Which country is it best to invest in from an HR point of view? There are hundreds of factors to take into account from a general business perspective, but ultimately the list can be reduced to just six.
In an increasingly troubled world, multinationals are ever mindful of a country’s political stability. An investment is never a wise one in a potential war zone or where there is little rule of law. It is also beneficial if those in the same company can speak a common language, and this is now most frequently English. Although not directly an HR concern, it makes little sense to trade in a country where the tax take on generated profits is excessive. That is why the USA is not am attractive country for foreign investors – with its 40% rate of corporation tax. The other three factors are all classically HR in nature – the size of the pool of available graduates, hourly labour costs and the framework of employment law.
Our legal factor is made up of four subfactors, The maximum statutory length of fixed-term contracts, the minimum overtime premia, the length of paid annual leave and liability level for redundancy severance payments (after 5 years service).
An analysis of conditions under each of these headings produces a shortlist of just 20 countries – all with populations of at least 500,000. These are: Austria, Canada, Croatia, Cyprus, Denmark, Finland, Ghana, Hong Kong, India, Ireland, Jamaica, Netherlands, New Zealand, Norway, Philippines, Singapore, Sweden, Switzerland, Trinidad and Tobago, and the United Kingdom.
So which countries came out on top? There was a tie for first place between Ireland and Jamaica, followed by the UK, then, also equally ranked – Cyprus, Hong Kong and New Zealand. Other countries ranked well in some areas, but were dragged down the rankings very often by a single factor – such as severance payments in Ghana, corporation tax rates in India, labour costs in Switzerland and the graduate labour pool in Hong Kong and Singapore. Moreover, some countries such as the Germany and Australia never even made first base.
Companies making investment decisions should also bear in mind critical HR-related cost factors we did not take into account – such as the social security tax take. There are often many bureaucratic issues too relating to the registration and establishment of an enterprise. Nevertheless, if potential customers and supply chains allow, and your company does not currently have a presence in one of our top-rated countries maybe it is time now to ask yourself why ever not?