Foreign recruiting 'good for the economy'

28 March 2006

BRUSSELS — Expat workers exert a positive economic impact, but companies still underestimate the importance they can have on profit and turnover growth, a new study claims.

The study by ING bank investigated four forms of internationalisation in small and medium-sized firms in Flanders, the Netherlands and Poland.

The results negated many prejudices, revealing the number of workers with a foreign passport in comparison with a company’s total workforce remains quite limited.

In more than half of the 1,000 Flemish companies studied, just 5 percent of staff were foreigners, newspaper ‘De Standaard’ reported on Tuesday.

ING also said 25 percent of Flemish small and medium-sized companies have expats as employees. That increases to 30 percent in the manufacturing industry.

Most foreign workers come from Western Europe, but immigrants with a Belgian passport were not classified as foreign workers in the study.

The research’s findings — presented on Monday at study day held by small and medium-sized business association Unizo — indicated the transport and construction industry is increasingly looking towards Central and Eastern Europe as potential regional suppliers of labour.

However, the most important reason for recruiting foreign workers is not cheaper labour costs, but know-how. This applies to the manufacturing, transport and logistics and the construction industries.

The construction industry most often cites the cheap cost as labour as a prime motivation for its recruitment of immigrant workers, but know-how is still the most important consideration.

In almost 25 percent of cases, immigrants are employed because Belgians cannot do the required tasks or simply refuse that type of work.

A number of employers believe that the work ethic of foreigners is better than that of Belgian employees and company managers are in general pleased with their foreign staff.

Cultural differences and government regulations are the biggest impediments to a successful co-operation.

ING stresses that hiring foreign workers has a positive effect on the Flemish economy. It said employment rates are boosted and companies can rise above labour shortfalls by employing foreign workers.

Immigrant workers also improve the viability of the Flemish economy and boost the level of knowledge.

However, it is worth noting that employers place little economical value on foreign workers. ING said most firms do not expect expats to exert an important impact on profit and turnover growth. This applies especially to construction firms.

To reduce costs, 25-30 percent of Flemish small and medium-sized businesses contract work out to foreign business partners. The phenomenon is most popular in the manufacturing sector than transport or construction.

Work is usually contracted out to Western Europe, but Central and Eastern Europe will increase in importance in coming years.

A third form of internationalisation, the opening of a foreign branch, occurs primarily to tap into new markets. That motivation is more important than cheap labour. Cost cutting is thus not the prime reason for opening a foreign branch.

The fourth form of internationalisation is a co-operative project with a foreign partner company. This is popular among companies that face stiff competition on the domestic market. In this category, 34 percent of firms have one or more foreign partners.

Subject: Belgian news

Foreign recruiting ‘good for the economy’