Guatemala has a lot of potential to utilize the U.S. H2A agricultural seasonal worker program successfully (in terms of scale and quality). There is unprecedented political will and industry interest to ensure it grows exponentially and that workers are recruited responsibly. Guatemala has an abundance of hard-working people waiting for an opportunity to migrate for work. It is also home to several established conscientious recruiters serving seasonal worker schemes in Canada that could support the expansion of the H2A program in Guatemala.
LaMP TEAM NEXT STEPS:
The LaMP team met with various stakeholders, including government, local CSOs, migrant workers, recruiters, international NGOs, and grass-roots organizations, in order to better understand the impact potential of the growing the interest in the H2A program in Guatemala, as well as the recruitment process, constraints and opportunities of U.S. seasonal worker schemes.
During these meetings LaMP discussed concrete concerns and strategies to increase employer demand, improve institutional collaboration, and reduce the risk of exploitation for workers who wish to participate in the programs.
The LaMP team is now preparing a diagnostic of responsible recruitment market potential in Guatemala and follow-up consultations with recruiters, who 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!
Responsible recruitment has a cash flow problem. In this blog, we present the problem and some ideas about solutions that tie access to finance to responsible practices. Rewarding ethical recruitment by solving cash flow constraints may tip the scales in favor of responsible firms, who have historically struggled to scale.
Imagine you own a small staffing agency that recruits workers from your home state in Mexico and places them in seasonal harvesting jobs in the U.S. each year. You want to serve the workers you recruit well, without charging them unnecessary or illegal fees, and help them get good jobs abroad with good pay (sometimes as much as 20x more than local salaries). The workers you serve are low-income, so fees of a few hundred dollars may force them into debt just to access a job.
Your clients, U.S. farms who employ these workers, don’t pay you for your services until several weeks after the workers arrive on site. But to get the workers to the jobsite, you have all sorts of upfront costs, including staff time, visa fees, and travel and lodging for the workers as they make the trip from their homes. Because your business is small with limited physical assets, you can’t get a loan from a bank to cover those upfront costs. You essentially have two options to get the cash you need to deliver on a staffing contract: (1) ask your clients – the farms – to pay upfront, or (2) charge the workers fees.
Suppose you want to do the right thing and not charge the workers. This may not just be ethical but also makes good business sense because it increases worker loyalty to you and the farm and may be a selling point for farms concerned about their own social impact. You could ask your clients if they will cover at least 75% of your total costs upfront. But most other staffing agencies charge workers fees and therefore appear to offer your clients a better (financial) deal, undercutting you and taking market share. Now what do you do? How can you grow your business? How can you be price competitive as a morally responsible recruiter with limited or no cash-in-hand and reserves?
Limited working capital is a challenge faced by responsible labor recruiters operating in cross-border markets across the world. Responsible recruiters are “double bottom-line” agencies committed to respecting workers’ rights while serving employer clients. They commit to a series of ethical practices and have mechanisms in place to avoid fraud and extortion of workers seeking employment abroad. And as a rule, responsible recruitment agencies do not charge workers illegal or unfair fees.
Becauseresponsible agencies don’t charge workers fees, they are at a competitive disadvantage. Unscrupulous recruiters that charge workers unfair or illegal fees can use this revenue as working capital. In effect, worker fees “solve” the liquidity problem for recruiters, absorbing the risk and debt burden from the firms.This in turn allows these agencies to offer more favorable terms to their clients (the employers), undercutting responsible agencies in the market.
These disadvantages limit the growth of responsible recruitment and have real human costs. Illegal and unfair fees can force workers into severe debt and forced labor situations. Sadly, worker fees, fraud, and exploitation are widespread, and horrific cases all too often make headlines. The problem is only growing more urgent as demand for temporary foreign labor explodes (see Figure 1 for an example from U.S. agriculture) – fueling the expansion of recruitment markets and the number of people at risk of exploitative practices.
Figure 1: The US H-2A program for agriculture, like many other temporary visa programs, is growing rapidly, along with its corresponding recruitment industry
Source: Rural migration news, UC Davis
If we want responsible recruitment to scale, we need to solve the challenges facing responsible firms. This includes shifting the financing ecosystem within which responsible agents operate so that they can get the working capital they need to serve workers and employers at scale. Solving this challenge will require new ways of financing and incentivizing international recruitment that encourage capital to flow to responsible agents.
Here are three preliminary approaches that might help move the needle:
1. Blended outcomes-based debt financing could provide responsible recruiters with low-cost loans to cover their working capital needs. Eligibility could be tied to certain quality standards that recruiters must meet. These standards would initially include the demonstration of systems and processes that ensure responsible practices. For repeat borrowers, future loan eligibility could incorporate independent measures of positive worker outcomes from past contracts. This option would most likely attract smaller recruiters or new entrants who have no access to traditional sources of financing and who would benefit from increased market exposure tied to their participation. This approach would require significant philanthropic or patient capital to de-risk or subsidize the loans made to responsible agencies.
2. Supply chain finance models involve commitment of up-front capital by larger, downstream actors (think large retail brands) conditional upon adherence with quality standards and continuity of vendor supply. Assuming the quality standards address unethical labor recruitment, this approach could solve cash-flow problems for recruiters while also reducing the risk of supply chain disruption for the downstream corporations. This model would also transform recruiters into ‘partners’ rather than ‘agents’ of their clients, allowing both parties to plan around and invest in a longer-term relationship defined not only by quantity but also quality. In theory, cheap loans sponsored by supply chain leaders would be attractive to any labor provider or employer. Yet slim profit margins and fierce competition in the industry may limit the pool of brands and retailers who would be willing or able to finance this sort of investment. As a result, this approach may work best in premium markets with clear product differentiation where retailers are more willing to invest in ensuring the supply of specific products (for example, certified organic foods), and in markets where sole-sourcing agreements are common.
3. Increased venture investment would target specific recruiters and invest in those which look especially promising in terms of growth and good practice. Whereas the first two ideas are lighter-touch and open to any recruiter that meets eligibility requirements (either for outcomes-based loans, or for supply chain finance), this third option is a more intensive engagement and ‘eligibility’ would be assessed on a case-by-case basis. This idea would be most likely to work for recruiters who already demonstrate a clear track-record of responsible practices and good potential for growth.
Of course, working capital constraints are just one challenge responsible recruiters face in the market. They may also absorb other risks that ‘standard’ recruiters shift onto the shoulders of workers or employers, such as the risk of failed visa applications, poor job matching, and abscondment. Given the complexity of these challenges, no single solution is a silver bullet. Nevertheless, access to working capital can give responsible recruiters some breathing room, and provide them with the liquidity they need to undertake proper vetting, training, and protection of workers. Quality, alongside quantity, will help ensure that employers, workers, and responsible recruiters alike reap the benefits of efficient and fair mobility pathways.
Getting responsible recruitment right at scale is critical.
Aging populations mean that employers must increasingly look abroad to find the labor they need. At LaMP, we think these trends can be harnessed as a force for good. Workers who move from poorer countries to richer countries can dramatically increase their earnings. For instance, young people who move from Kenya to study and work in Germany may increase their annual income by a staggering 1,563%. This can be life changing. If workers return home, they invest this money in their families and communities. If they can stay, and choose to do so, they still likely send money home as remittances (an important contributor to GDP in poorer countries). And there is evidence that outmigration for work opportunities contributes to a “brain gain” effect in the sending country rather than the feared “brain drain.” In short, the upside of doing international recruitment well is enormous, and the number of lives touched by labor recruitment is only set to increase.
