Sandhya A.S.
Postdoc Researcher, DFG Research Training Group “Cross-border labor markets: Transnational market makers, infrastructures, institutions”,
Bielefeld University
Intermediaries are often viewed with suspicion and distrust. Across a wide range of economic and social domains, they are frequently criticized for being mercantile and for extracting value without actually creating it. From financial brokers and real estate agents to recruitment agencies, consultants, and migration agents, intermediaries are often portrayed as actors who profit from connecting two (or more) parties that could, in principle, interact directly and independently.
Despite the challenges to their social legitimacy and the societal developments that could potentially eradicate the need for intermediation, intermediaries remain remarkably resilient. For example, technological innovations facilitate contact between buyers and sellers, workers and employers, citizens and states, reduce transaction costs of accessing connections and bridge structural gaps between two sets of actors. Yet, intermediaries continue to proliferate. In fact, instead of making intermediation redundant, technology may have created space for new forms of intermediation (platforms for instance). Within the context of labour markets, other social developments including solidification of social networks that could aid job search or institutionalization of certain state mechanisms that replicate intermediation in labour markets, such as job centers, have also failed to fully replace intermediation. Instead, many contemporary markets and governance systems appear more dependent on intermediaries than ever before. This raises an important question: why do intermediaries prevail?
Cross-border labour markets provide a particularly useful lens through which to examine this issue and address this question. Intermediation in cross-border labour markets is often associated with migrant recruitment agencies and migration brokers/agents linking migrants, employers, states, and communities. These actors do more than connect supply and demand; they identify opportunities, provide information, manage risk, organize logistics, translate language, cultural scripts as well as laws, and help migrants navigate complex institutional environments and work orders. Because intermediaries occupy strategic positions between actors, they can influence the flow of information, shape migrant decisions, impose restrictions, and extract rents.
One reason intermediaries persist in cross-border labour markets is their ability to generate and mediate trust among actors operating across significant social and geographic distances. My recent book ‘Agents of Migration’ discusses how in such markets, individuals are required to place trust in people and institutions they do not know. Intermediaries help bridge this trust deficit by acting as guarantors, translators, and personal stamps of credibility between parties. Employers may trust a recruitment agent's assessment of a worker more than information obtained directly from an applicant’s CV; migrants may rely on a broker because they lack confidence in unfamiliar employers, bureaucracies, or foreign institutions. Intermediaries often draw on personal relationships, local (and sometimes experiential) knowledge, social networks, and personal/professional reputation to establish credibility and reduce perceived risks. Importantly, in many communities, trust is not always placed in formal institutions. This helps explain why informal intermediaries, including former migrants, community leaders, and local agents, often remain influential even when formal channels are available. The persistence of intermediaries therefore reflects not only information asymmetries or transaction costs but also the fundamental social need for trusted actors who can bridge uncertainty between otherwise disconnected worlds.
The study of cross-border labour markets also reveal another significant reason why intermediaries prevail – to favour the interests of the states or actor increasingly resembling states in the global capitalist order. In many labour exporting countries, emigration states have come to rely on intermediaries for identifying and screening migrant workers, processing documents and several administrative procedures pertaining to emigration, conflict resolution between migrants and employers, and facilitating safe and timely return of workers after the end of the contract period. This reliance on intermediaries reflects both practical considerations and broader shifts in governance. Intermediaries can provide specialized expertise, local knowledge, flexibility, and transnational reach that state institutions often lack. At the same time, outsourcing allows states to extend their capacity and navigate their juridical constraints without necessarily expanding bureaucratic structures across borders.
In some other contexts, such as in the case of my research on emigration states, intermediaries are used by the state to govern emigration on behalf of the state. My findings show that the Nepalese state precludes self-organization of labour migration by the migrants and uses formal and informal means to mandate the involvement of migrant recruitment agencies. As a result, low-skilled migrant workers from Nepal are unable to leave the country for employment abroad without using the services of mediation, thereby constructing the ‘need’ for intermediation in the country. This further creates new questions of accountability, oversight, and responsibility in migration governance. Necessitating brokerage in the emigration context of Nepal creates a purposeful distance between the state and the migrants, depoliticizing state’s development interests behind promoting migration. It further leads to relinquishment of direct responsibility for the inevitably poor working conditions created by a business model centered on the use of cheap, foreign labour.
A more useful approach to understand the continued relevance of intermediaries is to view them as responses to specific structural conditions. Intermediaries emerge because they perform functions that other institutions are unable or unwilling to fulfil. They remain relevant and thrive because direct access to institutions is still challenging, expensive, or impossible for many. Their prevalence often reflects the varied interests surrounding their intervention. This, however, does not imply that their relevance is not challenged. On the contrary, they constantly face criticism from the state and the society and are required to routinely seek social and political legitimacy towards their work and identity in order to remain relevant. Like any other socially embedded market actors, commercial intermediation cannot take the institutions around it for granted. In such a context, the persistence of intermediaries suggests that the issue may not be whether intermediation should exist, but rather what forms of intermediation are most effective, accountable, and equitable.
