Positive and negative effects of labour migration

INTRODUCTION

The general beliefs that labour migration between certain countries was as a direct economic relationship between such countries has lately been proven wrong, in view of the latest resultant effect of Globalization, Trade liberalization and the Information Technology growth that has elicited a massive need for skilled labour especially in the developed countries with labour deficiencies.

In relation to this, fast paced development & economic growth as well as other liberalization policies in these developed countries has resulted in high economic wage differentials, high social welfare conditions, and high income packages which have become a major attraction for skilled labour. However, the developing countries have been worst-hit by its highly productive work force that has constantly been depleted to fill this gap. Lately, the pattern of labour migration has also become broad beyond the historical notion of the influence of industrialization as it cut across all facet of human endeavours.

On the other hand, leadership style of government, the political framework in developing countries (resulting in social strife, political crises and war), educational deficiencies, lack of social amenities, dilapidated infrastructures, topography, excessive colonial ties and poverty have equally been attributed as push factors on these skilled labour from this sending countries.

The study of labour migration across international borders especially between developing and the developed countries and the increasing growth in the last twenty years has become an important issue in contemporary economic analysis. This has also become a potential source of great worry particular for decision makers aside from economist from both the sending and receiving countries who constantly draw statistical inferences on its numerous economic effects (positive and negative effects) with particular reference to economic growth, increasing fiscal costs, balance of payment imbalances, welfare effects, cultural, and the resultant social imbalances with respect to the concept of ‘brain drain’ and ‘brain gain’.

To a large extent, the above has generated an extensive debate often leading to a high level of criticism on the need to check the high incidences because of the perceived high negative impact on both the receiving and sending countries. Pressure groups such as the Migration watch have consistently argued that the constant influx of workers if not checkmated into the receiving countries will lead to the wages of domestic workers being unnecessarily depressed, drive down wages, put pressure on the available scarce resources and cause an unprecedented rise in unemployment.

In the same vein, others have argued about its high negative impact on the production capacity of developing countries as a result of ‘brain drain’ of such countries often resulting in low capacity development, increased poverty,

Counter arguments with empirical evidences have also suggested the issue of brain drain has been uncalled for as the resulting impact of labour migration is positive on the developing countries balance of payments accounts through remittances as well as development growth through technology transfer and migrants aid support.

This study will be attempting to analyse critically whilst carefully answering the following questions accordingly: Who a labour migrant is and what is labour migration all about; the reasons behind labour migration & the recent increasing growth in labour migration and subsequently proceed to consider empirically the effects of migration on the sending countries.

LABOUR MIGRATION:

It is quite important at this stage to make clear distinction of the following terms to allow for full understanding of the subject matter:

Immigration

Emigration

Migration

Sending countries

Receiving countries

‘Push’ factors

‘Pull’ factors

Immigration simply means to relocate into a new environment, most appropriately a country, in order to settle down there;

Emigration simply refers to the opposite of immigration i.e. relocating out of one’s own country to another;

Migration on the other hand refers to moving from one place to another for the purposes of performing specific task;

Sending countries refers to the countries where the migrants depart from or more precisely migrants’ native countries;

Receiving countries refers to the host of migrants or simply put the countries where the migrants relocate to reside;

Push factors can be described as factors responsible for the migrant’s decision to relocate abroad such as political abuses, economic reasons like unemployment, cultural reason like gender inequality;

Pull factors can be described as receiving countries features that potentially could be attractive to a migrant’ such as opportunity for a better living condition, skill acquisition, employment and freedom of expression.

WHO IS A MIGRANT?

The International Labour Organisation describes a migrant worker as ‘a person who migrates from one country to another with a view to being employed otherwise than on his own account and includes any person regularly admitted as a migrant for employment. (Does not include frontier workers, seamen & short-term entry of members of liberal professions and artistes)’ (ILO, 1949)

The United Nations General Assembly in resolution of December 1990 describes a migrant worker as ‘a person who is to be engaged or has been engaged in a remunerated activity in a state of which he or she is not a national’. (UN 1990) Examples of these could include, an American teacher in Saudi Arabia, a Chinese construction worker in Sudan, an Indian coffee farm owner in Brazil, an Italian restaurant owner in the United States, a Dutch worker on an offshore oil installation in the UAE and a Nigerian student in France.

