| International Migration |
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International migration has emerged as an area of rising interest in economic development. Expatriate labor is a vital source of development financing in many members of the Group. More discussion is thus needed (a) to enhance the development impact of migration, (b) to address its challenges like brain drain, and (c) to promote innovative financial mechanisms to best harness remittances. This site explores various aspects of international migration via links to the pertinent sections. From here on, migration refers to international migration.
International migrants are defined as persons who were born outside the country where they now live. Large numbers of people migrate across international boundaries, and the volumes have been growing over time. Between 1960 and 2000 the number of international migrants more than doubled, from 76 million to 159 million. Put another way, there were 156 million international migrants in 1990, and this figure rose to 214 million by 2010. They were 2.9% of the world’s population in 1990, later 3.1% by 2010. International migrants tended to move to countries with a higher level of development than their own. In 2010 they were 10.3% of the population of developed countries, a far cry from the 1.5% of the population of developing countries. Six out of ten or 128 million international migrants live in developed countries, and the majority of these workers, or 74 million, came from developing countries. Females are almost half (49%) of all international migrants in 2010. In 2010 the main country of destination was the United States (42.8 million migrants), then the Russian Federation (12.3 million), Germany (10.8 million), Saudi Arabia (7.3 million), and Canada (7.2 million).
The main causes of migration are often the disparities in the economies between the home and host nations. Rising differences in per capita income between high-income and middle-income countries are cited as a factor. Migrants see opportunities for better-paying jobs in the developed world. The flow of workers follows a pattern over time known as the migration hump. One needs a minimum level of income to afford international travel, and workers who seek jobs abroad are usually those who can access financial resources. Those who search for overseas jobs are not from the poorest classes. Hence the nations that send the most workers, in general, are not the least developed countries. They are, rather, those whose citizens are seeing increasing levels of income, education, and access to information. So migration tends to rise as nations develop, then it falls. It will decline only when the home country is developed enough to give enough decent work to its labor force without having to turn to the pool of foreign jobs. Demographics is a related factor, according to the International Organization for Migration. Among developed countries, many of whom are aging and even shrinking, annual population growth is less than 0.3%, while that of developing nations is almost 6 times as fast. Hence there is an abundance of labor supply, and depressed wages, among lower income regions, as against a shortage of labor among the higher income. Further, nations with significantly large populations of the elderly need workers in the field of health care. According to Public Services International, there is, in fact a global shortage of healthcare staff. This helps drive the international migration of health workers. Some countries actively promote overseas employment through their programs. The Philippines, for example, helps workers seek and pursue foreign work in industries that are in demand abroad, according to the International Organization for Migration.
Remittances: flows larger than ODA Remittances are so large that they are greater than official development assistance. In sheer volume they are second only to foreign direct investments as a source of capital flows. They are even more constant than FDI and such flows to developing countries more than doubled over 1988-1999. Remittances to the developing world, according to official records, are at $ 351 billion in 2011, an increase of 8% over the 2010 level. They are seen to grow by 7 to 8% per year, reaching $ 441 billion by 2014. If flows to developed countries are included, remittances amounted to $ 483 billion in 2011 and are forecast to rise to $ 593 billion by 2014, according to the World Bank. The threat to the estimate, though, is sustained unemployment in the United States and Europe. Fewer jobs may be available to migrants, and public opinion may frown on new immigration. The fiscal crisis in Europe may threaten migrants from Central Asia and Eastern Europe (e.g. Bulgaria, Moldova, Romania) and those from Northern Africa. Global economic troubles may also make exchange rates more volatile. They may depress oil prices and thus lower demand for migrants into Middle Eastern countries. All these may affect remittances negatively. Among the developing countries, those which get the most remittances are India ($58 billion), China ($57 billion), Mexico ($24 billion) and the Philippines ($ 23 billion). Other big recipients are Pakistan, Bangladesh, Nigeria, Vietnam, Egypt and Lebanon. For a few small and low-income countries, remittances occupy a large slice of their GDP.
Migration creates Diasporas, or national networks across the host countries. These groups can give rise to social, cultural, and political change in the sending countries, as they learn of alternatives to what they have known at home. Diasporas benefit their home countries through projects for relief and local hometown development. They disseminate to their sending countries the skills, training, education, and innovations acquired in their foreign work. A World Bank report on Diasporas finds that high-skilled workers have been crucial in “accelerating technology exchange and foreign direct investment in China, India, Israel and the US.” The effect is not confined though to the high-skilled. Yes, blue-collar migrants are of lower skill compared to professionals, but they have more skills compared to the rest of the work force at home. On their return they can bring back managerial practices and innovations which they can apply to their own enterprises. Hence, both high-skilled and low-skilled workers benefit the human capital stock in their home countries via return migration.
