Category: Uncategorized

Wanted: New Partner Countries for Germany’s Labor Migration Policy 

The German economy is in dire need of immigrant labor. A study by the  German Federal Employment Agency (BA) estimates that Germany will need to attract 400,000 net immigrants to its labor market by 2050 to sustain its current growth levels. The problem is that Germany’s traditional source countries for immigrant labor in southern and eastern Europe face the same demographic shifts as Germany, meaning their populations have also been aging.

Most countries with booming demographics are developing countries, for which labor migration bears potential for development. Studies estimate that only 60% of people in developing countries are likely to find jobs above the poverty threshold. For these countries, emigration alleviates the pressure on their ailing job markets. This is accomplished with the new skills and knowledge brought by returned workers as well as remittances that often make up large shares of the developing countries’ national GDPs.

Germany has already laid most of the groundwork needed to attract missing workforce: a broadened legal framework, strong political commitment, technical expertise, and public awareness. But how can it move up the next gear? How can we scale up a decade of piloting? Where do responsibilities lie between government actors and the private sector? And where will the immigrants of tomorrow come from?

This blog seeks to address at least some of these questions. Parts of the answers lie with the need for Germany to strengthen cooperation with new and future source countries through labor migration partnerships.

Roadblocks ahead

In Germany, two main roadblocks stand in the way of prospective migrant workers.

First, learning German poses a significant challenge. German is not widely taught in schools due to its limited perceived global practicality. Language training is costly and takes on average 12-18 months of full-time training to reach the desired B2 level to be attractive to German employers. Most employers currently pay for the language cost at the match-making stage before the worker embarks on the language training journey, which creates a lot of “investment” risk. Finding sustainable solutions to bridge this payment/timing gap will increase attractiveness and make hiring of foreign workers easier.

Second, the uncertainty of visa procedures may discourage potential candidates. Visa policy is often a sensitive topic, but there are ways to increase the predictability and visibility of visa applications and processes for candidates and employers. For example, it can be accomplished through facilitated schemes for specific skills levels, occupations, or nationalities, such as the Australian Pacific Labor Migration (PALM) scheme and innovations in the US H2A scheme with Mexico and Guatemala. Another option is to change the visa design. Recent Spanish reforms have proposed a 4-year circular visa program to increase predictability and security for employers and migrant workers. The issue particularly with circular schemes, however, is the power they give to recruiting agencies in origin and employers in destination countries, creating a potential for exploitative behaviors. To address these power imbalances between stakeholders, ethical circular schemes should come with proper vetting of employers, responsible recruitment agencies, and the ability for migrants to change employers within their sector or occupation. The systems should also provide proper feedback channels for the workers to evaluate employers.

The next set of challenges await immigrants upon arrival. Integration is often complicated, especially for those who have yet to master the German language. Skills recognition is another issue given that requirements for the same professions vary by states. Sectors with difficult working conditions and unattractive remuneration, such as health and aged care, also struggle to retain migrant workers who turn to less burdensome professions. Additionally, employers are not always prepared to welcome international workers and manage multi-cultural and multi-language teams, especially in smaller cities and rural areas. Discrimination and racism are a reality that pushes some migrant workers to cut short their stay in Germany and move onward to another destination. While the issue of integration of migrant workforce is at the core of Germany’s minister for integration, it should also be addressed in unison with the private sector and employers across job sectors.

On top of that, many introduced pilot programs have been set up in a way that is difficult to scale and finance in a sustainable way. Over the past 10 years, Germany has piloted several projects through skills and labor mobility partnerships. These pilot projects have been key to push forward innovative models and identify challenges and bottlenecks. But pilots score poorly when it comes to the actual numbers of migrant workers they have channeled into Germany. As comprehensive as they are, these schemes tend to be very costly if not properly scaled. This raises the question of a fair sharing of costs between private and public actors. Employers, who already bear the risk of hiring candidates unfit for the job, are understandably wary of taking on additional financial expenses. At the same time, the government alone cannot subsidize labor migration but should act as an intermediary for private employers that are often not experienced with hiring foreign workers. Results-based financing (RBF) models, in which payments are connected to pre-agreed and verified measurable performance targets, may provide a solution to this issue, helping the government, employers and ultimately the workers to ease off the burden.

