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PT International mobility can be a game-changer for companies, employees, and entire economies—but did you know it comes with its own set of challenges? While it drives growth and innovation, many countries limit foreign workers to protect local job markets. These ‘quotas’ or ‘percentages’ might sound like a roadblock for businesses, but they’re a strategic move to balance local and international talent.
How do these policies impact your company’s global mobility strategy? Let’s explore their critical role and how to navigate them effectively to ensure a seamless relocation process.
Foreign Worker Quotas
Countries that establish quotas for foreign workers do so to regulate access to the labor market, generally for three reasons:
1. Protection of local employment:
Quotas help ensure that employment opportunities are primarily reserved for citizens of the country and that hiring foreign workers does not displace local workers. This is particularly important in situations of high unemployment, sectors with high demand for labor, or countries promoting and developing foreign investment.
2. Economic balance:
Quotas for foreign workers allow the government to regulate the entry of foreign workers based on the country’s economic needs.
In many cases, countries establish exceptions or prioritize specific sectors (such as technology, healthcare, or engineering) where there is a shortage of local talent, attracting foreign workers with critical skills for their economy.
3. Social and cultural integration:
By limiting the number of foreign workers, governments attempt to avoid social tensions and facilitate the integration of migrants. An excess of foreign workers can influence social cohesion and public perception of immigration, so quotas seek to maintain a balance between attracting foreign talent and promoting harmonious integration.
In addition, in countries with economies dependent on certain sectors such as energy, mining, and hydrocarbons, quotas can also help prevent labor abuse or exploitation of migrants, ensuring that these workers have the same opportunities and labor rights as locals.
However, like any essential regulatory framework, it has consequences. Viewed from another perspective, these protectionist public policies for local labor can become a problem for corporate international mobility if not addressed correctly, especially in multinational companies, which often transmit their culture, philosophy, and/or specialized skills through their workers—skills that may not be available in the local market.
Quotas can restrict the hiring of these professionals, limiting the company’s ability to fill key positions with the right talent, particularly in sectors such as technology, finance, and engineering, where such restrictions could complicate workforce planning and/or delay international projects if key workers cannot be mobilized on time, especially in the early stages.
It can also restrict the arrival of experts who could train local teams and share specialized knowledge, hindering the company’s ability to implement its best practices in different markets.
Furthermore, companies with global mobility development, policies, or dynamics that do not consider these important points tend to incur additional application and justification processes, which can potentially increase costs and administrative burdens (for example, some companies may need to demonstrate that they have exhausted local hiring options before considering a foreign worker, consuming time and resources).
Foreign Worker Quotas & How It Affects Global Mobility
When relocating to Latin America, evaluating foreign worker quotas is essential. While the region generally has a moderately open approach, its regulations aim to balance and protect local employment, with some countries being stricter than others, such as Nicaragua and Panama.
However, with the surge of globalization, rising costs in other regions, the pandemic, and other factors, Latin America has become increasingly popular over the last five years. Consequently, Latin American countries have faced the challenge of protecting local markets while developing policies to attract specialized talent in strategic sectors to boost their economies.
A regional example is Chile’s development of the “Tech Visas” program, which provides fast-track visas for professionals in high-demand sectors like technology and engineering, as well as those linked to a company’s investment in the country.
Foreign Overview of Foreign Worker Quotas in LATAM
While Latin America shares many commonalities, each country has established its public policies for protecting local employment, which may take into account the following:
– Argentina, Paraguay, and the Dominican Republic:
Establish that the number of foreign workers in a company can be at most 20% of the workforce. However, this rule is only sometimes strictly applied, and exceptions exist for highly skilled workers.
– Brazil:
Requires that at least two-thirds of employees in a company must be Brazilian, both in terms of the number of workers and the wages paid. In other words, foreigners can be at most 33% of a company’s workforce. However, the regulation varies depending on the type of company and sector, with distinctions made between technical and non-technical positions.
– Chile:
Labor law states that at least 85% of a company’s workers must be Chilean—this rule applies to companies with more than 25 workers; however, there are exceptions for those with specialized technical skills or permanent residents.
– Peru and Ecuador:
The limit for hiring foreign workers is 20% of the total workforce, and in Peru, they cannot receive more than 30% of the total payroll, except in cases of exceptions.
– Bolivia:
Bolivian labor law allows up to 15% of a company’s employees to be foreign workers, except in justified cases..
– Mexico and Venezuela:
Both countries have similar regulations, generally requiring at least 90% of the employees in a company to be nationals.
– Uruguay and Costa Rica:
Neither establishes a specific limit on hiring foreigners. However, hiring locals is encouraged in specific industries with high labor demand. The country promotes an open and flexible labor environment and is one of the destinations in the region with fewer restrictions on hiring foreign workers.
– Nicaragua:
Nicaraguan legislation limits hiring foreign workers to 10% of the company’s workforce, and companies must justify these hires to the authorities before starting the visa process.
– Guatemala and El Salvador:
Both countries require 90% of employees to be Guatemalan, allowing only 10% to be foreigners. However, exceptions are made for specialized or managerial positions, and if the need for qualified nationals is demonstrated, hiring local talent is strongly encouraged.
– Panama:
Panama has a more complex labor policy, where hiring foreign workers is limited in local companies, with several modalities. Generally, 10% of a company’s workforce must consist of foreign workers, with up to 15% of foreigners in technical and specialized roles.
– Trinidad & Tobago:
Labor law does not impose a fixed quota for hiring foreign workers. Still, it requires a work permit for formal employment, as companies must demonstrate that there are no qualified local citizens for the position before hiring a foreigner.
For those interested in labor quotas and migration in Latin America, it is recommended to explore the ILO Regional Strategy on Labour Migration and Human Mobility in Latin America and the Caribbean 2023-2030. This strategic framework, created by the International Labour Organization (ILO), outlines the organization’s approach to labor migration and mobility in the region. It offers a comprehensive guide on how countries in Latin America are addressing labor migration challenges, developing policies, and managing migrant workers.
Navigating Latin America’s Labor Policies with LARM
For companies engaging in global mobility or international relocations, understanding the labor policies of each country is essential. In LATAM, each nation’s regulations vary, and compliance often requires meeting specific requirements, such as permits and justifications for hiring specialized foreign workers.
Careful planning can help organizations avoid legal risks, reduce costs, and ensure a seamless relocation process for their expatriates. At LARM, we specialize in guiding companies and expatriates through the complexities of relocating to Latin America. Our expertise ensures businesses can navigate labor regulations smoothly while fostering international and local talent collaboration.
By leveraging our knowledge and resources, organizations can focus on developing their teams and expanding operations across the region, creating synergies that enhance skill development and regional integration. Whether it’s ensuring compliance with quotas, securing the necessary work permits and visas, or supporting expatriates upon arrival at their new destination, LARM is your trusted partner for comprehensive relocation and global mobility solutions across Latin America.
Article written by Jorge Flores, Business Development Manager for USA & LATAM at LARM.