But all these potential benefits are only realized if recruitment systems work for both employers and workers. We’re looking for partners to help us redesign the playing field, so that responsible recruiters have the edge they deserve. If you have thoughts, reactions, or ideas on any of this, please reach out – we’d love to collaborate with you.
The research included in this blog was made possible in part through funding by the Walmart Foundation. The findings, conclusions, and recommendations presented in this blog are those of Labor Mobility Partnerships along, and do not necessarily reflect the opinions of the Walmart Foundation.
LaMP has been working with responsible recruiter, CIERTO, to ensure workers’ perspectives are incorporated in the work that we do, including how we define “responsible” recruitment. The team was able to listen to workers’ concerns, expectations and ideas on the H-2A program, how to improve it and increase access for others. This was also an opportunity to learn from CIERTO’s practices and community engagement.
LaMP TEAM REFLECTION:
Kim and Mel from the LaMP’s North America team traveled to Huahuaxtla, Puebla, and met with 30 workers who had and had not worked in the United States under the H-2A agricultural seasonal worker program previously. Transparent and comprehensive information was the number one priority for workers in the recruitment process, and in-person community engagement was considered the best way to establish trust between recruiters and workers. This trip also helped shape methodologies, questions and practices for gathering worker perspectives, so the exercise can continue to be replicated in other LaMP projects.
The LaMP team is synthesizing the learnings from this trip and working on a blog which will be posted later! To stay tuned for more details, don’t forget to sign up for our newsletter here and follow us on twitter!
The year 2021 was a watershed year in the world of labor mobility: one where previously unthinkable policies were suddenly on the table, where the impact of labor shortages abruptly and dramatically entered the public consciousness as well as Board rooms, and where for perhaps the first time in history, high-income countries began to ‘compete’ for migrant workers. Everywhere we saw the signs of a new coming era; one defined where mobility is a necessity and the question is not if but how.
It was a watershed year for LaMP as well – in 2021, we doubled the size of our team, raised $3.5M in new multi-year grant commitments, defined our core values, and launched several big programs of work. We learned a lot through this growth, and want to take some time as we close out the year to share what we learned with you.
In 2021, we came a long way in articulating LaMP’s unique role and strategy and got to work:
We fill a unique gap in our field. LaMP is the only organization dedicated solely to expanding rights-respecting labor mobility for migrants workers as a global public good. Towards this end, our goal is not to be a service delivery or research organization ourselves, but to expand our field through demonstrating solutions and influencing decision makers. This approach lets us be much more ambitious about our potential impact than if we tried to act alone, and we have received significant interest in and support for our unique approach to designing scalable, market-viable, and rights-respecting solutions.
We build practice over policy. Much of the work in the labor mobility field takes a policy-first approach, crafting top-down regulatory approaches that often fail to play out in practice. At LaMP, our philosophy is “good practice leads to good policy” – we work within existing policies and regulations to improve the design and functioning of labor mobility and recruitment systems, feeding the findings of this work back into better policies. In 2021, we began testing this philosophy through our portfolio of work seeking to improve outcomes in the US H-2A program by developing market-viable strategies to improve recruitment practices.
We got messy and embraced complexity. Because poverty alleviation is at the heart of our mission, we exclusively focus on workers disadvantaged by existing migration systems. In the past, our field would have referred to this as a focus on ‘low-skilled workers,’ but as we explored it’s much more complex than that, with this group both offering essential skills and being disadvantaged through intersecting lenses of classism, racism, and nationalism. As a start, we’ve switched to the term ‘migrant workers’ (feedback welcome!), and now are on to the harder work of considering how these intersecting lenses affect our approach. Stay tuned in 2022 for more on that.
Through our rapid growth in 2021, we identified new challenges:
Thinking globally while acting locally. It’s a bumper sticker slogan, but was an important learning for us this year. While LaMP’s mandate is global, we found that the only way to be effective and get the trust of needed stakeholders is to be deeply embedded in the region/sector (in the ag industry for example), understanding the needs and challenges down to the names of specific immigration forms, common frustrations faced by employers, which crops require the most training, etc. This has two important implications for our work moving forward: (1) while maintaining a global mandate, we’ll be choosing priority regions and sectors and zooming in on those, and (2) we will be looking to build a roster of industry/region insiders to embed in our work.
Can we be all things to all people? LaMP’s work necessitates that we work with stakeholders with very different goals, who do not see themselves as part of the same field. To work on scaling mobility programs, we need to work with employers to design systems that are responsive to their needs — and to work on improving the quality and outcomes for migrants in mobility systems, we need to work with established advocacy organizations dedicated to protecting workers’ rights. LaMP sees these as going hand-in-glove, and all of our work deliberately targets solutions that can simultaneously scale and improve outcomes. However, this is a unique view in this space, and we are still working on bridging our partners’ very disparate views both in our work and our approach to strategic communications. In the end, we hope to build a coalition of ‘strange bedfellows.’
How do we get people to recognize missed opportunities as active harms? Successful movements are most often built around tangible and active harms; it is much more difficult to get people to care about missed opportunities for good. This creates a challenge for LaMP, as our constituency is future migrants more so than present ones – we work on behalf of the billion people who would like to migrate but are not able to do so. While many of these people will live and die in poverty, constituting very active harm, these harms are often ignored as people choose not to connect them to the absence of opportunities to migrate.
How can we open new doors? LaMP works both to open new migration opportunities (‘scale’) and to improve existing migration opportunities (‘quality’). Unsurprisingly, we have found much more appetite for work on quality over scale, which requires influencing government action. In 2021, we have pursued two strategies to scale – (1) through policy changes and (2) by improving the implementation of existing policies. It’s too early to tell which strategy might work and where, but we will continue trialing them in 2022.
In 2022, we are prioritizing three things (and you can help!):
We are piloting a sector-based approach. Because the needs and dynamics within individual sectors are so unique, we have found it more successful to identify opportunities for demonstrating scale by starting with a sector rather than starting with a country. This also allows us to partner with sector-based bodies as champions for expanding mobility opportunities. However, while this has become common wisdom in the labor mobility field, few actors have managed to successfully implement this approach. While we will be trialing our lessons on targeting and embedding deeply, we’re looking for your suggestions – which sector actors should we be talking to? Who should we bring on as expert consultants? What have you learned about successful approaches?
We will more actively feed what we learn back into the policy realm. This year we have been largely looking inward, exploring questions around our theory of change and feeding it back into our work. That was needed work and we have made important strides, but in 2022, we promise to more actively share what we are learning with all of you! You tell us – what of our work would you like to learn more about? What questions relating to labor mobility should we explore that would be most helpful in your work?
We are committed to centering the worker experience. Both we and most organizations in our space are guilty of speculating about what matters most to workers and how they evaluate migration opportunities – what do they think is a good job? How long do they want to migrate for? What is most important to their well-being during migration? In 2022 and beyond, we are committing to directly consulting with worker representatives on these and other critical questions, to ensure that their well-being and economic advancement is the center of our work.
As we close out 2021, I invite you to share what you have learned with us. At LaMP, we are dedicating 2022 (and every year after) to building a world in which more people have the opportunity to safely migrate, and look forward to working with you to make that vision reality!