From the above, we can relatively deduce the concept of labour migration more distinctively and not confuse same with clandestine activities such as illegal immigration, illegal migrants and labour trafficking.

LABOUR MIGRANT/MIGRANT WORKER:

Who then specifically is a ‘migrant worker’? Let us briefly consider an example of a farm worker who relocates from one environment to another for the purposes of performing specific farm duties such as harvesting seasonal crops. This person could be simply referred to as a migrant farm worker. In today’s analogy, this same definition has taken a broader meaning reflecting any worker’s departure from his native home who now lives in another country for an economic reason.

According to the International Labour Organisation (ILO), the world labour force stands at over 3.2 billion of the global population of 6.05 billion (see table 1 below), 200 million migrants representing about 3% of the world population does exist today, 60% of these figures presently reside in developed countries in Europe, United States, North America and some parts of Asia. The top ranked sending countries include Mexico, Afghanistan, Bangladesh, Vietnam, Colombia, Bosnia Herzegovina, Kazakhstan, Rwanda, Sri Lanka and Philippines whilst the top ranked receiving countries are United States of America, Canada, Germany, France, Russia, Australia, India, Ukraine and Saudi Arabia.

Source: United Nations Demographic year book 1999

Table 1: World Population as at 2000

1950

1960

1970

1980

1990

1995

1999

2000

Millions

WORLD TOTAL

2521

3022

3696

4440

5266

5666

5978

6055

AFRICA· AFRIQUE

221

277

357

467

615

700

767

764

Eastern Africa – Afrique orientale .

108

144

192

217

240

247

Middle Africa – Afrique centrale

Northern Africa – Afrique septentrio

110

142

157

172

173

Southem Africa- Afrique meridionale

Western Africa – Afrique occidentale

128

172

196

216

222

LATIN AMERICA

167

218

285

361

440

480

511

519

Caribbean – Cara”ibes

Central America – Amerique centrale

111

123

133

135

South America – Amerique du Sud

113

145

192

242

295

321

341

346

NORTHERN AMERICA

172

204

232

255

282

297

307

310

ASIA – ASIE

1402

1702

2147

2641

3181

3436

3634

3683

Eastern Asia

671

791

987

1178

1350

1422

1473

1485

South Central Asia

499

621

788

990

1239

1365

1466

1491

South Eastern Asia

182

225

287

360

441

480

511

519

Westem Asia

113

150

168

184

188

EUROPE

547

805

656

693

722

728

729

Eastern Europe – Europe orientale

219

253

276

295

311

310

308

307

Northem Europe

Southem Europe

109

118

128

138

143

144

Western Europe

141

152

165

170

176

181

183

OCEANIA

12.6

15.7

19.3

22.7

16.4

28.5

30.4

Australia and New Zealand

10.1

12.6

15.4

17.7

20.2

21.6

22.5

22.7

Melanesia

2.1

2.6

3.3

4.2

5.2

5.8

6.3

6.5

Micronesia

0.2

0.3

0.4

0.5

Polynesia

0.2

0.3

0.4

0.5

0.6

Source:

United Nations Demographic Year book 1999

For example, Nicaraguan constituted 76% of the foreign born nationals in Costa Rica in 2000; Colombians had a population size of 600,000 out of the 1m foreign born population in Venezuela; Paraguayans represented 32% of Argentina’s one million Latin-American immigrants respectively in 2001. Whilst the rest of Latin American and Asian immigrants were 23% and 26% of the 32.5m foreign born in the United States in 2002 respectively, Mexicans alone, were 9.8m i.e. 30%, representing the largest source of immigration to the United States. Though the huge representation may be largely due to the Immigration Reform and Control Act (IRCA) of 1986 which gave about two million former illegal Mexicans legal status, Mexicans share of the foreign labour market no doubt, is larger than any labour migrants from other countries in the United States (see figure 4 below).

