Replacing experienced workers with cheaper labor: a business strategy error

We live in times when professional loyalty seems to have lost the value it once held. In an increasingly unstable job market, where immediate profit takes precedence over sustained team-building and skills development, workers have become easily replaceable parts.

But to what extent can we allow experience, merit and dedication to be discarded for a few dozen euros?

It is with some perplexity that we observe, in many sectors of the Portuguese business community, a trend that, while not new, has been increasing in recent years: the replacement of experienced workers with foreign labor, often cheaper and often subject to precarious working conditions. This phenomenon, motivated by a purely economic logic, almost unconsciously ignores the real value of human capital and the investment made over the years in the training and qualification of each employee.

It's common to see employees who have spent decades contributing to a company's growth, with dedication, loyalty, and accumulated knowledge, submit their resignation letter. In many of these cases, the decision isn't due to profound demotivation or professional disinterest, but rather to a slightly more advantageous proposal from another employer—often a competitor—that offers a raise of 100 or 200 euros per month.

Surprisingly, the original companies, instead of seeking to understand the reasons for the departure or even proposing a small improvement in conditions, simply accept the dismissal with indifference. They don't ask how much the employee will earn, nor do they try to persuade them to stay. This passivity reveals a worrying lack of interest in human resources and internal dynamics.

The issue becomes even more serious when one realizes that these companies, instead of correcting salary imbalances or valuing those who have always been loyal to them, prefer to hire foreign workers at substantially lower rates. This practice, besides being ethically dubious, results in a breakdown of organizational identity. Remaining employees watch these replacements with fear and demotivation, knowing that, even after years of dedication, they can easily be discarded. This leads to the loss of internal memory, team spirit, and the corporate culture built over time.

This is, of course, not a criticism of immigration. Portugal has a long and rich history of emigration of its nationals to countries like France, Germany, and Switzerland, where many Portuguese were welcomed and successfully integrated. Immigration is often an economic and social necessity, and immigrants play a fundamental role in essential sectors of our economy. However, this immigration must be regulated, dignified, and not used as an instrument of exploitation or as a way to weaken the rights and appreciation of Portuguese workers.

It is unacceptable that many of these foreign workers live in degrading conditions, subject to excessive working hours, without access to basic rights, and without any job security. This situation not only compromises human dignity but also contributes to the general degradation of working conditions in Portugal. Unfair competition between national and foreign workers, mediated by low wages and a lack of oversight, only benefits the immediate profits of a few and undermines social cohesion and the country's economic balance.

Examples from other European countries can serve as inspiration, particularly through the adoption of strict policies to protect local workers and regulate the hiring of foreign workers. In Germany, for example, labor laws require concrete justification for dismissals and limit the direct replacement of national workers, encouraging talent retention through ongoing training. Similarly, France requires employers to demonstrate that they have not found local candidates before hiring workers outside the European Union, ensuring compliance with collective agreements that prevent the practice of substandard wages. Switzerland applies the principle of "equal pay for equal work," even for foreigners, penalizing companies that resort to exploitative hiring. Sweden, meanwhile, requires that immigrants be hired under wages and conditions equivalent to those of national workers, with frequent union oversight. These examples demonstrate that it is possible to integrate foreign workers without compromising the rights of local workers or encouraging unfair replacement.

In Portugal, a genuine debate on this reality is still lacking. Labor policy needs to be rethought, creating legal mechanisms that prevent the complete replacement of national employees who choose to leave in search of better conditions. For example, one could limit the replacement of foreign workers to a percentage of the total workforce, ensuring that there is no "bulk renewal" motivated solely by cost-cutting. At the same time, companies should be more closely monitored, particularly regarding the conditions offered to immigrants and the contracts awarded to them.

Currently, hiring foreign workers in Portugal entails a set of legal obligations that cannot be ignored. For workers from third countries (outside the EU/EEA), a work or residence visa is required, followed by authorization from AIMA (National Institute of Economic and Social Development), and it may be necessary to publish the vacancy in the IEFP (National Institute of Economic and Social Development). The employer must respect the Priority Principle, ensuring that there are no national, EU, or foreign candidates with legal residence available, which is demonstrated by publishing the vacancy in the IEFP for 30 working days. Furthermore, depending on the regime, the employer may be required to provide accommodation: optional but regulated for seasonal work; not mandatory under the standard regime; and mandatory under the "Green Route for Immigration" regime, where, in addition to adequate accommodation, a valid contract, professional training, Portuguese language instruction, and health and travel insurance are required. Given this situation, it is important to question whether all these expenses, including housing and training costs, end up making hiring a foreigner as expensive, or even more expensive, than granting a competitive salary increase to an experienced employee already integrated into the company. This analysis reveals that, often, the most economical and strategic solution may be to retain those who already know the internal operations, avoiding additional costs of integration, training, and compliance with complex legal requirements.

It's also important to create an incentive framework for retaining experienced employees, one that values seniority, merit, and ongoing training. A company that invests in the qualifications of its staff and then lets them leave for an extra €100 per month demonstrates serious strategic shortsightedness. The cost of a good employee's departure—in terms of productivity, team morale, the time it takes for a new employee to adapt, and the loss of knowledge—is often far greater than the cost of a fair salary update.

Valuing those who are present, those who know, and those who have contributed over the years is a matter of justice, business intelligence, and respect for human dignity. The future of our companies depends, to a large extent, on how they treat their employees. Wasting talent for a mere 100 euros can end up being much more costly—for the company, the national economy, and society as a whole.

More than a question of economics, this is a question of principles. We cannot continue to build a labor market that rewards turnover and penalizes stability. Portugal needs companies that invest in people, not just numbers. Until that happens, we will continue to lose talent, humanity, and, in the long run, competitiveness.

Graduate in Political Science and International Relations and Vice-President of the National Directorate of the Royal Cause//The author writes with the old orthographic agreement