Cooperation outside; coordination within

It is clear that labor migration partnerships rely on strong cooperation with sending countries at the technical as well as political level. At technical level, the cooperation should achieve some degree of coherence on training requirements and skill recognition. At the political level, partnerships are sustained by their perceived added value – a determinant that may change over time and with successive governments.

As many of the traditional sending countries age, it is time to build new and strengthen existing partnerships with the emerging source countries. As an example, although most skilled workers come to Germany from India, Germany’s visibility and attractiveness as a destination country pales in India in comparison to other global competitors.

To gain visibility abroad, Germany needs to increase the coordination across responsible ministries and build a coherent messaging – from the Foreign Office to Development and International Cooperation, Home Office, Labor and Social Affairs, Health, and the Chancellery. Ultimately, effective labor migration will require strong cross-sectorial partnerships among a variety of stakeholders – from relevant ministries to states and communities, private employers, and host communities – asking for enhanced communication, coordination, and coherence.

Lots of new developments are currently taking place in Germany when it comes to improving the processes and attractiveness of Germany as a destination country. But Germany needs to do more to overcome the hurdles of language and attractiveness, focusing on its ‘unique selling points’, for instance by communicating about the non-monetary benefits it offers and that are too often not spelled out to migrant workers: health and retirement benefits, family reunification, speedy access to citizenship, and others. Within the EU, Germany is leading a solitary race for labor migration. This alone should give Germany an edge to attract more labor migrants.

This blog is based on outcomes of a discussion among representatives from German ministries, development organizations and the private sector hosted by the German Council on Foreign Relations (DGAP) and Labor Mobility Partnerships (LaMP) in October 2022.

LaMP Flights: Understanding needs and challenges of Mexico’s transportation industry

FAVORITE QUOTES: 

“I want to become a driver because I want a better future for my family” 

“I want to become a driver because it has the privilege of combining responsibility with sunsets and unimaginable landscapes” 

– Students at training centers

MAIN TAKEAWAY: 

Labor mobility can help address the current labor shortage in the Mexico’s trucking industry, particularly for heavy freight transportation. Coordinated and scalable efforts to professionalize the country’s long-haul truck drivers may be one of the first steps towards such endeavor. The industry demonstrates several important ingredients necessary to build a bigger and stronger labor-force, such as organizational capacity, motivated and talented leaders and teams, well-developed processes and procedures, willingness to invest from the private sector, and competitive salaries. However, underlying conditions such as crime and insecurity, supply chain industry configuration, informal practices, insufficient control and monitoring and health concerns present important challenges as the industry works to attract new workers.   

 

LaMP TEAM REFLECTION: 

After trips to Guatemala and the Dominican Republic, the LaMP team traveled to another target destination of our Ibero-America scoping project – Mexico. This trip allowed us to assess Mexico’s potential and appetite for circular labor mobility within its heavy freight transportation industry. Our focus on Mexico stems from its position of representing both – a receiving country of workers from Guatemala, El Salvador and Honduras, also known as the Northern Triangle, as well as a sending country of trained workers to the United States and Canada, which face similar labor shortages in the sector.  

The LaMP team met with a broad variety of stakeholders including government actors at different administrative levels, private sector, and labor organizations, collecting various perspectives and getting familiar with the existing initiatives. Although many of them shared experience with Mexican truck drivers eventually leaving to work for US employers and expressed concerns about this issue, just a few stakeholders have considered binational coordinated circular labor mobility schemes as a solution helping to meet labor demand of employers in both countries. Still, most stakeholders agree that more cross-border collaboration, such as joint efforts with the United States to align incentives for the two nations’ employers, is necessary to address the workforce gap. And yet, while most of the stakeholders we encountered during this trip expressed positive attitudes towards foreign workers, they have been more focused on attracting and training Mexican workers, including young people and women, as a first straightforward response to the industry’s needs.   

The workforce gap for the long-haul freight transportation sector is a complex challenge, but the industry is highly motivated to address the issue. The LaMP team will build on this energy to explore possible labor mobility solutions tailored to the sector’s needs. We are currently assessing the feasibility of different labor mobility initiatives, including financing mechanisms, to unlock current barriers to job training, and cross-border coalition building. Specifically, we are analyzing Central America’s long-haul transportation workforce needs and starting to explore bilateral or multilateral collaboration opportunities in the US side.  

Interested in this work? Feel free to contact us!

