For businesses across Europe, finding people with the right skills is becoming increasingly difficult, and as competition for talent grows, more employers are looking beyond their domestic labour markets to find the people they need.
For those who have never recruited internationally, however, the prospect can raise plenty of questions around employment law, payroll, tax and immigration, as well as whether they need to establish a local company before they can employ someone.
Luxembourg offers an interesting alternative perspective because, for employers there, building an international workforce is hardly a new idea.
A small country with a very international workforce
Luxembourg’s population reached more than 690,000 in January 2026, with 46.6% of residents being foreign nationals and around 180 nationalities represented across the country. More than 228,000 people also commute into Luxembourg each day from France, Germany and Belgium to work.
For businesses in Luxembourg, having employees who live and work across national borders is therefore not an unusual response to a recruitment challenge. It is simply part of the country’s working life.
That international outlook is also reflected in the country’s languages. French, German and Luxembourgish all play an important role, while English is widely spoken, particularly in sectors such as finance, technology and professional services.
For employers, this creates access to a much broader pool of skills and experience than would be available from the domestic workforce alone.
Why aren’t more businesses looking overseas?
The need is certainly there. A European Commission Eurobarometer survey published in June 2026 found that 46% of European SMEs are struggling to find workers with the right skills, yet only 14% had attempted to recruit workers from outside the EU during the previous two years.
Of those that had, 54% described the process as difficult, with administrative and immigration procedures the most frequently cited barrier.
There is a clear gap between the recruitment challenge businesses are facing and their willingness to look beyond their own borders. The talent may be out there, but the perceived complexity of international hiring can be enough to make employers think twice.
Luxembourg provides an interesting example of what can happen when international recruitment becomes part of the normal way a business operates.
Making international hiring work
Luxembourg’s experience doesn’t mean that employing people across borders is without its challenges. Businesses still need to understand the employment rules in each country, from contracts and working conditions to payroll, tax and benefits.
The difference is that international hiring does not have to mean taking all of that on alone. An Employer of Record can allow a business to employ someone in another country without establishing its own legal entity there, while providing support with many of the local employment and administrative requirements.
For businesses that are struggling to find the right skills at home, this can make it easier to consider talent in other countries without first having to build an international HR infrastructure of their own.
Luxembourg has been navigating the realities of international employment for years. On a smaller scale, Jersey and Guernsey tell a comparable story. At the same time, many businesses elsewhere in Europe are only now beginning to consider what a more global approach to recruitment could mean for them.
As the competition for skilled workers continues, perhaps the biggest lesson is a simple one: the right person for a role does not necessarily live in the same country as the employer.
Ready to explore international recruitment? Find out how Agility EOR can help you employ and manage talent across Luxembourg.