Fig 4 Other Countries Nationals in USA by Countries & Regions, 2002

MEXICO 57%

EUROPE & CA

5%…

AFRICA & OTH

ASIA 10%

OTHER LA

23%

EUROPE &

CANADA

AFRICA & OTHER

COUNTRIES

ASIA

OTHER LATIN

AMERICA

MEXICO

Source: Urban Institute 2004

By estimation, Mexicans in the United States could soar to about 13 million by 2011.

WHY LABOUR MIGRATION?

Several reasons, majority of which has been highlighted in the introduction and others in the above context has been deduced as major factors for labour migration but for a well robust analysis of this subject matter, it becomes essential to review the above reasons along the following perspectives: Is labour migration for economic or non-economic reasons? Is labour migration forced or better still voluntary arising from conducive or non-conducive internal structures in sending countries. A review along this line could give us a better insight into appreciating why labour migration does occur especially in the context of our review of the high incidences of labour migration between the developing and developed countries.

It is estimated that the world labor force stands at about 3.2 billion, 85% of this population size reside in developing countries. Out of this, 200 million does exist as migrants of which 90% of them are in the labour force and which 60% have relocated to developed countries. The labour work force composition in the developed countries stands at the service industries taking a larger chunk of 72% whilst the industry and agricultural sectors sharing 25% and 3% respectively.

A reason that is obvious is that labour migration can be stopped in entirety even when there is development. ‘Development does not reduce the impetus for migration it increases it’ (Massey 1988). So long as opportunity does exist, migrants will be attracted to such opportunities in order to enhance their living condition, avoid poverty as well as insecurity. Paradoxically, these remain the main hydra-headed difficulties the developing countries don’t have solutions for. The reasons for labour migration could be summarized as follows: Growing urbanization & linkages through globalization, economic vulnerability of developing countries policies, and migrants’ quest for enhanced personal economies of scale, poverty, political conflicts, famine, relative cheap transportation, population pressure, and strong ties to former colonial masters, fallout of wrong economic or political decisions by former colonial masters leading to war. We shall consider first the economic reasons.

WAGE DIFFERENTIALS:

In most developing countries, there exists a high significant wage differential arising from growing urbanization thereby giving rise to ‘economic inequalities’. An intended migrant worker will obviously juxtapose the expected earnings abroad vis-à-vis the associated relocation cost. Where the former is higher, the rationale to relocate becomes highly justified.

UNEMPLOYMENT:

Unemployment and displacement arising from a wrongly timed industrial revolutionary transformation scheme through embracing trade liberalization could cause rise to a massive concentration of displaced workers who in turn search for better opportunities elsewhere especially abroad where the system is more dynamic. For example, Tajikistan break-out from the USSR in 1995 and its sudden transition from a controlled economy to a market economy left a lot of its workers unemployed and this led to a large scale migration outflow.

PURCHASING POWER PARITY:

A stimulated analysis in the workings with particular reference to the ‘purchasing power parity’ and the associated income differentials, makes relocation becomes apparent and the motives highly visible for workers in the developing countries.

WELFARE PACKAGES:

Welfare packages which are linked to the direct relationship between income and post tax adjustment system have been motivating factor behind a massive pull in into the developing countries. In the developed countries, a worker is entitled to basic mortgage facility aside from other ancillary benefits derivable from basic employment where such structure fail to exist in developing countries.

LACK OF SOCIAL AMENITIES & INFRASTRUCTURES:

The non-availability of basic social amenities as well as infrastructures in the developing countries has been a high reason for labour force migration. The developing countries leaders’ non attention to these provisions as a priority makes it rather disheartening. Whilst the cost of migration at times may create a challenge for the migrant in terms of migrant expenses, culturally realignment, learning a new language and adjusting to a new weather condition, the incentives derivable from expectations from an improved life condition, such as acquisition of better skills through education, exposure, training as well as better living standard may become dominating in the decision making.