Stay tuned for more details about this project as well as other LaMP’s work by signing up for our newsletter and following us on twitter! 

 

Applying innovative finance solutions to sticky challenges 

Significant attention is paid to how policies drive outcomes in migration systems; however, there is little attention paid to how the financing models behind them influence behaviors of key actors.  

Policies and regulations are important tools, but in the context of migration which by definition crosses legal boundaries, there are limitations to the effectiveness of enforcement. Where regulation is limited to what can be enforced, financing systems can be designed in creative and complex ways which reinforce policy goals by connecting payments to the desired outcomes.  

In results-based financing (RBF), payments are connected to pre-agreed and verified measurable performance targets. Ideally, these targets map directly to the desired outcomes, such as well-prepared workers moving into good jobs.  

RBF is a critical part of LaMP’s toolkit to improve labor mobility systems. As a tool, RBF has potential to quickly grow while helping workers, employers, governments and other labor mobility actors. RBF can: 

  • Reduce the burden on government systems as it increases accountability and embeds transparency without the need for increased regulation or enforcement 
  • Increase focus on results instead of activities and learn what actually works, encourage innovation at an individualized, localized approach to the needs of workers and employers. 
  • Optimize the use of commercial as well as public resources since payments are only made for successful programs.  

LaMP has a large portfolio applying RBF to different challenges and contexts within labor mobility. 

 


For more information, contact:

Sophia Wolpers

swolpers@lampforum.org

 

 

Kim Geronimo

kgeronimo@lampforum.org

Innovative language training solutions helping migrant workers and employers alike 

Language requirements are part of most mid-skill labor visas and play an integral role in how well a migrant worker can exercise their job, advance and integrate in the destination country. Therefore, it is not surprising that governments around the world are hesitant to lower this entry requirement. At the same time learning a language while working, as often required, is time and cost-intensive for potential migrant workers and often not affordable without financial support.  

At the same time, employers willing to hire migrant workers due to ongoing labor scarcity do not want to pay months and years in advance for a worker who may or may not arrive.  

This timing and risk challenge can be solved through a mixture of well-integrated technology and results-based financing innovations if partners across education, tech, financing and recruitment come together.  

Throughout 2023, LaMP will be coordinating and working with a range of partners to cultivate and design a new multi-step language training model. This model will couple low-cost application-driven language learning with innovative funding solutions further increasing its quality. The goal is to equip the most dedicated workers with the skills required to enter and succeed in labor markets abroad, while reducing costs and risks.  

Lowering the structural hurdles to language skill acquisition for workers in low-income countries will expand the opportunities for workers to find the best possible jobs abroad to maximize their income and support their families, communities and economies.  

 


For more information, contact:

Sophia Wolpers

swolpers@lampforum.org

 

 

Creating new pathways for essential workers to enter Canada

Expected demographic shifts caused by rapid aging of Canada’s population is likely to lead to labor scarcity in sectors and occupations across all skill levels; therefore, Canada needs to start building a robust labor market to prepare for the consequences. 

At LaMP, we seek to address the growing worker scarcity by improving occupational migration programs, creating opportunities for workers and solving problems for employers. We have been working at both the federal and provincial level to identify opportunities to address Canada’s worker shortages in essential sectors, such as aged care, construction and hospitality.  

In 2021, we published a high-level policy proposal on designing a pathway that would allow new workers in certain trade and service occupations recognized as essential to come to Canada from abroad, a change for the Canada’s current model favoring “high-skilled” workers.  

Since then, we have been working with partners at provincial as well as federal levels on designing “development-centric” regional pilot for essential workers from historically-excluded sending communities, to demonstrate poverty alleviation potential and economic benefits of admitting migrant workers without a bachelor’s degree to individual provinces and Canada as a whole. 

 


For more information, contact:

Zuzana Cepla

zcepla@lampforum.org

Building sector-specific migration programs in the elderly care 

The high-income countries are aging – the number of people older than 80 in the 37 OECD countries
is expected to climb from over 57 million in 2016 to over 1.2 billion in 2050.[1] As a result, the working age population has been shrinking, creating shortages that are already growing into inevitable labor scarcity across sectors. However, the aged care sector’s shortages have been even more elevated due to the increasing number of seniors in need for care. To maintain the current worker-per-patient ratio across OECD countries, the sector will need additional 10 million personal care workers by 2040.[2]  

Therefore, OECD governments and industry associations around the world have been paying high-profile attention to labor mobility within the aged-care sector.  

