If you can work from home, why can’t you work from Bali?

Sascha: [00:00:02] From Equity Mates media. This is The Dive. I'm your host, Sascha Kelly. There is global competition heating up where you work and where you retire. Indonesia, Thailand, Greece and Portugal are amongst a raft of countries hoping to draw in digital nomads and wealthy retirees by extending visas for up to a decade. But those who want to reside there. 

Audio Clip: [00:00:22] Imagine working from home on a Greek island. Well, it's becoming a reality for a growing number of workers. 

Sascha: [00:00:30] Across the globe. It comes after tourism and immigration took a major hit through the pandemic, and many workers and businesses were forced to quickly adapt to working from home arrangements. And hey, if I can work from home, why can't I work from a beach in Bali? It's Monday, the 7th of November. And today I want to know why are countries so desperate to attract digital nomads? And which ones of them have the most enticing way to do this? I'm joined by the co-founder and CEO of Equity Mates. It's Bryce Leske. Bryce, it's been a while. And here's my question. Can I walk from a beach in Bali? 

Bryce: [00:01:06] Sascha, we have a flexible working arrangement here at Equity Mates Media. Go for it. Let me know how it is. I might join you. 

Sascha: [00:01:11] You said it on mic, so I'm holding it. I like the idea of a digital nomad has been around for a while, but it has been really supercharged with the idea of the pandemic and work from home. What is a digital nomad, for starters? 

Bryce: [00:01:27] So the term was first used in the 1980s in Popular Computing magazine, but really took off in the 1990s to describe a new lifestyle that had been made possible by portable computer devices and the Internet. So for the first time, if you worked a white collar job, you could really work from anywhere. And fast forward 30 years. Sascha And with the pandemic and growing acceptance of working from home, predicts in 2022 this year that 31% of all workers worldwide will work remotely, at least some part of their job anyway. So a pretty large proportion of the population and with this, the popularity of the digital nomad lifestyle has absolutely exploded, as you said in the intro. Why work from home when you could work with a pina colada in your hand from anywhere? According to a survey by MBO Partners in America in 2020, almost 11 million Americans describe themselves as digital nomads, which was an increase of nearly 50% from the year before. So it is in full swing. 

Sascha: [00:02:25] 50% in one year. That is insane and I guess we can attribute that to the COVID effects. And as the digital nomad lifestyle grew in popularity, countries around the world then embraced this opportunity, inventing a digital nomad visa. That sounds great. 

Bryce: [00:02:42] Yes. Well, this is what you will need, Sascha, if you're off to Bali. But the digital nomad doesn't quite fit the traditional visa system, so tourist visas are generally short and often do not allow the visa holder to actually work, whereas working visas are hard to get and often require a company to sponsor the visa. Neither of these work for digital nomads who may want to spend a longer period of time in a country working, although not often working for a company that is based in that country. So they can't easily get a sponsor. They just want to work remotely by the beach, often in the country where the money that earning goes further. And this is where that digital nomad visa comes in. So countries are starting to acknowledge the benefits of digital nomads. We know remote workers feed money into the economy by renting property. They pay bills, they spend money at bars. They go shopping, all while not taking away local jobs. Digital nomad visas are typically granted for a year and often allow renewal for subsequent years. Many can be applied for online and are very affordable and generally to qualify for a digital nomad visa, the applicant needs to meet a minimum monthly income and other requirements such as health insurance. So it's a great visa if you're not fitting in work or travel. 

Sascha: [00:03:54] And all those benefits that you spoke of. They're bringing money into the economy while not taking jobs from locals is a godsend for governments around the world looking to grow their tax base without charging locals more. And that brings us to our story today. We're seeing more and more countries compete basically for these digital nomads. 

Bryce: [00:04:15] Yeah, competition is hot. The first country to offer a digital nomad visa was Estonia in 2020. And since then, Sascha, their popularity has just exploded. In 2021, there were 21 countries and today there are 47 countries and growing offering digital nomad visas.

Sascha: [00:04:35] Okay. Tell me some of the best incentives and what's on offer.