POOR PLANNING POLICIES & COLONIAL TIES:

The developing countries poor demographic policies and non compliance with policy issue on planning, as well as often leads to exert pressure on the available scarce resources and thus causes great distortion in the efficient allocation of such resources. This pressure may often have been caused as fallout of wrong economic or political decision taken by former colonial masters of these developing countries. Mostly at times, the resultant effects leads to political conflicts, war and eventually poverty which forces both the skilled and unskilled labour force out of such countries in search of a place of rest. An apparent example was the Rwanda genocide of 1994 arising from a wrong decision earlier taken by Belgium (colonial master) politically.

PROXIMITY & CHEAP TRANSPORTATION:

Cheap transportation and proximity in terms of geographic distance between countries often play a great factor in labour migration especially where the developed countries shares a border line with the developing countries. A typical example is Mexico and the United States as well as Paraguay and Argentina.

NATURAL DISASTER:

Natural disaster such as drought and famine could be recognized as another factor responsible for labour migration between developing countries and the developed countries. Poor scientific research depth makes it difficult for developing countries to make adequate preparation in terms of preventing or limiting the effects of future natural disasters and the aftermath effects which leaves the country with food shortages and majority of the population impoverished thereby ‘pushing out’ its citizenry for quest of survival. An example here is Ethiopia.

LABOUR MIGRATION EFFECTS ON SENDING COUNTRIES- POSITIVE OR NEGATIVE?

Intellectuals as well as pressure groups such as the Migration Watch have argued extensively on the evils of labour migration to both the sending countries and receiving countries. This essay will critically review the effects on the sending countries alone with an attempt to give an informed decision based on economic theory as well as a practical perspective.

The proponents against labour migration has consistently argued that its negative contribution to a sending country far outstrip all perceived or anticipated benefits. A strong support of this argument is that, labour migration constitutes a brain drain problem and loss of investment arising from funds invested in public infrastructures to give this apparent labour migrant basic education, income inequality, high unemployment for receiving countries labour and perceived slavery for migrants in receiving countries.

Contrary to the above, in the words of the Juan Somavia, Director General of the ILO, “Migrant workers are an asset to every country where they bring their labour”. On that note, we will like to look at labour migration contributing positively to a sending country as well.

For countries like Tajikistan, labour migration really assisted in easing ‘social discontent’ when there was mass unemployment which resulted when the economy fell apart. Foreign jobs being taken by its citizens further reduced the unemployment rate and boosted internal consumer demand. These migrant workers became a vital component in Tajikistan’s machinery for economic growth (Olimovo & Bosc; 2003)

In the case of India, remittances from the migrants constituted a major part of the country’s financial inflow. Indian migrants relatively extended more support to its sending country through foreign direct investment and technology transfer when they convinced Hewlett Packard (HP) to set up operations in India.

Vietnamese, Irish and the Philippines migrants have supported their countries extensively through the promotion of investment in the area of developing trade and tourism networks with their receiving countries. These sending countries balance of payment figures derivable directly from tourism remains commendable as a result of the return of this human capital exportation.

For countries like Mexico, returning labour migrants have been major contributors to developing local communities and substantially assisted in reducing the rural-urban migration drift through the provision of resources, as well as improving social infrastructures.

Labour migrants from most part of Africa should be credited likewise for assisting in boosting international trade for their sending countries through creating markets in host countries for agricultural products. The strong ties for African food taste, the non-adaptability as well as the fear for a foreign food has greatly encouraged farmers in sending countries to ship such products/setting up African shops in host countries thereby boosting international trade and export earnings for sending countries.

Labour migration should not be seen as a problem which developing countries should explore solutions for. ‘Developing countries in particular may have a lot to gain in terms of growth, investment, human capital accumulation and poverty reduction if they manage to restructure effectively their economies following emigration and diffuse these benefits throughout the economy. To do so, migration and development policies need to become more coherent’ (Katseli et al; 2006).

Finally to the developing countries, labour migration should be viewed more as a transformation process and must be understood as an opportunity than a challenge. The obvious challenge therefore for decision makers in these developing countries is to seek out measures to prevent or alternatively limit inherent political, cultural and social effects of labour migration whilst benefitting immensely from the economic attributes it does provide.

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