The moral challenge of expatriate employment in developing countries

Many moral concerns have been raised in the literature regarding expatriate employment, especially given the way the practice unfolds in developing countries. Four main arguments have been put forward to explain the moral problem of expatriate employment in developing countries, namely that the practice: 1) is premised on the injustice of wage discrimination (Toh & DeNisi 2005; Chen, Kraemer, and Gathii 2011; Oltra, Bonache, and Brewster 2013; Bonache, Sanchez, and Zarraga-Oberty 2009), 2) produces undesirable outcomes (Carr, McLoughlin, Hodgson, and MacLachlan 1996), 3) disregards contextual aspirations and historical memory (Bhanugopan & Fish 2007; Akinsanya 1980, 1994; Ogbuagu 1983; Rood 1976) and 4) perpetuates external domination and control (Smiley 2010; Manji & O’Coill 2002).

The first argument stems from the enormous pay disparity between expatriates and local professionals. It has been noted that, although expatriates work shoulder to shoulder with similarly qualified local professionals (Welch 2003), expatriate salaries are usually considerably higher than those of local professionals. In some cases, this disparity could mean that expatriates earn as much as 20 to 50 times the salary of local professionals. In fact, in many cases, the housing allowance of an expatriate is higher than the salary of a local employee of similar rank (Chen, Choi, and Chi 2002: 808).

Viewed from the perspective of distributive justice, the moral problem here is very evident. Prima facie, it would strike one that this disparity is unfair because the two categories of employees make similar contributions to the company. The basic problem here is that local employees are treated like “second class citizens when working alongside expatriates in their own country” (Toh & DeNisi 2005: 133). Given that “local–expatriate compensation disparity is not a regional issue unique to China or Asia, but one that exists in cross-national expatriation, especially between developed and developing countries” (Chen and others 2011: 3596), the argument made from this perspective is that expatriate employment in developing countries is morally indefensible, because it is a system premised on wage injustice and discrimination. The point here is that the phenomenon of compensation disparity between local employees and expatriates is not a regional issue restricted to the conventions of management practices in China or similar countries in Asia. In other words, enormous pay disparity is a feature of expatriate employment commonly experienced in most developing countries of the world. 

Although different arguments have been put forward to explain the pay disparity between expatriates and local employees (Adams, 1963; Oltra and others 2013), the central problem is that these explanations do not sufficiently account for the entrenchment of this practice in companies and NGOs in developing countries. Thus, it would appear that a plausible construal of the moral problem of expatriate employment in developing countries is clearly the lack of fairness of compensation practices.

I do not dispute the importance of wage injustice in understanding the moral problem of expatriate employment in developing countries, but it does not seem to me that this is a reasonable way to construe the moral indefensibility of the practice. Other considerations are important in making sense of the moral issue here that are not related to compensation, such as power differences, fair distribution of work conditions and other non-material goods. The problem with the wage injustice approach is that it does not capture the entire scope of what is really at stake. To conclude that expatriate employment in developing countries is morally indefensible because of the lack of fairness in compensating expatriates and local employees is to commit a fallacy of faulty generalization. This approach simply takes the aspect of wage injustice as a defining feature that makes expatriate employment morally indefensible. So, while I think it is true that the compensation disparity between local employees and expatriates constitutes a form of injustice, I believe that a general framework for the construal of the moral problem must have a different starting point. Arguing from the perspective of wage injustice does not suffice to show what defines the moral impropriety of this form of employment in developing countries.

Another account of the moral indefensibility of expatriate employment in developing countries is embodied in studies seeking to demonstrate the adverse effects of expatriate employment. An example of this approach is a study of the impact of expatriate employment on the formal education sector in Malawi. In this study, it was noted that overall, the circumstances surrounding expatriate employment in this developing country led to the demotivation of both the local staff and expatriates (Carr, Chipande and MacLachlan 1998: 134 – 135) and consequently undermined the goal of the organization. Carr and MacLachlan (1996) have shown that in many cases pay differentials lead to double demotivation, that is, to the demotivation of expatriates as well as of local employees. Whereas this problem arises for the expatriate due to self-perception, the local employee is most often demotivated because of perceived unfairness. Thus, expatriate employment leads to negative outcomes that do not align with the goals of businesses or international charities. Self-perception is central to productivity in the workplace – essentially “the mechanism by which those who are initially focused on the money may become demotivated” (Carr and others 1998: 134). Expatriates become demotivated because their judgement that they are “working just for the money” impacts their motivation and hence performance (Carr and others 1998: 134). This point largely explains the overall picture in the literature on NGOs that reliance on expatriate employment for the realization of organizational goals in developing countries leads to failure (Edwards 1996).

Based on these observations, expatriate employment in developing countries would be considered to be morally indefensible because it produces undesirable outcomes. This argument maintains that expatriate employment is a morally indefensible practice to adopt in developing countries, since it has been shown to lead to negative outcomes for expatriates, local employees and the organization or company. The reasoning for this claim is that it is irresponsible to adopt a practice (expatriation) that is known to lead to negative outcomes (demotivation), which undermine the realization of the interest of the company or organization.