As gleaned from country experience, the following are the benefits derived from international migration. It funds basic needs via remittances, especially for poor and lower middle income families. It raises money as well for bigger ticket family expenditures, like education, a house, a vehicle, a small business. Expenditure on family needs in turn wields multiplier effects for the economy. And spending on education, health, and housing upgrades human capital or individual capacities. These factors help reduce poverty. One study has found that in developing countries, a 10% increase in per capita official international remittances will result in a 3.5% drop in the share of people living in poverty. International migration lowers unemployment in the countries of origin. In turn it supplies for skilled labor and professionals that destination countries may lack. Migrants also fill in the vacancies for jobs that local workers do not want to do or lack the skills to do. They work in the “3D” jobs that are dirty, dangerous, or difficult, because the wages abroad are much higher than what they would derive at home. It drives growth during times when the domestic economy is on the downswing, acting like a buffer during recessions. It builds up foreign exchange reserves, protecting countries from exchange rate shocks and crises. It draws in financing that can be channeled to development priorities. In fact remittances have been more stable, more resilient to the 2008-2009 crisis, than other types of financial flows. Remittances are being factored into debt ratings of middle-income countries. Remittances have helped Bangladesh get a rating comparable to that of many emerging markets. Remittances have enabled the Philippines to raise $ 750 million in bonds in spite of the global crisis. The UN Secretary General (2010) remarks on these other benefits of migration: (I)nternational migration can set the foundation for the development of networks that facilitate the diffusion of knowledge, innovation and attitudes that can promote development. Migration-driven processes of social and cultural change can have significant impacts on entrepreneurship, community norms, and political transformations — impacts that are often felt for generations to come.
These in turn are seen as the drawbacks of international migration. Families may suffer strain in their social ties; spouses can drift away from each other and children can grow up without either one of their parents. “The social cost to children left behind includes poor performance in school, violent behavior, delinquency and psychological problems,” according to the ESCAP 2008 Economics and Social Survey of Asia and the Pacific. Families may get into habits of dependency: working-age members postpone job search and becoming productive. Migrant workers may be vulnerable on foreign soil. Irregular migrants are at greatest risk, and may end up exploited and victimized. On the national level, governments may be lulled into the status quo. There is much less pressure for them to embark on macroeconomic reforms when migration acts as a safety valve for unemployment. Spending is skewed towards personal (household) consumption, when it could be put to better use as investment in productive capacity. However, this argument of “non-productive spending” on houses, durables, and clothing may be flawed. One can argue that these goods contribute to family well-being, so such spending can promote development in a broader sense. Brain drain is a familiar problem: countries of origin may lose their trained professionals, and this may impede progress in social development. However, the data indicate that the fraction of high-skilled people from developing countries leaking to brain drain is not all that large. Only 5% of secondary-educated workers in developing countries, and 10% of their tertiary-educated workers, are migrants abroad. Further, many nations train more workers with specific skills than what their domestic economies need. Brain drain can be harmful though in sectors with highly educated professionals within countries that lack human capital. In particular, the fields of health and education may be vulnerable. The 2007 International Migration outlook reported that around 2000, within the OECD countries, 65% of foreign-born nurses and 74% of foreign-born doctors came from the poorer countries. The UN Secretary General (2010) notes: For some countries, the losses of health personnel through emigration are crippling. In the case of Angola, Antigua and Barbuda, Cook Islands, Dominica, Fiji, Grenada, Guyana, Haiti, Liberia, Mozambique, Saint Vincent and the Grenadines, Sierra Leone, Trinidad and Tobago and the United Republic of Tanzania, for instance, over half of the doctors born in each of those countries are working in OECD countries. Brain drain involves a transfer of resources from poor countries to the rich. OECD countries have 3 million migrants with tertiary education. Assuming $ 20,000 to educate a person to the tertiary level, the developing countries have transferred around $ 60 billion in human capital to the developed world. There is the related concept of brain waste. “Currently, too many migrants worked below their level of education and skills,” according to UNITAR (2009). Doctors work as nurses abroad, teachers as nannies, and Ph.D. degree holders as cashiers. The converse to the brain drain argument is brain gain. People who see opportunities abroad invest in their training, and this builds up a nation’s stock of human capital. For example, nursing enrollment in the Philippines has swollen because of the jobs open overseas. The brain drain argument is also weakened as education becomes more privatized. Investment in human capital does not come from the state, so there is less of an obligation to pay back to the state by serving at home.