November 4th, 2021, Washington, D.C. – Labor Mobility Partnerships’ (LaMP) initiative to strengthen and unlock the value of quality recruitment within the H-2A seasonal agricultural workers program has received support from the Walmart Foundation.
LaMP will work with leading H-2A recruiters and key stakeholders in the ag labor supply chain to support the growth and development of professional, quality recruitment operations in North American agriculture. The initiative represents an opportunity for industry partners to engage in making professional recruitment the standard business practice. LaMP’s approach focuses on market-compatible strategies and solutions to recruitment challenges with the ultimate goal of making H-2A work better for everyone.
Originally published on Policy Options August 19, 2021 here.
Special note: This post was originally written for a Canadian audience, therefore the language within this article reflects the labor mobility challenges faced by their country.
Labour shortages and aging demographics mean we’re relying on migrants to fill critical jobs. We need a streamlined program to meet these demands.
This post was published also at the Center for Global Development (CGD) website here.
High-income countries depend on immigration to help foster strong societies and economies. Yet when deciding who is allowed to enter, most use a simple dichotomy based on educational attainment: “high” and “low” skilled.
In this blog, based on a new policy brief by Labor Mobility Partnerships (LaMP) and discussions at a recent LaMP-CGD co-hosted event, we outline why this dichotomy is wrong, and how high-income countries can build mutually beneficial migration pathways at all skill levels.
Because there is no explicit general definition of a high-skilled versus low-skilled worker, such categorizations are often arbitrary and sometimes even contradictory.
To increase the overall complexity of their economies, and thus boost growth, high-income countries need a much broader variety of abilities than the traditional low- and high-skill dichotomy, which is solely based on a worker’s level of schooling.
Rather than using the arbitrary education-focused definitions of skill levels, labor mobility schemes should focus on the capabilities needed by employers hiring sectors, including a worker’s ability to learn and develop new skills during their employment in the host country.
Implementing better quality labor pathways for foreign-born workers with a broad variety of skills would add to the overall economic growth of the receiving countries while also assisting native-born workers with their own realization and potential career advancement.
An economy is a complex system, under which each worker’s skills and specialization has its own value that complements the capabilities of others—a process that ultimately leads to increased overall economic growth. As Hausmann found, complexity is in fact at the center of countries’ economic growth and development.[i] The argument may be easier to understand using the following metaphor. A simple economy makes bread, which only requires a few ingredients, including a great deal of flour, but no eggs. A more sophisticated economy produces both bread and cake, the latter of which requires flour and eggs. And an even more sophisticated economy might produce a variety of breads, pastries, and cakes, which requires the specialized skills of a chef, who can create new recipes using existing and new ingredients. Note that each of the economies still need flour to produce their goods. In terms of migration, high-income countries strive to attract more entrepreneurs, information technology (IT), and other experts with advanced degrees to continue expanding the range and depth of sophistication of their economies. However, the “recipes” for modern economies still require “flour”—in other words, there is still a need for caregivers for the young and the old—as well as cleaners, roofers, painters, and retail workers; and many employers in high-income countries struggle to fill these and other jobs due to increasing labor scarcities.
All workers—whether native- or foreign-born—offer a wide range of skills and abilities, from social and cultural skills to those learned from previous experiences or even at school, which advances and increases the complexity of an economy. And yet, when it comes to foreign-born workers, many existing labor mobility systems in high-income countries traditionally use a dichotomy based on educational attainment, simply splitting the workers into two groups: high–skilled or low-skilled. So-called high-skilled workers typically have at least a four-year degree and work as IT experts, medical doctors, scientists, or other professionals that require a postsecondary degree; while so-called low-skilled workers have less schooling than a bachelor’s degree and work, for example, as agricultural and construction laborers, welders, and caregivers.
In fact, the capabilities of foreign-born workers represent a kind of “skills mix,” consisting of educational attainment and knowledge of another language, skills acquired through previous or current employment, and interpersonal and other social skills. In other words, a foreign-born worker brings an entire package of abilities, which could possibly help both companies in employing sectors of high-income countries as well as workers and their families in their countries of origin if a worker decides to return. However, for a country to bring in a variety of workers with a broad range of skills, it needs flexible mobility pathways that allow for the safe entry of workers with skill sets that correspond to the needs of the host country’s economic sectors. Moreover, data show that, when combined with other enforcement measures, implementation of additional quality labor mobility programs for workers with diverse skill sets could help reduce irregular migration channels.[ii]
Nevertheless, high-income countries are not particularly willing to admit additional foreign-born workers who possess a broader array of skills. High-income countries have frequently demonstrated the political appetite for developing pathways to admitting highly skilled foreign-born workers to work in sectors, such as IT, medicine, and science. Since professions in these fields have clear and established training and certifications systems, it is easier for high-income countries to label them high-skilled. However, other occupations that require extensive training are not likewise recognized. Employers and workers in construction, care work, tourism, and similar fields are therefore often at a disadvantage due to the failure of countries to develop adequate mobility pathways that recognize the skills and training that is required for these sectors. Although the inclination toward highly skilled workers stems from a variety of factors, data show that many foreign-born workers traditionally labeled as low-skilled due to their lower level of schooling in fact play important roles in the lives of native-born workers and help increase overall productivity. Receiving countries may find that it is more beneficial to base labor mobility schemes on sector needs rather than on the educational level of workers.
Implementing additional quality mobility pathways for foreign-born workers with a broader variety of skills would increase economic complexity for both the receiving high-income countries and the sending countries because workers returning home can continue to use and teach others their skills. Research shows that such new abilities may make workers more attractive to potential employers or, in combination with accumulated savings, potentially allow them to open businesses of their own and train people in their native countries.[iii] Moreover, upon their return, workers can capitalize on their acquired skills to secure jobs that require higher skill levels and that provide better salaries than those they could have obtained prior to their migration.[iv] For example, a study on returnees to Brazil, Chile, and Costa Rica reveal that such workers are overrepresented in highly skilled occupations and underrepresented in least-skill trades.[v] A separate analysis by Natasha Iskander, focused on Mexican construction workers in Philadelphia, Pennsylvania, and Raleigh-Durham, North Carolina, revealed that “as immigrants move their knowledge from one labor market context to another, they change its form and composition.” The change is so radical that “it is more accurate to say that it is transformed, rather than merely transferred.”[vi] Increasing and improving mobility systems for workers with all kinds of skills and abilities, not only for those with a high level of education, could be a powerful tool in the development strategies of high-income countries because the resulting increase of economic complexity also impacts countries of origin.
