and the next Expat Insider survey will show.