For decades, multinationals around the world have taken advantage of the relocation of their productive points to pay lower wages to their workers. The textile industry is the clearest example. Some countries have benefited along the way: China, Bangladesh, Tunisia, Morocco … And also Turkey. Today it continues to happen. But in a different way. Companies no longer go there to produce anything.
They only take their workers remotely.
The phenomenon. It happens that the lira, the Turkish currency, has been installed in an inflationary dynamic for several years. Turkey closed November with the CPI through the roof (20%) and the value of its currency has depreciated 40% against the dollar this year alone (more than 80% since 2015). For the Turks it is a problem. Although they charge more in lira, their purchasing power in dollars (or other stronger currencies) falls. Therefore, they are interested in earning their salary in currencies other than that of their country.
Offshoring. What are they doing? This interesting report from the Financial Times tells it: some are leaving … While others, taking advantage of teleworking, are accepting offers from foreign companies that pay them in dollars. His profit is net, as a young American start-up worker explains: “I didn’t want to leave my family and friends (…) Earning in dollars and spending in lira is more attractive to me compared to living in Berlin and spend in euros “.
For your company, of course, it is also more profitable. A worker based in Istanbul will always be cheaper than another based in San Francisco Bay, one of the most expensive areas in the world.
Disadvantage. Like the offshoring of the turn of the century, this is also a story of winners and losers. Only in this case the active subject is the companies and not the workers. Except for some leading technology start-ups that can pay good salaries, such as Getir, most Turkish companies, depreciating the lira through, cannot compete with foreign capital. They cannot offer better conditions to the young Turks.
There is a talent drain within the country itself. “It is good for young Turks who suffer high unemployment in our country (22%), but it is very bad for companies, which need young qualified workers and cannot pay their salaries,” they explain from an employer association.
The emigration. Turkey must add to the internal talent drain from abroad. The meager economic situation and the repressive and authoritarian tone of Recep Tayyip Erdoğan has caused many to choose to flee to another country. According to a survey carried out by a local polling company, 64% of Turks between the ages of 19 and 29 want to leave the country permanently. The tide is economic and political (the number of Turkish asylum seekers in Germany has exploded).
New week, new lows. #Turkey Lira plunges to another All-time low after Erdogan says Islam demands lower rates. Now down 57.4% YTD. pic.twitter.com/No6j5flgbf
– Holger Zschaepitz (@Schuldensuehner) December 20, 2021
A mirror. The conditions in Turkey are special, but they serve as a reference for the future post-office job. European workers in once non-relocatable jobs will have to compete with equally skilled but cheaper Indian, Vietnamese or Turkish workers. A Silicon Valley recruiting company puts it well in the FT: “Companies have proven what it means to attract talent in a radius greater than 20 kilometers. And there is no turning back.”
We saw it at the time: teleworking may mean living where we want and having more flexible conditions … But also a significant salary adjustment. One encouraged by countries like Turkey.
Image: Mika Stetsovski