The Traditional Dichotomy of Foreign-Born Workers’ Skills
Workers are typically considered skilled if they have reached a specific level of education, if they have obtained specific certifications, or if their expectedpay levels or wages are above a certain threshold. However, the exact definition of skilled varies by country as each sets its own eligibility criteria and types of visas.[vii] Moreover, when discussing labor mobility, politicians, economists, and other experts tend to use rhetoric that splits workers into two groups—high-skilled and low-skilled.[1] High-skilled workers typically have at least a bachelor’s degree and engage in positions such as IT experts, medical doctors, and scientists. Low-skilled workers usually have less schooling than a four-year degree and tend to be engaged as agricultural or construction laborers, welders, caregivers, and cooks. This dichotomy has been used as an actual basis for the migration systems of high-income countries. The United States, for example, defines highly skilled foreign-born workers as those who have earned at least a bachelor’s degree;[viii] all other workers are considered low-skilled. In Europe, countries tend to establish their migration systems along the two skill levels as well. Spain, for example, defines high-skilled workers as those with at least a graduate degree.[ix] Japan issues its highly skilled professional visas to applicants seeking jobs in academia, engineering, and business management, which typically require doctoral or master’s degrees.[x]
Even when countries use other characteristics to divide foreign-born workers into groups, they still tend to end up with similar groups of “high” and “low.” Canada, for example, changed its system in 2014 to define its two categories of workers based on their wages rather than on their skills. The country’s temporary foreign-born worker program has been divided into two categories: high-wage workers, including positions offering wages at or above the established provincial or territorial median wage, and low-wage workers, with pay below the median wage level. In fact, however, the occupations in these two categories basically cover the same positions as the previous system of high- and low-skill, which divided foreign-born workers based on if they had obtained a postsecondary education or formal certification.[xi] Although this may be a less value-laden way to classify foreign-born workers, it still serves to give preference to one group over another.
This dichotomy toward foreign-born worker categories is problematic for multiple reasons. First, the overly rigid and simplified skills definitions often limit mobility pathways for workers who might have some postsecondary education or training but who lack a four-year degree—middle-skilled workers. In the United States, reports show that about 52 percent of jobs require mid-level skills,[xii] and 69 percent of human resources executives claim that their firm’s performance is often impacted by their inability to attract such talent.[xiii] Additionally, estimates indicate that middle-skill occupations will represent the largest share of overall job openings in the United States through 2024.[xiv] The Organisation for Economic Co-operation and Development (OECD), which defines middle-skill jobs as occupations with average wages “in the middle of the occupation-wage distribution”—a definition that does not even reflect the actual skills of the workers—says that these occupations represent slightly over 30 percent of the total employment in member countries.[xv]
Although some countries recently introduced programs for certain middle-skill occupations, such as caregivers, only a few countries’ migration schemes recognize middle-skilled foreign-born workers as a standalone stream.[2]Therefore, middle-skilled workers are often categorized as low-skilled and thus restricted to the same few pathways merely because they do not meet the high-skillthreshold, regardless of their having training and certifications in their fields. This is the case in Spain, for example, giving employers very limited options for closing their job gaps by hiring from abroad.[xvi] As a result of such an approach, many foreign-born workers from the construction and health care sectors are considered low-skilled[xvii] even though they possess certifications in their field. They are then offered fewer and more restrictive mobility pathways than workers recognized as high-skilled.
Employing Sectors Need More Skills than Schooling
Another important issue with the skills dichotomy in countries’ labor mobility schemes is that it overlooks other difficult-to-measure skills that workers also bring to the receiving country, such as technical, social, and cultural abilities, and interpersonal competencies. Businesses are increasingly interested in workers with critical thinking, interpersonal, learning, and other soft skills. In a recent survey, the majority (65 percent) of U.S. employers claimed that soft skills are in the highest demand.[xviii] In other words, educational attainment alone cannot fully describe the actual skills of a foreign-born worker. There are other abilities and expertise that workers gain through specialized training or informally by performing their jobs.
The narrowly defined skill levels used in high-income countries’ labor mobility schemes often diminish the value of workers—native- and foreign-born—in occupations typically labeled as low-wage or low-skill. And yet studies show that foreign-born workers, who are considered low-skilled due to their lack of schooling, are “in fact quite skilled.”[xix] A recent study on work and mobility among Mexican migrants working in low-skill occupations in the United States show that a lack of schooling and credentialing does not correlate with a foreign-born worker’s “lack of ability, desire to learn, or ambition to advance in life.” It also found that foreign-born workers with low levels of schooling still bring skills from their home country that they use in the United States. For example, in the construction sector, nearly two-thirds of the interviewed foreign-born workers confirm that they had previous experience in their home countries, and about half say they use these skills at their jobs in the United States. Moreover, agricultural workers, who are often characterized as “easily replaceable, transient, and unskilled labor,” showed “substantial skill transfers, skill development, and social mobility.”[xx] Similar trends were reported in other sectors as well, including retail, hospitality, and personal services.[xxi] Further, the study finds that over three-quarters of the respondents had learned new skills abroad, sometimes through their occupations, including agricultural work, which typically offers only a few mobility pathways.[xxii]
The dichotomy based on workers’ schooling does not reflect the actual skills and value that workers bring to the receiving high-income countries and their societies. It is impossible to fully assess the ability of workers solely based on their schooling. In other words, workers’ abilities represent a “skill mix,” consisting of a wide range of skills and abilities gained through a variety of sources, rather than just through educational institutions. Clearly, the skills dichotomy, often used to create mobility schemes in high-income countries, completely ignores the experiences of workers from previous employment as well as their soft skills and ability to learn, which are often more important to employing sectors seeking to fill these so-called low-skill positions.
The seemingly simple skills dichotomy used for many high-income countries’ mobility schemes prevents employing sectors from bringing in the variety of workers they need, and thus hampers the process of increasing complexity in the involved economies, ultimately limiting their growth and development. For example, the construction industry needs all type of workers, including engineers, construction managers, electricians, carpenters, and laborers.[xxiii] Manufacturing companies hire researchers and scientists as well as machinists, welders, and cutters.[xxiv] However, the structure of mobility systems often makes it more difficult for employers to hire workers from diverse backgrounds because the employer must navigate multiple programs—some for highly skilled workers and others for less skilled workers. Rather than basing mobility systems on a worker’s education level, the receiving countries should consider sector-based schemes focused on the needs of the employing sectors and the overall economy.
Lastly, but perhaps most importantly, while the label low skilled might imply little value, in fact, such workers provide essential services to the public.[xxv] The health care industry, for example, often devalues women’s work, reflected in a 28 percent gender pay gap, with other industries and professions, such as janitors and maids and house cleaners, facing similar challenges.[xxvi] Combined with restrictions on the admission of foreign-born workers imposed by host countries, migration schemes often disproportionately block women’s migration, especially in occupations such as nurses, caregivers, and sometimes even domestic workers, which are not recognized as “skilled” even though they require a certain level of training.[xxvii] However, it is not only women who face devaluation of their work, as the same trends can be seen in other industries that primarily employ male workers, who are also frequently undervalued and face many migration restrictions.
High-Income Countries Face Labor Scarcity
Economists have long argued that the division of labor is the ultimate formula for a country’s wealth. As the “recipe” analogy at the beginning of this note describes, due to the specialization of companies and their workers in a variety of activities, as well as the interactions among them, a country’s economy becomes more complex, ultimately increasing economic efficiency. The complexity of a country’s economy therefore plays a central role in its economic growth and development.
However, due to inevitable demographic changes caused by low fertility rates and aging populations, the workforces of high-income countries are shrinking.[3] This keeps employers from being able to hire enough workers with the required skills. These trends have resulted in an unprecedented scarcity of workers[4]—a problem that employers across industries cannot address by simply increasing wages (table 1).