Bryce: [00:04:38] Well, you've spoken about Bali, Indonesia. In June 2002, Indonesia announced plans to introduce a digital nomad visa that would allow remote workers to live in the country tax free for five years. Imagine how many waves you can catch in five years with the hope that it would bring in 3.6 million digital nomads in Croatia. Sun's. Sale. In January 2021, Croatia offered a digital nomad visa that allows workers to stay up for a year while being exempt from paying income taxes. Thailand Some of the main benefits are a ten year residency in the country and a lower tax rate. So rather than paying a possible 35% tax rate, digital nomads will only pay 17% in taxes. And Spain, they are currently trying to pass a new law that would see digital nomads receiving a tax incentive of 15% instead of the 25% in their first four years, making it easier for remote workers to settle in. So it's tax incentives, it's staying longer. Those are the two major incentives being pushed at the moment.

Sascha: [00:05:38] Yeah, but they're pretty good incentives and the competition's pretty hot. All four of those locations, I'd be quite happy to visit. And, you know, they're saying, come and live in our country and we'll offer you a lower tax rate to do so. So I guess who have been the winners who have been some of the most popular destinations with digital nomads? 

Bryce: [00:05:56] Well, nice surprises. The countries that have a destination like a beach, you've got Europe, you've got Greece topping the list for digital nomads, according to a recent article published in Neurone News. Next, many islands, nations as well, like Bermuda, Barbados, Antigua, the Cayman Islands all have digital nomad visas. And then if they can't offer a beach, they can offer a week of currency. So in Asia, countries like Indonesia and Thailand are top of the list as they offer beautiful locations and the opportunity to really stretch your money further. You could also think of it as salary arbitrage, for example, such as if you were to move to Indonesia, you would get paid an Australian salary but live on an Indonesian cost of living. Imagine that villa you'd be in. 

Sascha: [00:06:41] Look, I'd have to say goodbye to my Melbourne coffee, but maybe the trade off would be worth it. 

Bryce: [00:06:47] They do say Indonesian coffee is pretty good though, so. 

Sascha: [00:06:50] I'll guess I'll have to go and taste it and find out for myself. Look, let's take a pause there. I'm going to Google some quick flights and then when I come back, I want to look at what this competition means for the future of work. Welcome back to The Dive. I'm your host, Sascha Kelly. I'm joined today by Bryce Laskey, co-founder and CEO of Equity Mates. And we're talking about the growing competition around the world for digital nomads. Look, I'm putting up my hand to go research this firsthand. It's a pretty great topic. So rise. Remote workers have decided that if we can work from home, we can work from home anywhere. How have employers of these digital nomads responded to this growing trend? 

Bryce: [00:07:40] Yeah, well, much like the work from home debate, responses from employers have been mixed. On the one hand, you have companies like Airbnb and Atlassian really embracing, working from anywhere Airbnb. You can move anywhere in the country that you want to work and your compensation doesn't change. Atlassian has announced their team anywhere policy where you need to be in the office just four times a year. And it does look like they will be looking at a pay based sort of cost of living. On the other hand, companies like Apple and Alphabet still in the tech world, are insisting on a hybrid model where you do have to come into the office a certain number of days. So for both Apple and Alphabet, they've tried to start with three days a week in the office. So it does make it a little difficult to work from a beach in Thailand. 

Sascha: [00:08:24] It does feel like there's a bit of a risk of workers here. If Airbnb is happy for you to work from a beach in Thailand and continue to pay your current salary, why wouldn't they look to hire someone who's willing to work for less who's actually just based in Thailand? 

Bryce: [00:08:38] Yeah, it's a great question. It definitely is a risk. But I think given how tight labour markets are at the moment, we haven't really seen this play out yet. Atlassian appeared to be looking into the cost of living question and how they can structure their Australian salaries. They also have Zone A, which is New South Wales and Victoria and Zone B, which is all other states to think about salary based on the high costs of living in both of those states. So that may be a model going forward. And if you want to work overseas where the cost of living is lower, you may be asked to take a smaller pay check than perhaps someone living in San Francisco or another expensive city. So companies are definitely approaching it in different ways. 

