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COMMENTARY

Navigating APAC's complex labour laws requires creative solutions

THE Asia-Pacific region is home to many fast-growing, innovative economies that present substantial opportunity for international companies looking to invest in the region. But with a diverse range of languages, cultures and legal systems, doing business in the region also poses immense compliance challenges, particularly when it comes to labour laws. Companies looking to hire in the region must understand the labour laws of more than a dozen countries, a daunting and time-consuming effort that is best outsourced to a third-party expert.

Asia-Pacific is forecast to be the world's fastest-growing region through 2030, according to the Organisation for Economic Co-operation and Development, and after several decades of relentless growth, its labour laws are finally catching up. Bills such as Singapore's recently passed Employment Act are raising standards governing work conditions and hiring practices, and similar legislation is soon to follow.

Finding talent in this region requires an understanding of regional labour markets that overlap and are in constant flux. Average wages vary wildly. In 2017, the region's turnover rate - voluntary and involuntary - was the highest in the world. As at mid-2018, almost half of employees in Singapore planned to leave their job in the next 12 months. High demand, coupled with speedier turnover rates, has created a labour market that is competitive and uncommonly dynamic.

Companies navigating Asia-Pacific's markets have turned to contingent workers - part-time, freelance and independent contractors - for an easily scalable, skilled workforce that can weather rapid market fluctuations. A managed services programme (MSP) is a highly effective way for employers to manage contingent workforces in this complex setting, and one that companies are increasingly buying into.

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Multinational tech giant Philips recently used an MSP to expand its workforce in China and India, which helped the company navigate a web of national employment laws and local nuances required to do business effectively.

Almost half of Singapore's employers used a flexible staffing option in 2017, and nearly 20 per cent expect to increase their use of contract and temporary workers. As the use of contingent workers has risen, national governments have begun tightening employment regulations in reaction, posing greater challenges for multinational corporations that manage workforces across many jurisdictions.

In China, contingent workers are only allowed to backfill full-time employees who are on leave, and for no longer than six months. Indonesian regulations require employers to provide allowances for religious observances to any worker employed for more than one month. The Philippines limits contingent labour to 40 per cent of a business's operational staff. Singapore has adopted guidelines that encourage benefits such as paid leave and notice periods for contract workers.

This complicated web of laws prevents multinationals from smoothly onboarding workers - that is exactly where managed service providers excel. They specialise in establishing consistent onboarding procedures across diverse jurisdictions, systemising background checks and integrating contingent labour costs into a company's workforce analytics tools.

MSPs act as an insurance policy against regional changes. They free company leadership from having to monitor ongoing legislation in more than 20 countries. They integrate directly into a company's HR division and assume tasks, such as vetting talent suppliers, auditing onboarding procedures, negotiating contracts, updating workforce analytics, tracking tax withholdings and ensuring regulatory compliance across a company's entire operating territory.

In the coming years, it will become harder for a single company to effectively navigate the labour norms and enforcement mechanisms in each Asia-Pacific country. By correctly scaling a company's contingent workforce, MSPs have helped reduce labour costs for numerous organisations, giving them a potent advantage against their competitors.

  • The writer is managing director of the Asia-Pacific region for Randstad Sourceright