Table 1. Total Job Scarcity in Select High-Income Countries, Pre-Pandemic
The ongoing COVID-19 pandemic has caused economic swings as many businesses were forced to close their doors, and millions of employees around the world were furloughed, but long-term demographic trends are unlikely to change. Instead, data suggest that the situation will likely worsen (table 2).[xxviii] Labor mobility can serve as an effective policy tool for increasing the complexity and thereby the overall growth of the economies of both sending and receiving countries. Foreign-born workers, who return home after a time in the receiving country, bring back with them new and more developed skill sets, which allows them to enhance the economies of their countries of origin.[5] At the same time, labor mobility can, at least partly, alleviate the labor scarcity experienced by the employing sectors of receiving countries.
Table 2. Projected Total Job Scarcity in Select High-Income Countries
Therefore, some high-income countries have begun to explore ways to bring workers from abroad. For example, Germany began to enforce its new immigration rules in early 2020 to provide more opportunities for workers from outside the European Union (EU).[xxix] The United Kingdom also introduced a new immigration system in 2020, following the country’s exit from the EU.[xxx] Canada made considerable changes to its system in 2014[xxxi] and launched a number of new pilots in 2019.[xxxii] Nevertheless, rather than focusing on employing sectors’ needs, the new mobility pathways are often targeted primarily at workers they consider skilled.
However, many sectors that struggle the most with worker scarcity need workers typically considered low- or middle-skilled. In the United States, occupations that do not require any degree, including home health and personal care aids, as well as fast-food counter workers and restaurant cooks, were among the jobs with the largest absolute growth in worker demand projected for 2019–2029.[xxxiii] In 2020, European countries reported shortages in occupations such as nursing, plumbers, cooks, heavy truck drivers, and welders.[xxxiv] Although the pandemic exacerbated the alarming need for “low-skilled” essential workers in health care and agriculture, scarcity had already hit these sectors as well as the tourism, construction, and manufacturing sectors in the preceding years. Care work is among the essential sectors hit hardest by worker scarcity, with Australia expecting 250,300 job openings by 2023,[xxxv] and the United States expecting 7.8 million job openings by 2026.[xxxvi] Additionally, the Canadian farmworker deficit is expected to double by 2029 from the 16,500 reported in 2017,[xxxvii] and the Australian[xxxviii] and U.S.[xxxix] agriculture sectors have been stressing the need for more workers as well. Further, 81 percent of U.S. construction businesses reported struggles finding qualified workers in 2020,[xl] expecting to be short 747,000 workers by 2026,[xli] and UK contractors reported difficulties with recruiting as well.[xlii] Even before the pandemic, U.S. construction firms reported 434,000 vacant jobs in 2019,[xliii] and Germany had approximately 225,000 unfilled positions in the construction sector in 2018.[xliv] With regard to the tourism sector, over two-thirds of surveyed German hoteliers and restaurateurs reported that a lack of workers was their top issue.[xlv] Overall, it is clear that sectors employing low-skilled workers in a variety of high-income countries are facing worker scarcity. And yet, the nations have been struggling to introduce an effective labor mobility program to sufficiently fill such gaps.
High-Income Countries Favor High-Skilled Migrants
Despite employers’ proven need to fill their low-skill openings, it has been difficult for foreign-born workers without any or with only limited schooling to come and work in high-income countries. In fact, during the past few years, the political appetite among EU member countries for the opening of new mobility pathways and admitting foreign-born workers is less than what is needed by the employing sectors,[xlvi] even though such pathways could help reduce irregular migration—another issue of concern to many high-income countries over the past few years. However, to achieve the desired reduction, the expansion of new mobility channels would have to be established in a way that sufficiently increases the incentives for workers and employers to avoid irregularity, combined with other enforcement measures.[xlvii] Currently, even when a nation’s government does explore labor mobility as a solution to increasing labor scarcity, the efforts often target workers with college and university degrees.
That shift is dramatic compared to historical approaches toward immigration in high-income countries, such as the United States, Canada, and Australia. While a hundred years ago, these nations’ mobility schemes emphasized attracting laborers[6] to fill low-skill jobs in factories and mines or on farms and ranches, today the focus is shifted toward recruiting science, technology, engineering, and mathematics (STEM) and management-level workers.[xlviii] Nowadays, politicians in the OECD member countries compete to attract what they believe to be “the best and brightest”[xlix] while controlling and reducing other migration channels, including low-skilled worker mobility.[l] While mobility channels for high-skilled workers tend to provide permanent pathways to the receiving countries, channels for low-skilled migrants are usually temporary and very restrictive.[li] The temporary pathways tend to be seasonal despite the need of many employing sectors to fill other low-skill year-round jobs. While temporary pathways for low-skilled workers may be more politically feasible, their restrictive nature may ultimately hurt both the employing sectors and foreign-born workers due to the number of barriers and constraints that must be overcome just so the worker can remain in the receiving country for a limited time.
There are very few channels through which employers in high-income countries may bring in nonseasonal low- and middle-skilled workers. For example, the U.S. mobility system currently provides zero pathways for nonseasonal occupations requiring less than a college degree. While there are programs for highly skilled temporary workers with a postsecondary education and for seasonal agricultural and nonagricultural workers,[lii] no pathways exist for workers to fill the country’s year-round shortages in low-skill sectors, such as care work[liii] and certain manufacturing occupations.[liv] Switzerland does not even allow individuals from non-EU countries to work unless they are considered “highly qualified,” which means they must hold a university degree and have professional work experience.[lv] Similarly, the Netherlands only has a few pathways to bring non-EU low- and middle-skilled workers.[lvi]
Some high-income countries appear generally open to receiving more foreign-born workers, but their programs are primarily focused on the admission of highly skilled workers. France, for example, has been relatively more amenable to labor mobility as the country seeks new ways of closing its job gaps. However, its channels have been selective, prioritizing workers with more schooling above others. Despite the growing demand for low- and middle-skilled workers in sectors such as agriculture, hospitality, and care work, the emphasis has been on recalibrating the mobility of highly skilled workers and students, as well as on family and humanitarian migration.[lvii] Although Canada provides opportunities for low-skilled workers to come through its temporary channels, they are, in most cases, disadvantaged compared with high-skilled workers, who have been given a clear path to permanent residency.[7],[lviii] Moreover, the opening to more low-skilled workers in Canada has been accompanied by a series of restrictions imposed on the program regarding employment, social residency, and family reunification.[lix] The United Kingdom’s newly introduced point-based system also disadvantages low-skilled workers[lx] and encourages employers to “move away” from relying on hiring from abroad.[lxi] Greater openness toward highly skilled over less skilled workers has been characteristic of the mobility schemes of many Southeast Asian countries as well. Singapore, for example, has novel policies to attract “foreign talent” and regulations for employing less skilled “foreign workers.” Hong Kong has a strictly regulated program for low-skilled migrant workers and a more open one for those with higher-level skills, under which the worker does not need a job offer and can eventually settle.[lxii]
It is important to note that seasonal work represents a significant exception to the above-described trend, but even those programs are designed to restrict low-skilled workers’ access to host countries. In the United States, for example, the nonagricultural seasonal worker program helps employers fill job vacancies during peak seasons. However, even though the program covers all sectors with seasonal need other than agriculture, it has been restricted by an annual cap of 66,000 workers.[lxiii] Although employers in those sectors have been calling for an increase since the early 2000s when their need began to considerably exceed the 66,000 limit, the quota has remained constant since the 1990s, preventing more workers from entering the country.[8],[lxiv] This trend is apparent also in countries that have recently piloted new programs for admitting seasonal workers. In 2019, the British government announced the beginning of its Seasonal Workers Pilot, or the “Initial Pilot,” through which farmers can recruit a limited number of temporary workers.[9] The original pilot program was set up to provide visas for 2,500 seasonal migrant workers to come to the United Kingdom in 2019; the number increased to 10,000 in 2020;[lxv] and for 2021, the quota has been expanded to 30,000 workers.[lxvi] However, that is still far from filling the 80,000-worker gap reported by UK farmers.[lxvii] And what’s more, on its website, the UK government still calls for the recruitment of domestic workers and automation in effort to “move away from a heavy reliance on low skilled overseas workers.”[lxviii]