Together with partners, LaMP is engaging G20 governments on the issue of labor mobility for elderly care, creating an opportunity to translate the political attention into concrete actions and commitments. Besides our advocacy work, LaMP provides actors within the G20 and others such as the European Commission and Global Aging Network with technical expertise and tools necessary to design and introduce new migration programs for the sector. 

As a result of this work, LaMP seeks to secure breakthrough commitments by key actors to address elderly-care labor scarcity through cross-border labor mobility. Our goal is to support emergence of concrete policy changes and investments that create more and better elderly-care job opportunities for foreign-born workers. 

 

[1] OECD (2020), Who Cares? Attracting and Retaining Care Workers for the Elderly, OECD Health Policy Studies, OECD Publishing, Paris, https://doi.org/10.1787/92c0ef68-en

[2] OECD (2020), Who Cares? Attracting and Retaining Care Workers for the Elderly, OECD Health Policy Studies, OECD Publishing, Paris, https://doi.org/10.1787/92c0ef68-en

 


For more information, contact:

Salvatore Petronella

spetronella@lampforum.org

 

 

Zuzana Cepla

zcepla@lampforum.org

 

 

Responsible Recruitment is key to the future of U.S. Agriculture 

LaMP is executing on a portfolio of work to strengthen responsible labor recruitment in the U.S. H-2A seasonal agricultural worker visa program. The H-2A program currently provides visas to over a quarter million migrant workers each year to work on farms in the United States. When H-2A works well, the program represents a critical solution to growing labor shortages in U.S. agriculture and an often life-changing source of income for migrant workers and their communities.  

However, the promise of H-2A is threatened by perverse incentives built into the labor market and the program’s design, which can lead to poor recruitment practices and poor employment conditions. Meanwhile, major produce retailers and high-profile brands are turning up the pressure to find solutions to keep labor supply chains clean. 

Our work focuses on strengthening responsible practices in the earliest stages of recruitment, as the first step in a worker’s journey can have a cascading effect on their well-being throughout their migration and employment experience. 

We work alongside leading H-2A recruitment agencies, growers, produce retailers, and other stakeholders in the supply chain to design and pilot market-friendly initiatives that improve the competitive advantage and value proposition of recruitment agencies that strive towards responsible practices. We focus on shifting the economic incentives and financing structures that shape market behavior so that good practice is good business. 

LaMP’s work on the H-2A recruitment industry has received support from the Walmart Foundation and the Western Union Foundation. 

 


For more information, contact:

Kim Geronimo

kgeronimo@lampforum.org

Innovative Financing Models: Funding the Future of Responsible Recruitment Practice

 

PANELISTS

Jane Newman, International Director at Social Finance, UK
Rupal Patel, US Senior Program Manager at Stronger Together and Founder & Principal at Good Scout Capital
Elicia Carmichael, Senior Advisor at Labor Mobility Partnerships (LaMP)

 

MODERATOR

Anbinh Phan, Director, Global Government Affairs and Business Diplomacy at Walmart

 

ABOUT THE EVENT

This session was part of the Global Forum for Responsible Recruitment convened by the Institute for Human Rights and Business (IHRB). The session featured emerging innovative financing tools to incentivize responsible recruitment practices and explore the potential impact and benefits of these models for workers, recruiters, and employers. Specifically, the panelists focused on the outcomes-based smart subsidy model recently introduced by Social Finance and the outcomes-linked favorable finance model explored by the Labor Mobility Partnerships (LaMP). The goal of the session was to encourage participants to explore how financing solutions may be relevant tools to foster responsible recruitment in their contexts.

LaMP Flights: Improving Central Americans’ Access to Job Opportunities within the Cruise Industry 

FAVORITE MESSAGE:

Guatemalan workers have a strong value proposition. Cruise guests want to see more workers that represent the countries they are visiting on their vacation to have a more genuine experience.

MAIN TAKEAWAY:

Creating a pipeline of qualified and trained job seekers from Guatemala can help respond to the labor shortages of the cruise industry and create more job opportunities for workers. The cruise industry operates on a global level and can offer competitive wages, professional growth, and an opportunity for workers to see the world. However, for Guatemala to unlock this opportunity, workers need better access to English language and hospitality skills trainings, including access to funding as well as enough time to invest in these trainings, and a formalized recruitment industry in this sector that can respond quickly to the growing needs of the cruises.