The UN High Commissioner for Human Rights (2009) has expressed concern that in some countries, migrants are denied access to basic human rights. In particular their children cannot be registered at birth and they are deterred from accessing education and health care. The Office of the UN High Commissioner for Human rights notes violations related to: (a) discrimination, xenophobia and racism; (b) access to economic, social and cultural rights; (c) administrative detention of migrants in an irregular situation and the criminalization of their actions, and (d) the impact of the global financial and economic crisis on migrants. Critics say that the particularly vulnerable are undocumented migrants who end up abused, exploited via low wages, and working in extreme conditions. In extreme cases, some women are trapped into sexual work in the entertainment industry, and a few are even molested and battered. According to the International Center for Migration Policy Development, as many as 650,000 illegal migrants entered the European Union in 2001. Illegal migrants are drawn by demand for cheap labor. But they avoid formal financial systems and lack access to social services.
Undocumented migrants turn to unregulated remittance channels as they do not qualify for bank accounts, and they are afraid to expose their identities and contact information. The problem is compounded at times by a lack of access to banks and other formal mechanisms. A UN DESA report has called informal systems “the poor man’s private banking vehicle, and a market response by economic agents who are constrained by the level of financial development and government policies.” Informal channels are attractive to migrant workers because of their anonymity, low cost, speed, versatility, and cultural acceptance. However, the high fees they charge dampens the migrants’ will to save and lessen the amounts sent to their families. On the macro level they reduce the inflow of remittances to the migrant’s nation. Informal remittances are difficult to estimate, thus complicating monetary policy. In particular, they leave no paper trails, and informal records are hard to interpret. There lies as well the problem of fraudulent transactions. Sums from legitimate businesses may be mixed with those from illegitimate fund transfers. Informal remittance channels are vulnerable to being used for money laundering, capital flight, and terrorist activities. They have come under special scrutiny in the United States in the wake of the September 11, 2001 attacks. They are being closely watched by the Financial Action Task Force. Responding to informal channels with heavier licensing and reporting requirements may not be prudent. Poorer migrant workers will be cut off from remittance channels they have long used. And the evidence indicates that the September 11 hijackers turned to credit cards, wire services, and banks – all formal systems – to transfer their funds. It is best to first build public consensus in designing and implementing regulations and standards over remittance channels.
Migrants, their sending countries, and even their host countries, can benefit much if the cost of sending remittances is reduced. The G8 and G20 countries have thus agreed on the “5 by 5” objective: to cut global remittance costs by 5 percentage points within 5 years. Such attempts are yielding results. Costs have been dropping in the high volume remittance corridors like France to North Africa, United Kingdom to India, United States to Mexico. The Inter-American Development Bank finds that average remittance transfer fees to Latin America and the Caribbean have fallen by about 75 per cent since 2000. They now hover between 5 and 6 per cent of the amount remitted. The World Bank adds that for the world as a whole, the costs of sending remittances dropped from 9.8 per cent in September 2008 to 8.7 per cent in early 2010 and 7.3% in the 3rd quarter of 2011. Nevertheless, these remittance costs are still too high, especially for small countries and those in Africa, where they are important to the poor. The cost of transmitting remittances will be further reduced if there is more competition in the market. Liberalizing the entry of more players will also expand the share of the formal sector. Online systems can help reduce remittance costs substantially, but this may require much investment among the banks. These institutions have the option to outsource said systems as a lower-cost alternative.
Channeling remittances to development Innovations are arising to maximize the benefits derived from remittances. Monetary authorities are encouraging the teaching of financial literacy to migrants and their families. This will help channel remittances to greater savings and investment, rather than pure consumption. A Dual Nationality Act allows former Filipino citizens who have become citizens of another country to own private land in the Philippines. Hometown associations are mobilizing migrant remittances for setting up development projects in their local areas. These groups may need to be organized more effectively to achieve economies of scale. The G20 has turned its attention to Diaspora bonds which are targeted at expatriate communities. Governments can mobilize these huge savings – e.g. $ 50 billion for Africa alone – to finance development projects like roads, railways, and schools. Various countries, like Ethiopia, Kenya, and Nepal, have issued Diaspora bonds, while Nigeria will issue Diaspora bonds in 2012. Others like Rwanda and Bangladesh, are considering such bonds. The bonds can be a stable source of development financing due to the migrants’ home bias and lower sovereign risk. Local (state or provincial) governments may explore the option of floating bonds targeted to migrant workers. This will enable migrants to get higher rates on their savings while contributing to the infrastructure development of their home area. Governments may give institutional support to NGOs that harness migrant savings for the development of the migrants’ own home communities (e.g. towns, provinces).