Sascha: [00:09:18] Yeah, and that's not a new idea. I know when I was in the UK there's such a thing as London Loadings. So a lot of companies that have regional bases as well as a London office, there would be discrepancies in the pay. Now, before the break, we spoke about why countries want digital nomads. They bring more money into the local economy as digital nomads, frequent shops, you know, they go to bars, pina coladas by the beach, as you said. So they're paying taxes and integrating into society. And crucially, they don't displace local jobs because they're working remotely for another company or building their own. But there has to be some drawbacks to this, especially as the number of digital nomads scale. One potential drawback that comes to my mind is that they would displace locals from renting or owning houses in covered areas and would generally push property prices up. What does this look like at scale and what are some of the drawbacks? 

Bryce: [00:10:14] Yeah, it's a good question. We haven't really seen what this looks like at scale yet with Indonesia's new digital nomad and wealthier retiree policies, both looking to attract millions of people to the country. This is probably the country that we do want to watch. In particular, Bali is probably the island to watch. The two biggest drawbacks are the displacement effect and the short term nature of the stay. So displacement is, as you described with housing, Sascha, digital nomads are often paid more than their local counterparts. And so you can start to price out the locals in terms of housing, but also in everything else. Life can get a lot more expensive for locals. The second challenge is that digital nomads may stay longer than a traditional tourist, but they're still relatively short term, generally six months to a year before they move on. The impact of this means that they're not exactly putting down roots and investing in the local economy. Then they're much more sort of long term tourists with laptops than they are new residents. So two things that we'll keep an eye on for sure. 

Sascha: [00:11:13] Okay. So where does this end? 

Bryce: [00:11:15] Sascha, it ends with you and I on a beach in Barbados. 

Sascha: [00:11:19] I think we need to just move this episode into an Equity Mates team meeting and just present it as an argument to the wider team. 

Bryce: [00:11:27] Now, look, it's really a matter of opinion where this ends. There are some that would argue that this work from anywhere trend, especially for big companies, is a product of the pandemic. And at some point, as the pandemic gets further and further in our rear view, companies will return to insisting on coming to the office all the time. Then there are others that argue the arc of technology continues to bend towards people being more flexible with work. New technology continues to make us feel more connected, even if we are further apart. So things like the metaverse and augmented reality will make this whole idea of working remotely a lot easier. So what could the future look like? Well, perhaps much like a gap. Yeah. Between school and university. We shouldn't be surprised if the future of big companies start facilitating digital nomad years, where workers can uproot their lives and live halfway across the world but continue doing the same job. It is an exciting concept to think about. Sascha.

Sascha: [00:12:22] Yeah, I think it's a fitting way to end this episode, given that you're recording at the Equity Mates studio in Sydney. I'm recording in Melbourne, but both of us would prefer to be on a beach in Bali drinking pina coladas. I'm going to go out on a limb and say that. 

Bryce: [00:12:37] That is very true. Maybe we'll add it into our benefits policy here that.

Sascha: [00:12:42] I'm going to hold you. You know, you've said it into a microphone is a dangerous place to do it. If you enjoyed this episode, then please tell a friend about it. It really is the best way for our podcast to grow when not lying. Take a screenshot. Tell them about this great business podcast you're listening to. It gets you up to speed with everything. And if you've just joined us for the first time, then welcome. Go and check out our huge back catalogue again. A huge thank you for getting us into the Australian Podcast Awards. We're super excited you can vote for listeners' choice. I'll put the link in our show notes. Remember, you can follow us on Instagram at thedive.businessnews. You can contact us by email. Tell us what you want us to talk about thedive@equitymates.com. And you can subscribe wherever you're listening right now, so you never miss an episode. Bryce, thanks so much for joining me today. 

Bryce: [00:13:30] Thanks for having me, Sascha. Good to be back. Looking forward to the next one. 

Sascha: [00:13:33] Not so long between drinks next time.