The Covid-19 pandemic, which caused an unprecedented shortage of essential workers, forced some high-income countries to implement fast-track immigration measures to address the situation, allowing more foreign-born workers with skill levels categorized as low or middle to come or remain for a longer period. Italy gave 600,000 undocumented migrants work permits in recognition of the need for these workers to provide care and put food on the table during the crisis.[lxix] Portugal has temporarily regularized all migrants who had applied for a residency permit before the declaration of the state of emergency. Despite border closures, Germany, the United Kingdom, Finland, and other countries have made special provisions to fly in seasonal agricultural workers.[lxx],[lxxi]In Canada, Prince Edward’s Island has fast-tracked immigration processes for health workers and truckers; and Nova Scotia has done the same for nurses.[lxxii]
Nevertheless, the argument that high-income countries tend to prefer and favor so-called high-skilled over low-skilled foreign-born workers is also evident in the discrepancy of the rights provided to each of the two groups. As Martin Ruhs suggests in his book The Price of Rights: Regulating International Labor Migration, programs targeting more highly skilled foreign-born workers tend to grant such workers greater rights than do the low-skill programs. This trend stems from the fact that the pool of highly qualified workers who are willing to migrate is relatively small, allowing selected individuals to choose among receiving countries, thereby prompting the competing destinations to offer high wages as well as more substantial rights. On the other hand, because the number of potential foreign-born workers willing to accept low-skill jobs is virtually unlimited, receiving countries often provide them with wages, employment conditions, and rights that violate local laws and are that fall significantly below international standards.[lxxiii] The countries of the Cooperation Council for the Arab States of the Gulf (GCC, formerly known as the Gulf Cooperation Council) are among the most open to low-skilled workers, representing a clear exception to the pattern described above. However, they also provide these individuals with very weak labor standards and limited rights. Singapore is similarly quite open to foreign-born workers while also imposing considerable restrictions on the rights of low-skilled workers. Despite recent efforts to raise the bar on worker protections, numerous reports continue to demonstrate how foreign-born workers’ rights are being abused.[lxxiv]
Why Are Low-Skilled Workers Out of the High-Income Countries’ Spotlight?
Lawmakers’ decisions regarding the regulation of the admission of foreign-born workers depend on national policy goals, such as economic efficiency and national security, given certain constraints, including domestic and international legal restrictions or a limited ability to control immigration flows.[lxxv] According to Ruhs, there are at least three reasons why high-income countries are more likely to favor highly skilled foreign-born workers: (1) they expect that such workers will better complement the existing skills and capital of their population; (2) they value the importance of human capital and knowledge for long-term economic growth as predicted by endogenous growth models; and (3) the dependence of the overall fiscal impact of immigration on workers’ earnings, which tend to be linked to their skills. In other words, a highly skilled foreign-born worker will likely pay more in taxes and be less eligible for welfare benefits than a worker with a lower skill level.
Since high-income countries tend to be quite knowledge-based, their lawmakers tend to think that recruiting “the best and brightest” in the “global competition to attract high-skilled migrants” will further speed up their countries’ technological advancement and development. A powerful lobby has helped shape the narrative around highly skilled workers, as hiring companies tend to be among the largest and best resourced to invest into their industry’s advocacy efforts. In the United States, for example, the most influential petitioners for high-skilled workers are multinational corporations, such as Deloitte, Apple, Cisco, Amazon, and Facebook, each with annual revenues in the billions of dollars. It is useful to compare this to the low-skilled nonagricultural temporary worker program in the United States, which serves companies from sectors such as landscaping and seafood processing, which generate much lower profits. There is nothing wrong with attracting highly skilled workers, but it should not be a country’s sole focus because employing sectors need workers with a wide variety of skills, experiences, and abilities.
Another explanation typically given by high-income countries to justify their preference for high-skill migration is the public attitude toward low-skilled workers. In 2018, a majority of surveyed individuals in high-income countries, including Sweden, the United Kingdom, Canada, Germany, the United States, and France supported high-skill migration (figure 1),[lxxvi] while at the same time, many saw low-skilled migrants as a burden and believed they were taking jobs away from native-born workers.[lxxvii] Some recent surveys conducted in high-income EU countries and the United States show that most people support quite restrictive immigration measures, especially against migrants from certain ethnic backgrounds, and would like to see a decline in immigration flows to their countries. These attitudes appear to be driven by sociopsychological factors rather than economic concerns.[lxxviii]
Figure 1. Public Support for High-Skill Migration in Select High-Income Countries
However, recent research showed that most people are not strictly for or against immigration but rather fall somewhere in the middle in that they are anxious, conflicted, or movable. Such individuals are usually quite open to some shifting of their views on immigration (movable), but they have concerns. This group is the most vulnerable to hostile narratives and misinformation spread by certain anti-immigration political actors, making it the main battleground for shaping public attitudes toward migration.[lxxix] At the same time, most people in this category could be convinced that their countries need more foreign-born workers at all skill levels if the argument were approached in a better way, demonstrating the economy’s need for these individuals. To address the hesitance of the “movable middle,” lawmakers in high-income countries should work together with immigration advocates to combat the hostile narratives around migration and come up with strategies to diminish misinformation and demonstrate the benefits that migrants bring to the society.
Figure 2. Grouping People based on their attitudes (including to immigration) in six countries
Despite the hostile narratives around low-skilled foreign-born workers, research reveals how important their roles are to the lives of people in the receiving high-income countries, and how much they increase overall productivity. Foreign-born workers often perform difficult jobs—mowing lawns, picking berries, washing dishes, or building roads, as examples. In other words, such workers add to the economic complexity described by Hausmann, and thereby contribute to the economic growth of the receiving country. Additionally, as foreign-born workers enter occupations that require lower skill levels, native-born workers tend to move away from such jobs and begin to improve their economic status. In the United States, data show that the increase in foreign-born workers entering the country who willing to engage in lower-skill occupations allowed the native-born population to become more educated and skilled and to pursue better jobs.[lxxx] A separate study reveals that low-skill immigration into the United States allows highly skilled women to decrease the amount of time they spend on household work and significantly increase the number of hours they can dedicate to their field, including law or medicine.[lxxxi] Similar research found that the outsourcing of household production to temporary foreign domestic workers significantly contributed to the increased labor force participation of women, especially mothers of young children in Hong Kong.[lxxxii] Overall, the research suggests that immigration reduces the total cost of household services, prompts the native-born workforce to become more productive, and helps highly skilled women work additional hours or have more children.[lxxxiii]
Conclusion
To increase the complexity of their economies and thereby boost economic growth, high-income countries need workers with a broad variety of skills and the ability to learn—not only workers with a particular level of schooling. Given the demographic challenges faced by high-income countries, foreign-born workers could help fill job gaps. However, the traditional dichotomy of low- and high-skilled workers, solely based on an individual’s level of education, prevents their labor mobility systems, which tend to favor high-skilled workers, from bringing in foreign-born workers with a broader variety of skill sets. Moreover, the existing systems tend to ignore the fact that workers learn and gain more skills while on the job in the host country, which benefits both the receiving country and the country of origin as some workers return. A productive society includes people with a broad range of skills that complement each other. Therefore, in lieu of the simplistic skills dichotomy, workers should be seen as offering a “skills mix” composed of all their experiences and abilities gained in and out of school, as well as their interpersonal, communication, cultural, and other social skills. Rather than building mobility pathways based on a worker’s level of schooling, receiving countries should consider schemes based on the needs of their employing sectors.