The need for global cooperation Both the countries sending migrants and those hosting them benefit from the movement of labor. The sending countries gain from lower unemployment and poverty, and from deriving funds for development priorities. The host countries fill the gaps in their supply of skills. For example, developed countries with declining birth rates need migrant health professionals to care for their ageing populations. Saudi Arabia in particular benefits from imported labor: its private sector has almost 6 migrant workers for every native worker. Hence, both the sending and host countries stand to benefit from country-to-country dialogues and agreements on migrant issues. The most pressing issues would be trafficking, irregular workers, recognition of academic credentials, and violations of employment contracts. Human resource development concerns should figure in such talks. There should be more investments in education in the countries of origin, portability of pensions and benefits across countries, and improved integration of migrants at their destination countries. But such discussions should be pursued beyond the ambit of bilateral talks. Bilateral agreements often find countries of origin in a weak bargaining position because of the acute competition among them. Further, regulating emigration from one country would unleash emigration pressures from her competitors. It is thus better to have a common, global regulatory framework to protect international migrants.
UN Conventions to protect migrants According to a review by the South Centre, the International Labor Organization (ILO) first worked on 2 conventions to protect the rights of migrant workers. The 1949 Convention (No. 97) on Migration for Employment covers the period when a worker leaves his home country to the day of his return. It deals with issues on recruitment, accommodation, treatment of workers and work conditions, union membership, social security, legal proceedings and taxes. Following it was the 1975 Convention (No. 143) on Migrations in Abusive Conditions and the Promotion of Equality of Opportunity and Treatment of Migrant Workers. This spelled out more distinct rights, including unionization, collective freedoms, cultural rights, reimbursement, housing, social security, training, and education. This scope of this Convention was broader than its predecessor, looking more closely at irregular migration and how to prevent it. The UN Convention on the Rights of All Migrant Workers and their Families was drafted in 1990. It stressed that human rights and their treaty instruments apply to migrant workers and their families, regardless of their status. The Convention, however, allowed states to limit the rights of some particular categories of temporary migrants, like project-tied workers, specified-employment workers, and seasonal workers. It entered into force in 2003; two years later 33 nations had ratified the Convention, mostly developing countries. The current number is 45. Most countries of destination had not signed it. Despite narrow ratification, there was still “space for developing informal and non-binding dialogues on labor migration at the multi-lateral level” according to a 2006 report of the International Organization for Migration. For the legal measures then that protected migrants were seen as inadequate because of the changing setting. Recruitment was shifting from the state to private firms. There was rising feminization of migrant labor. Women in domestic work and the sex sector were often outside the protection of labor law. And trends pointed to an increase in irregular migration. The 2000 Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children was drafted and ratified by 18 countries. The 2000 Protocol against the Smuggling of Migrants by Land, Sea and Air was ratified by 17 countries. They both supplemented the UN Convention against Transnational Organized Crime. While their ratification was limited, both Protocols are often used as guidelines for nations to craft their policies in treating migrants.
Another UN intervention was the creation of the Global Commission on International Migration (GCIM). UN Secretary General Kofi Annan’s 2002 report, Strengthening of the United Nations: an Agenda for Further Change (A/57/387), said, “the Secretary-General characterized international migration as one of the main issues on which the United Nations had to deepen its knowledge, sharpen its focus and act more effectively.” In 2003 the UN thus formed the Global Commission on International Migration to craft a framework promoting more orderly migration. Its mandate was to “place the issues of international migration on the global policy agenda, to analyze gaps in current approaches to migration, to examine the inter-linkages between migration and other global issues, to present appropriate recommendations to the Secretary General and other stakeholders, to analyze gaps in current approaches to migration, to examine the inter-linkages between migration and other global issues, and to present appropriate recommendations to the Secretary General and other stakeholders.” In its October 2005 final report, the Global Commission on International Migration stated that the “international community has failed to realize the full potential of migration and has not risen to the many opportunities and challenges it presents.” The Global Migration Group or GMG was formed in 2006 following one of the recommendations of the Global Commission on International Migration. It is a consultative group from various UN agencies born from an existing cluster, the “Geneva Migration Group.” Because migration is politically sensitive, there is opposition to establish a specialized body to focus on it. Hence, an inter-agency body may serve as the more practical vehicle. The members of the GMG are: ILO, IOM, OHCHR, UNCTAD, UNDESA, UNDP UNFPA, UNHCR, UNODC and the World Bank. They meet regularly and have rotating chairs.
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