The early 1990s saw the beginnings of a global labor market. Today, in 2011, the elements are all in place. Yet as a labor market, it is not very open and not very global. It is a mix of markets, government programs that allow firms to hire foreign workers, and intermediaries such as global manpower firms and other employment placement services. Elementary as this global labor market is, its further development would seem dubious given the current economic recession, stronger government intervention in economies, growing sentiment against low-wage immigrant workers and foreign professionals, and more paperwork everywhere. And yet there are a number of trends that suggest we are entering a new era in which firms both need and benefit from a global labor market. The advantages for the workers themselves and for the larger economy of a city or a country are a separate matter. Finally, from the perspective of governments, or certain agencies within governments, transnational flows of professionals are often seen as a brain drain--although a focus on global remittance flows shows that the top ten recipient countries include five highly developed countries, such as the United States and the United Kingdom.
In what follows, the focus is on firms. This understanding of current trends is based on both existing data and in-depth interviews with firms and experts from across the world. This includes such combinations as the manager of the China-based operations of a Singaporean firm or the US-based operation of a Mexican firm. The data used come from specialized manpower reports and include trend data not usually used in analyses of the employment of foreign workers.
Based on this information, this article argues for three trends that mark a new phase in the development of a global labor market. These trends go well beyond the familiar notion of the search for "talent" in which the key argument put forth by firms recruiting foreign professionals is the scarcity of talent in the pertinent country, as in the need for importing high-tech workers to the United States, the United Kingdom, and Germany. The structural trends detected point to a vastly expanded need for a global labor market and a qualitative change in the parameters of that market, instead of simply a generic search for talent. The reasons for these developments are the changes in the key traits of economic globalization, the growing segmentation of specialized labor markets, and the demographic turn. Over the next decade, all three will take us well beyond the current understanding of the need for foreign workers, particularly foreign professionals.
Role Changes for Foreigners at Global Firms
The dominant pattern until quite recently was to bring home-country professionals to run a firm's overseas operations. This pattern is increasingly being recognized as insufficient, with three changes triggering a tipping point in the global labor market.
First, the available evidence suggests that the importance of hiring foreign professional workers will only grow. This has to do with the fact that the global economy is not as that as is often thought, and indeed is not about to become flatter anytime soon. Even in some of the most globally standardized industries, global firms must encounter and engage with the enduring particularities of national, regional, and even local political economies, as well as the distinctive economic cultures of countries. Employing local professionals is not only a good idea because it brings in local talent. It is also becoming necessary to maximize operational effectiveness and success because local professionals can create a bridge between the foreign firm and a country's national economic culture.
Second, and partly due to the above, global firms will have to bring foreign professionals into the highest level of home headquarters to understand and learn from the specificity of the foreign location, as well as its uses and understandings of talent. …