Opening more sector-focused mobility pathways could also positively impact people from both receiving and sending nations. Such an expansion of pathways could enable more native-born workers to access additional education and skills and thereby improve their economic status while also serving as a crucial part of a nation’s development strategy by allowing foreign-born workers to return to their countries of origin with experiences and skills gained abroad, thereby helping their families and communities escape poverty.
[2] For example, New Zealand recognizes mid-level skills in its labor mobility scheme.
[3] Based on the United Nations’ zero migration scenario, the working-age populations of OECD countries will decline by more than 92 million by 2050, while at the same time the elderly population (over age 65) will grow by more than 100 million people.
[4] More on worker scarcity can be found in LaMP’s separate policy note here.
[5] More on how labor mobility helps workers escape poverty can be found in a previous LaMP’s note here.
[6] The focus was on bringing these workers from northwestern Europe, especially, the British Isles.
[7] Canada has recently decided to lower the number of points one needs to enter the country through its point-based system to a record low, allowing some low-skilled workers to settle in the country. However, the new measure is mostly focused on skilled migrants who are already in the country rather than new temporary workers that still face other barriers to entry.
[8] Even when the government decided to increase the cap in FY2017, FY2018, and FY2019 by 15,000, 15,000, and 30,000, respectively, through a one-time regulation, the total number of admitted workers remained well below the employers’ need.
[9] The program has been created in reaction to farmers’ worriers about potential lack of seasonal workers after the country exited the EU and introduced its new points-based immigration system that focuses mostly on attracting high-skilled workers as discussed above. Moreover, in summer 2020 during the first wave of COVID-19, the country launched its ‘Pick for Britain’ campaign that attracted only about 8,000 locals, way below the estimated 80,000 needed workers, which also added to the farmers’ worries.
[i] Hidalgo, César A., and Ricardo Hausmann. “The Building Blocks of Economic Complexity,” June 30, 2009. https://www.pnas.org/content/106/26/10570#sec-7.
[ii] Clemens, Michael, and Kate Gough. “Can Regular Migration Channels Reduce Irregular Migration? Lessons for Europe from the United States.” Center for Global Development, February 2018. https://www.cgdev.org/sites/default/files/can-regular-migration-channels-reduce-irregular-migration.pdf.
[v] Dumont, J.-C., and G. Spielvogel. “Return Migration: A New Perspective.” In International Migration Outlook, Part III. 2008. Paris: OECD Publishing.
[vi] Iskander, Natasha, and Nichola Lowe. “The Transformers: Immigration and Tacit Knowledge Development.” SSRN. NYU Wagner Research Paper No. 2011–01, January 23, 2011. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1745082.
[vii] Weinar, Agnieszka, and Amanda von Koppenfels Klekowski. “Highly Skilled Migration: Concept and Definitions.” SpringerLink. IMISCOE Short Reader, May 28, 2020. https://link.springer.com/chapter/10.1007/978-3-030-42204-2_2.
[viii] Moriarty, Andrew. “High Skilled Immigration – 5 Things to Know.” FWD.us, September 8, 2020. https://www.fwd.us/news/high-skilled-immigration-5-things-to-know/.
[ix] “The Guide to Visa Types and Work Permit Requirements.” How to get a Work Permit and Visa for Spain.InterNations GO!, September 14, 2020. https://www.internations.org/go/moving-to-spain/visas-work-permits.
[x] “Point-Based Preference Immigration Treatment.” Highly Skilled Foreign Professional Visa. June Advisors Group. Accessed April 9, 2021. https://www.juridique.jp/visa/hsp.php.
[xi] “Overhauling the Temporary Foreign Worker Program.” Canada.ca. Government of Canada. Accessed April 9, 2021. https://www.canada.ca/en/employment-social-development/services/foreign-workers/reports/overhaul.html.
[xii] “The Skills Mismatch.” Skills Mismatch. National Skills Coalition. Accessed April 9, 2021. https://www.nationalskillscoalition.org/skills-mismatch/.
[xiii] Burrowes , Jennifer, Alexis Young, Joseph Fuller , and Manjari Raman. “Bridge the Gap: Rebuilding America’s Middle Skills.” Harvard Business School. Accessed April 9, 2021. https://www.hbs.edu/competitiveness/Documents/bridge-the-gap.pdf.
[xiv] Kosten, Dan. “Immigrants as Economic Contributors: They Are the New American Workforce.” National Immigration Forum, June 5, 2018. https://immigrationforum.org/article/immigrants-as-economic-contributors-they-are-the-new-american-workforce/.
[xv] “What Is Happening to Middle-Skill Workers?” OECD Employment Outlook 2020 : Worker Security and the COVID-19 Crisis: OECD iLibrary. OECD, July 7, 2020. https://www.oecd-ilibrary.org/sites/c9d28c24-en/index.html?itemId=%2Fcontent%2Fcomponent%2Fc9d28c24-en.
[xvi] Hooper, Kate. “Spain’s Labour Migration Policies in the Aftermath of Economic Crisis.” Migration Policy Institute Europe, 2019. https://www.migrationpolicy.org/sites/default/files/publications/MPIE-SpainMigrationPathways-Final.pdf.
[xvii] Speare-Cole, Rebecca, and Emily Lawford. “What Is the Points-Based Immigration Bill, and What Is Classed as a ‘Low-Skill’ Job?” London Evening Standard. Evening Standard, July 13, 2020. https://www.standard.co.uk/news/politics/uk-immigration-points-based-system-threshold-unskilled-job-a4367206.html.
[xviii] Ashford, Ellie. “Employers Stress Need for Soft Skills.” Community College Daily. Community College Daily, January 16, 2019. https://www.ccdaily.com/2019/01/employers-stress-need-soft-skills/#:~:text=Among%20soft%20skills%2C%20employers%20said,Effective%20communication%20(69%20percent).
[xix] Hagan, Jacqueline. “Defining Skill: The Many Forms of Skilled Immigrant Labor.” American Immigration Council, November 18, 2018. https://www.americanimmigrationcouncil.org/research/defining-skill-many-forms-skilled-immigrant-labor.
[xx] Hagan, Jacqueline. “Defining Skill: The Many Forms of Skilled Immigrant Labor.” American Immigration Council, November 18, 2018. https://www.americanimmigrationcouncil.org/research/defining-skill-many-forms-skilled-immigrant-labor.
[xxi] Hagan, Jacqueline. “Defining Skill: The Many Forms of Skilled Immigrant Labor.” American Immigration Council, November 18, 2018. https://www.americanimmigrationcouncil.org/research/defining-skill-many-forms-skilled-immigrant-labor.
