Staying Put

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When people think about changing jobs and moving to a new location, the deciding issue is often housing. Says Kacey Young, head of the finance practice at Harvey Nash, an international recruitment agency, "It's the first thing [people] consider." And relocation problems have meant that in spite of the rash of job openings in some parts of the E.U., labor mobility has fallen below the level of the 1960s, according to Ullrich Heilmann of Germany's Rhine-Westphalia Institute for Economic Research.

Cultural mindsets and language barriers are partly to blame. But government policies on housing issues also provide people with ample reason to stay put. Heilmann cites Germany's common practice of subsidizing housing rents between 30-50% in some areas as one reason for low mobility. In Belgium, high taxes on the sale price of a home 12.5% in addition to notary fees of 3.5% or more are a disincentive for the unemployed to move even short distances for a job.

On the supply side, Europe's boom towns also face the problem of how to attract and keep workers with vital skills in the face of soaring real estate prices. In the U.K., the Blair government recently unveiled proposals for interest-free home loans for key workers such as nurses and police living in expensive areas of Britain, particularly London. The Irish government has fast-tracked infrastructure development to meet a projected demand for 200,000 new homes over the next decade around Dublin, where an influx of companies and a booming economy caused house prices to jump 16.5% in 1999.

It is not only governments and workers, however, who worry about housing these days. In a tight market for skilled labor, Young says, corporations are increasingly buying homes for hot new hires a perquisite once reserved for top executives. The drive for smooth relocation has even forced some companies to become full-service real estate brokers: they also buy the recruit's existing home.