LaMP TEAM REFLECTION:

The LaMP team kicked-off a series of scoping trips to dive deeper into opportunities for intra-regional labor mobility in Ibero-America. First, the team traveled to Guatemala to get a better understanding of the worker supply side. We met with stakeholders in Guatemala to better understand the potential impact of increasing job opportunities in the cruise industry for Guatemalan workers. Specifically, we discussed the matter with the government, non-profit organizations, training institutions, and recruiters, who could possibly support building of responsible recruitment industry within the sector, meeting the needs of the cruises while expanding the pool of circular employment opportunities for Guatemalans. During these meetings LaMP discussed concrete concerns and strategies to better prepare jobseekers for the industry, improve institutional collaboration, and reduce the risk of exploitation for workers who wish to work at sea.

The following week, we participated in the Florida Caribbean Cruise Association (FCCA) Annual Conference in the Dominican Republic to get more insights into the employers’ perspective and needs. At the conference, we discussed employment needs in the industry, especially following the halt during the COVID-19 pandemic. During the opening ceremony speakers emphasized that hiring more workers from the Latin American region  is one of the industry’s key priorities. The LaMP team engaged with cruise executives and delegates from the region to better understand the cruise lines recruitment challenges and how to harness opportunities specifically in Central America. To successfully increase hiring in Central America for cruises, countries need to create a qualified pool of candidates that is trained, ready to live at sea and speaks English. It is critical to establish a reliable and responsible recruitment market that can respond to the industry’s needs, match workers to jobs and prevent exploitation. Governments need to coordinate closely with cruises to ensure workers are trained according to their needs. And cruises need to coordinate closely with governments to ensure that a responsive recruitment market is set in place.

The LaMP team now takes this knowledge to start designing a pilot, helping incentivize jobseekers to invest in trainings which can ultimately result in a job offer in the cruise industry, while also channeling the cruise lines’ interest to hire from Guatemala and Central America more broadly. The team is now working with cruises, recruiters, training institutions and other stakeholders that expressed interest in continued collaboration.

To stay tuned for more details, don’t forget to sign up for our newsletter here and follow us on twitter!

“Entitled” Podcast S2E26: Global Inequality: How Should Countries Share Their Wealth?

PRESENTERS

Branko Milanović, the world’s leading economists focused on inequality

James Robinson, economics and political science professor at University of Chicago

Rebekah Smith, Executive Director of Labor Mobility Partnerships

ABOUT

While borders have the ability to divide countries both politically and socially, wealth drives an even bigger wedge between us. How do we make sense of the fact that the wealthiest country in the world, the United States, borders one of the poorest countries: Mexico? Despite efforts to mitigate this, global wealth inequality still appears to be growing. According to the World Inequality Report, the poorest half of the global population owns just 2% of the total global wealth.

In this episode of the Entitled podcast explored some of the ways we could fix global wealth inequality.

Economics of International Wage Differentials and Migration

Original publication: Oxford Research Encyclopedia of Economics and Finance

The key question for the economics of international migration is whether observed real wage differentials across countries for workers with identical intrinsic productivity represent an economic inefficiency sustained by legal barriers to labor mobility between geographies. A simple comparison of the real wages of workers with the same level of formal schooling or performing similar occupations across countries shows massive gaps between rich and poorer countries. These gaps persist after adjusting for observed and unobserved human capital characteristics, suggesting a “place premium”—or space- specific wage differentials that are not due to intrinsic worker productivity but rather are due to a misallocation of labor. If wage gaps are not due to intrinsic worker productivity, then the incentive for workers to move to richer countries is high. The idea of a place premium is corroborated by macroeconomic evidence. National accounts data show large cross-country output per worker differences, driven by the divergence of total factor productivity. The lack of convergence in total factor productivity and corresponding spatial productivity differentials create differences in the marginal product of factors, and hence persistent gaps in the wages of equal productivity workers. These differentials can equalize with factor flows; however their persistence and large magnitude in the case of labor, suggest legal barriers to migration restricting labor flows are in fact constraining significant return on human capital, and leaving billions in unrealized gains to the world’s workers and global economy. A relaxation of these barriers would generate worker welfare gains that dwarf gold-standard poverty reduction programs.