For the thousands of digital nomads who have flocked to Mexico, life is sweet. Between their work calls, they spend their time exploring the most beautiful beaches and eating the best food the country has to offer. It is what many dream of, yet their presence has caused a living nightmare for much of the local population.
The influx of wealthy foreign workers – whose average salary is well over five times the average Mexican salary – has increased the demand for housing in the most popular neighborhoods. This has fueled expensive new property developments and pushed rents to levels unaffordable for most residents. Ordinary Mexicans are being evicted from their homes and business premises to make way for new apartment buildings, cafes and yoga studios. Much of the rich cultural heritage of the affected areas is being bulldozed.
The situation has become so serious that residents are taking to the streets in droves to protest. Songs of “Vivienda, si! Sorry, no! (Housing, yes! Evictions, no!) are being heard loud and clear across the country.
The sad irony is that many digital nomads moved to Mexico in part to escape the rising cost of living in their home country. In doing so, they created an inflationary crisis for the people they evicted and displaced.
Similar issues occur in other nomadic hotspots around the world. What was once hailed as the future of work is shaping up to be fraught with challenges as it increasingly provokes resentment among affected communities. Companies that employ digital nomads should therefore consider the potential ramifications. The risk of reputational damage and even costly litigation increases as local people unite and organize to resist this practice.
Ruth Jones is the founder and director of 3Thinkrs, a marketing and public relations agency that has embraced digital nomadism. She reports that while the approach has “worked very well so far, the company isn’t naive enough to think there’s ever going to be a problem.”
While many organizations have considered the more obvious practical complexities — how to ensure compliance with tax rules, for example — many other potential issues aren’t even on their radar. That’s the view of Sam Ross, vice president and general counsel at Remote, an American company that helps companies manage employees and contractors in more than 50 countries.
As digital nomadism is a relatively new concept that “doesn’t really have a legal definition, there are quite a few red flags to beware of,” he warns. For example, employers have a duty under UK law to prevent illegal employment and therefore must ensure that all their employees, wherever they are, have the right to work and have obtained the appropriate visas.
Some popular destinations have seen crackdowns on illegal work. In 2014, for example, armed police raided a cafe in Chiang Mai, Thailand known to be a haunt of digital nomads, arresting several of its customers. Although no fines were issued, this incident highlights the importance of ensuring compliance with all applicable labor laws.
As the number of nomads grows, the risk of remote workers “falling through the net” also increases, says Ross, who encourages employers to “make sure they get the right legal advice.”
There are serious reputational risks to consider, he points out. For example, if a company’s nomads “earn exceptionally high salaries but local communities do not see the benefits” in the form of improved local services – perhaps due to fiscal oversight – this does not wouldn’t have a good image of their employer.
Likewise, the behavior of the nomads must be considered, given that they are the representatives of their employers. They should therefore be encouraged to show respect to their hosts and give back to these communities, rather than forming isolated enclaves.
This has been a problem in Barcelona in recent years, causing widespread resentment among the locals. Many criticize digital nomads for adding nothing to their city besides the cost of living. Activists have yet to target particular employers for letting this happen, but the risk of targeted activism is high as the opposition grows stronger.
Companies that employ nomads in cities like Barcelona would therefore be wise to seek solutions as soon as possible if they want to avoid harmful retaliation. As part of this, they must educate their staff on the legal aspects of digital nomadism and offer advice on best practices. It could go so far as to suggest saturated places to avoid.
Charlotte Gray is a digital nomad who works for SafetyWing, an American insurer specializing in health coverage for teleworkers. She reports that her company is developing “Borderless 2.0”, a course for digital nomads that suggests ways they can have a positive socio-economic impact in their destinations of choice.
“It’s about making city guides with recommendations on how they can contribute, including volunteer opportunities and community groups to join,” says Gray.
She adds that if her company highlighted the problems caused by digital nomadism in particular places on its list of potential destinations, “that would be enough to turn it away.”
But it seems that few companies have adopted such programs so far. Jones, for example, admits that 3Thinkrs has yet to add a similar course to the training it offers to staff, although it has hired several nomads.
Is it because few employers have grasped the magnitude of the problem, or is it because they think such advice would fall on deaf ears?
Gray disputes this last theory. She argues that any socially conscious digital nomad would appreciate such guidance, stressing that it would be a “really smart move” for employers to provide it.
Tracking every remote worker is not a simple task, especially for large companies. Still, it’s crucial that this is managed properly, with a regularly updated record of everyone’s locations. If several people plan to work in the same place, it may even be useful to consider whether it would be advantageous to establish an adequate corporate presence there.
Jones observes that such a move would allow an employer to “work with a broader workforce” by hiring local people and thereby contributing more to the economy of that location.
Despite the problems associated with digital nomadism, Jones and Gray agree that the practice is here to stay. If companies can put in place the right solutions to protect themselves, their employees and the communities concerned, everyone will benefit. Still, it remains to be seen if they will do so quickly enough to avoid a damaging backlash. What is clear is that when it comes to understanding the true socio-economic impact of digital nomadism, we have only scratched the surface.