The problem with this argument can be stated in the following way: if the moral indefensibility of expatriate employment is understood solely from the perspective of the negative outcomes it leads to, then this implies that no question of moral impropriety exists when the practice leads to positive outcomes. This perspective falls short, because what is at stake is not the outcome of the practice per se but the phenomenon itself. Specifically, the goal is to show what makes the basic nature of expatriate employment in developing countries morally indefensible. This is not a sufficient explanation of the moral problem because the argument deals solely with one putative moral aspect of the phenomenon and does not provide a general moral framework for the evaluation of this form of employment in developing countries.

The wave of indigenization in different sectors of the economies of many developing countries provides the grounds for the third argument regarding the moral problem of expatriate employment in developing countries (Ogbuagu 1983; Rood 1976; Akinsanya 1994). For many post-colonial states, the path to national development involved implementing policies that would enable the states to exercise significant control over the economic activities within their territories. Thus, the cogency of indigenization for these countries was premised on the negative implications of foreign control of their economies through expatriates. The following observation demonstrates this point:

In the pre-independence and early independence era, the Nigerian economy was dominated and controlled by foreign nationals…. The economic structure in this period can be likened to an hourglass: most foreign private investors and entrepreneurs (notably from Britain and other European industrialized countries) made up the highest echelon; other foreign nationals such as the Lebanese acted as middle-men, engaged primarily in distributive and export trade and other related services; and, at the base of the economic structure, were a few privileged Nigerian elites who performed very peripheral economic roles (Ogbuagu 1983: 242).

After independence, the leadership of the country attempted to bring the public and private sectors under the control of Nigerian nationals. This resulted in the Nigerian Enterprises Promotion Decree, which was enacted by the government in 1972 (Akinsanya 1994: 64). The aim of this decree was to ensure that expatriates were replaced by local professionals in order to fast track the realization of economic freedom in the newly independent country. To be sure, indigenization did not only occur in Nigeria. It also informed national business policies in the United Arab Emirates (Forstenlechner 2008; Al-Lamki 2005), Papua New Guinea (Bhanugopan & Fish 2007) and many other developing countries.

Based on the concerns expressed in the debates about indigenization of the workforce in developing countries, expatriate employment in these countries is considered morally indefensible because it perpetuates a practice that is insensitive to the context and historical memory of these countries. Evidently, this argument owes its currency to the post-colonial nature of many of the developing countries striving to build modern economies. During the era of colonial economies in Africa and other parts of the world, the local staff constituted the lowest tier of the work force. Unlike expatriates, they held most of the menial jobs and had very few opportunities for career advancement. From this contextual space, the engagement of expatriates in both the public and private sectors of developing economies is argued to be morally indefensible because it entrenches a practice that obstructs the development of local capacities through the implementation of indigenization policies.

Apart from lacking proof of how exactly indigenization alone is capable of bringing about the desired results in the economy, this argument proceeds from the wrong end in making its case for the moral indefensibility of expatriate employment in developing countries. The argument adopts a third-person perspective, that of the context and historical memory of the local environment, instead of the responsibility-bearing agent – the company or organization engaging expatriates. Limiting what matters solely to the third-person perspective – the local context – renders the argument incapable of satisfactorily explaining the moral indefensibility of expatriate employment. To account for the moral impropriety of this form of employment, one needs to show a compelling reason why it is an objectively indefensible practice. Besides, since it is possible that a practice can undermine contextual aspirations without being morally indefensible, this argument fails to provide a plausible framework for understanding the moral problem of expatriate employment in developing countries.

A fourth argument holds the view that expatriate employment is a practice designed to perpetuate the external control and domination of people in developing countries. For instance, Sarah L. Smiley has argued in her analysis of the patterns of everyday life of expatriates in Dar es Salaam that “the perception of Dar es Salaam by expatriates, of its perceived safety and comfort, and the limited ways in which they use the city reinforces past patterns of segregation” (Sarah L. Smiley 2010: 339). If this observation is taken to mean that expatriate employment perpetuates patterns of domination reminiscent of the colonial era in developing countries, then one can argue on this basis that this form of employment is morally indefensible because it perpetuates domination.

Most of the literature critical of NGOs amplifies the claims of this argument. The main idea is that the role of NGOs “in ‘development’ represents a continuity of the work of their precursors, the missionaries and voluntary organizations that cooperated in Europe’s colonization of and control of Africa. Today, their work contributes marginally to relief of poverty, but significantly to undermining the struggle of African people to emancipate themselves from economic, social and political oppression” (Manji & O’Coill 2002: 568). Since NGO work in developing countries is almost synonymous with expatriates, this view reinforces the argument that expatriate employment in these countries is morally indefensible because it perpetuates domination.