In a globalised world where everything is interconnected, foreign workers have proved to be helpful for many countries. In terms of filling the gaps for the labour market or even bringing their skills set and perspective the impact of foreign workers on our economies are profound. However, this case is a complex one since it has its opportunities and drawbacks for local economies. 

Positive Impact of foreign workers 

  • Labour Market Support

Foreign Labour can bring stability and support particularly in sectors where the number of employees are low due to demographic change, changes in careers or even the nature of the job. Let us view a couple of sectors where foreign workers work, the first one is in Agriculture. It is difficult to attract local people in this sector since the work is quite hard, demanding, and workers’ wages are low. Therefore, Workers from abroad are interested in this job especially if they are used to this type of job. Their presence ensures that the work is done to maintain delivery which prevents losses and maintains the supply chain. Without foreign labour some countries may face issues such as shortage that can lead to increase in the price of food. But with their help economies are staying afloat. 

A second example can be the hospitality Industry such as hotels. A majority of their labour are foreigners. Since a hotel needs a huge workforce to fill jobs such as housekeeping, waiters, barmen, gardeners, managers, and so on. Local people feel reluctant to perform this job since its working hours are always varying and changing which is quite demanding and the salary is low. Therefore, Foreign workers will seek out this kind of opportunity since they will be able to enjoy a better standard of living and gain more money as compared to their home country where life might be difficult.

  • Economic Growth

Employing foreign workers will definitely boost productivity in any industry giving the chance for businesses to expand and provide suppliers or customers with more goods or services, and on top of that bring in new perspectives and innovation in the business arena. 

Firstly, having foreign workers in a local country as mentioned earlier will enable businesses to run their operations effectively and efficiently without being constrained by labour shortage. This expansion can give businesses an increase in sales, profit, market share, and a competitive edge. 

Secondly, small and medium enterprises can benefit from employing foreign workers since they lack resources to offer competitive wages that can potentially attract the local workers to work but unfortunately the salaries do not correspond and match with need,therefore smes have to change their focus towards foreign workers. Small and medium enterprises can definitely benefit from that since they will have access to a wider talent pool that can be profitable for their business and allow them to compete with other organisations. 

  • Cultural diversity and Innovation

By having foreign workers in a working environment it will enlarge the cultural diversity and landscape giving the chance to colleagues to learn about our cultures which can definitely bring a new level of understanding and allow working in a team far more better and enjoyable. For example: In the marketing industry blending of ideas and perspective can result in unique, innovative campaigns, products and new strategies to target customers being created. On top of that a business will find it easier to adapt and evolve according to customer taste and preferences. Foreign workers who are familiar with best practices or technological trends from their home countries can help businesses in host countries to develop products that will cater for the needs of a global market. 

Therefore, this will lead to business attracting more customers leading to an increase in sales, profit and market share, and if a business is expanding they will need to hire more employees, offering employment opportunities which will lead to more local people benefitting from a standard of living and investing in the economy of their country. 

Negative impact of foreign workers

  • Wage suppression and Job competition

Foreign workers will accept to take on workloads that are paid lowly due to their economic condition in their home country, leading to employees hiring more foreign workers than local people because they are willing to work for less, which might leave a huge number of locals without a job. 

This can create competition on the job market making locals feel pressured to accept a salary and working conditions that do not match with their expectations and the tasks that they have to fulfil, which can lead to a wage stagnation, and tension with foreign workers and local people which can potentially create tension and require the intervention of government to protect and ensure that locals have a job. Therefore it will be important for businesses to create an inclusive environment where both foreign and locals can work together hand in hand because everyone can make a difference and bring their own contribution in a business. 

  • Leakage

A significant portion of foreign workers’ money is sent back to their home country, while this will benefit their country it creates an issue for host countries. This outflow of money prevents money from circulating properly in the local economy which can diminish the multiplier effect both in terms of money and business. Leading to several businesses experiencing a decrease in the number of demands for products or services, generating less profits, and decreasing the quality of life of many people.

  • Strain on public services and infrastructure

If a country is employing a large number of foreign workers the government will have to find ways to accommodate these people, and demand for public services such as healthcare, education, and housing which will lead to certain areas being overcrowded and long waiting times in restaurants or shops, more congestion, and an increase in the cost of maintenance of roads, and other infrastructures. 

If you loved this article do not hesitate to share it with your friends and families, you can even leave us a message in the comment section below. If you wish to read more articles you can have a look at “restrictions on employment” or”Income tax for foreigners”.