You’d have to be living under a rock to have failed to hear of the many recent technological advances promising to boost productivity and improve the lives of people around the world. But realizing the productivity benefits of things like automation, generative AI, machine learning, or any number of other technologies is not a given—requiring workers with the skills and experience needed to use them.
In our last debrief, Amritpal Singh, President, Field Operations, of global employment platform Multiplier, discussed at length the company’s ambition to use technology to lower the cost of transaction, in turn making it easier for all sizes of businesses to hire talent overseas and beat this talent crunch.
This time, we’re zeroing in on why global employment’s ability to increase the talent pool and access productivity-boosting workers is becoming increasingly existential—not just for companies but countries, too.
How employment powers the global economy
“Employment is a critical aspect of the global economy,” Amrit explains. “A country’s gross domestic product, for instance, is intimately related to employment. The more people work and are productive, the more money the government makes by collecting taxes.”
Of course, that’s not the only lever countries can pull. “Governments typically have a few resources they can play with. One is land. Another is natural resources, like oil.”
However, neither of these resources can be grown—countries are stuck with what they have. Human resources are somewhat more flexible.
“People are a resource, but particularly the number of people who are productive assets,” Amrit says. “Those are the people directly contributing to the wealth of the country. Governments, therefore, have a powerful mandate to ensure that people are either employed—to produce more tax income for the country—or on an entrepreneurial journey and creating jobs for others.”
The problem with minimum wages
So far, so good. But, governments must balance this drive for productivity with other demands from the population. “Governments also introduce market abnormalities,” Amrit adds. “Minimum wages, for instance, are installed by local governments to prevent people from transacting at rates deemed predatory.”
While the reasons behind such policies might be benevolent, they can have a negative effect when poorly managed. “The challenge is that it forces a higher wage on companies. With higher wages, a given company will not be as profitable as before, and there’s every chance it could end up going out of business.”
Amrit points to this phenomenon as the reason why many manufacturing companies left Western countries in the 1990s. “Too many factory workers were saying: ‘Hey, give me more money.’ Everybody was egging each other on, and the minimum kept increasing. Eventually, companies just gave up and jumped ship.
“That is the negative impact of minimum wages. Going back to economic first principles, anything you introduce that causes an abnormality between willing buyers and sellers isn’t helpful because it’s a market distortion.”
Aside from losing companies, that distortion causes further issues. “When you introduce minimum wages, you force companies to upskill, reskill, and hire more knowledge workers. But many countries don’t have a large enough working, productive population,” says Amrit, “so where do those workers come from?”
Going global for increased productivity
The typical response to that question by governments has been to encourage migration—but facilitating immigration has become prohibitively expensive for companies. It’s a problem exacerbated by one of the major ideas powering developed economies: everybody wants to move further up the food chain. As Amrit puts it: “You want your children to be doctors and not janitors.”
With economies constrained in their productivity by the size of their population, and existing methods of bringing in new workers becoming untenable, only one viable answer to this puzzle is left standing: global hiring.
“From a developed country’s perspective, by pursuing global employment, they gain access to a whole host of more productive assets—who can make companies more profitable and, in turn, fill their coffers by taxation,” Amrit says.
Multiplier’s obstacle-clearing mission
In the past, that’s been an option largely restricted to the biggest companies—because they were the only ones with the capital, the resources, and the time to overcome the many obstacles in the way.
“Countries like to say: you cannot touch my people unless you open up a legal entity, and you register, and you do this, and you do that.’ There is a natural tendency to put blockers in place, but when they become too demanding, no transactions can occur.”
Of course, there will always be blockers. But that is precisely the challenge Multiplier was created to overcome. “Before, somebody wanting to work in the US would have to move there either physically or register themselves as an independent contractor—just to get a transaction opportunity.”
Multiplier offers businesses and workers a way around these issues, letting the former access global talent without requiring the latter’s physical relocation, thanks to a platform that handles everything from payroll to taxes, social contributions, and insurance.
By leveraging technology, Multiplier has reduced the cost of transaction and made global hiring an option for companies on any scale. “The only way for economies to boost their productivity is by reducing transaction costs,” Amrit explains. “The more we can reduce transaction costs, the more people transact, the more the economy grows. And salaries are just as much a transaction as anything else.”
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