Apr 19 2011
In a recent post regarding the changing dynamics of hiring in emerging markets, I highlighted that salaries in emerging markets have risen dramatically due to a deep talent shortage. However, as a HR professional, Jacque Vilet, commented on LinkedIn, there are many other reasons for high salaries in emerging markets. From legal issues to infrastructure problems, starting or continuing operations in emerging markets can be far more complex than working in developed markets.
Difficulties in business operation are matched with higher cost of living - while certain things in emerging markets such as India, China or Brazil can be cheaper, in my experience the majority are not! In Sao Paulo, the capital of Brazil, food prices are similar to that of New York, and while rent isn’t quite comparable across the board, at the top end prices can match. In addition, personal security is still an issue in many parts of Brazil and result in having to pay for extra safety measures (for the record, I did not have a problem in Sao Paulo in the six months I was there).
Turning to cars and electronics, heavy taxes imposed in Brazil lead to items we take for granted at low prices being twice as expensive (or more). In addition, problems with infrastructure have left Brazil’s roads almost unbearable with traffic, and there are no trains to carry you or goods between cities; Internet services can also be temperamental in the capital due to wireless signal interference and server overload; Tropical storms plague the summer and electricity cuts are a regular occurrence; and labor laws are notoriously hard to navigate, leaving employers with huge staffing costs.
Imagine the effect on business productivity.
However, I do not want to paint Brazil or any other emerging market as ‘undeveloped’. Instead, there are some areas of governance and infrastructure that still need to catch up with the explosive growth.
Fast growth also leads to inflation and rising currency valuations, making exports harder. Yet leaders in emerging markets must (and do) learn to accept all difficulties and find ways to reach comparative profit margins with regions worldwide.
For all the reasons above, talented leaders in the emerging markets are worth every penny.
Readers from India, China or Brazil, can click their country flags in the top right corner for specific market information.
This article was written by Christian Pielow from the Association of Executive Search Consultants (AESC).
BlueSteps is the exclusive service of the AESC that puts senior executives on the radar screen of over 6,000 executive search professionals in over 70 countries. Be visible, and be considered for up to 50,000 opportunities handled by AESC search firms every year. Find out more at www.BlueSteps.com.
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