[xxii] Hagan, Jacqueline. “Defining Skill: The Many Forms of Skilled Immigrant Labor.” American Immigration Council, November 18, 2018. https://www.americanimmigrationcouncil.org/research/defining-skill-many-forms-skilled-immigrant-labor.
[xxiii] Torpey, Elka. “Careers in Construction: Building Opportunity.” Career Outlook. U.S. Bureau of Labor Statistics, August 2018. https://www.bls.gov/careeroutlook/2018/article/careers-in-construction.htm.
[xxv] Gardner, Mary. “The Case for Low-Skilled Immigrants.” Opinion. The Hill, June 14, 2018. https://thehill.com/opinion/immigration/391968-the-case-for-low-skilled-immigrants?rl=1.
[xxvi] O’Donnell, Megan, and Samantha Rick. “A Gender Lens on COVID-19: Investing in Nurses and Other Frontline Health Workers to Improve Health Systems.” Commentary and Analysis. Center For Global Development, March 25, 2020. https://www.cgdev.org/blog/gender-lens-covid-19-investing-nurses-and-other-frontline-health-workers-improve-health-systems.
[xxvii] Smith, Rebekah, and Megan O’Donnell. “COVID-19 Pandemic Underscores Labor Shortages in Women-Dominated Professions.” Commentary and Analysis. Center For Global Development, May 13, 2020. https://www.cgdev.org/blog/covid-19-pandemic-underscores-labor-shortages-women-dominated-professions.
[xxviii] Mallet , Victor, Daniel Dombey , and Martin Arnold . “Pandemic Blamed for Falling Birth Rates across Much of Europe.” Coronavirus economic impact. Financial Times, March 10, 2021. https://www.ft.com/content/bc825399-345c-47b8-82e7-6473a1c9a861.
[xxix] MacGregor, Marion. “Europe: Few Routes for Unskilled Migrants.” Understanding Europe. Infomigrants, January 27, 2021. https://www.infomigrants.net/en/post/29885/europe-few-routes-for-unskilled-migrants.
[xxx] “New Immigration System: What You Need to Know.” GOV.UK. Home Office and UK Visas and Immigration, January 28, 2020. https://www.gov.uk/guidance/new-immigration-system-what-you-need-to-know#skilled-workers.
[xxxi] “Overhauling the Temporary Foreign Worker Program.” Canada.ca. Government of Canada. Accessed April 9, 2021. https://www.canada.ca/en/employment-social-development/services/foreign-workers/reports/overhaul.html.
[xxxiii] Clemens, Michael, Reva Resstack, and Cassandra Zimmer. “The White House and the World: Harnessing Northern Triangle Migration for Mutual Benefit.” The White House and the World – Harnessing Northern Triangle Migration for Mutual Benefit. Center for Global Development, December 2020. https://www.cgdev.org/sites/default/files/harnessing-northern-triangle-migration-for-mutual-benefit.pdf.
[xxxiv] McGrath, John. “Analysis of Shortage and Surplus Occupations 2020.” Employment, Social Affairs & Inclusion. European Commission, January 12, 2020. https://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=8356&type=2&furtherPubs=no.
[xxxv] Darby, Fi. “10 High Demand Jobs to Look out for in 2020.” SkillsTalk. UpSkilled, December 26, 2019. https://www.upskilled.edu.au/skillstalk/high-demand-jobs-2020.
[xxxvi] Campbell, Stephen. “New Research: 7.8 Million Direct Care Jobs Will Need to Be Filled by 2026.” PHI, January 24, 2019. https://phinational.org/news/new-research-7-8-million-direct-care-jobs-will-need-to-be-filled-by-2026/.
[xl] “Strong Demand For Work Amid Stronger Demand For Workers: The 2020 Construction Hiring And Business Outlook.” Associated General Contractors of America, 2019. https://www.agc.org/sites/default/files/Files/Communications/2020%20Construction%20Hiring%20and%20Business%20Outlook%20Report.pdf.
[xlii] Price, David. “Labour Shortages Could Raise Rates ‘at Least 10%’.” Construction News, January 29, 2021. https://www.constructionnews.co.uk/brexit/labour-shortages-could-raise-rates-at-least-10-29-01-2021/.
[xlvi] Chrysoloras, Nikos. “Europe’s Bid for Self-Reliance Overlooks Need for Human Capital.” Bloomberg, February 16, 2021. https://www.bloomberg.com/news/newsletters/2021-02-16/supply-chains-latest-eu-self-reliance-overlooks-human-shortages.
[xlvii] Clemens, Michael, and Kate Gough. “Can Regular Migration Channels Reduce Irregular Migration? Lessons for Europe from the United States.” Center for Global Development, February 2018. https://www.cgdev.org/sites/default/files/can-regular-migration-channels-reduce-irregular-migration.pdf.
[xlviii] Chiswick , Barry R. “Immigration: High-Skilled versus Low-Skilled Labour?” Australian Government. Productivity Commission. Accessed April 9, 2021. https://www.pc.gov.au/research/supporting/sustainable-population/05-population-chapter03.pdf.
[xlix] Kapur , Devesh, and John McHale. “Give Us Your Best and Brightest: The Global Hunt for Talent and Its Impact on the Developing World.” Center For Global Development, September 1, 2005. https://www.cgdev.org/publication/9781933286037-give-us-your-best-and-brightest-global-hunt-talent-and-its-impact-developing-world.
[l] Czaika, Mathias, and Christopher R. Parsons. “The Gravity of High-Skilled Migration Policies.” KNOMAD, March 2016. https://www.knomad.org/sites/default/files/2017-04/KNOMAD%20Working%20Paper%2013%20HighSkilledMigration_0.pdf.
[li] Ruhs, Martin. “The Price of Rights: Regulating International Labor Migration.” Princeton University. Princeton University Press, August 25, 2013. https://press.princeton.edu/books/hardcover/9780691132914/the-price-of-rights.
[lix] Ruhs, Martin. “The Price of Rights: Regulating International Labor Migration.” Princeton University. Princeton University Press, August 25, 2013.
[lxii] Ruhs, Martin. “The Price of Rights: Regulating International Labor Migration.” Princeton University. Princeton University Press, August 25, 2013.
[lxiii] Bruno, Andorra. “The H-2B Visa and the Statutory Cap: In Brief.” Federation of American Scientists. Congressional Research Service, April 17, 2018. https://fas.org/sgp/crs/homesec/R44306.pdf.
[lxiv] Bruno, Andorra. “The H-2B Visa and the Statutory Cap: In Brief.” Federation of American Scientists. Congressional Research Service, April 17, 2018. https://fas.org/sgp/crs/homesec/R44306.pdf.
[lxvii] Lindsay, Frey. “With No EU Workers Coming, The U.K. Agriculture Sector Is In Trouble.” Forbes Magazine, March 24, 2020. https://www.forbes.com/sites/freylindsay/2020/03/24/with-no-eu-workers-coming-the-uk-agriculture-sector-is-in-trouble/?sh=102480f7363c.
[lxxiii] Ruhs, Martin. “The Price of Rights: Regulating International Labor Migration.” Princeton University. Princeton University Press, August 25, 2013.
[lxxiv] Ruhs, Martin. “The Price of Rights: Regulating International Labor Migration.” Princeton University. Princeton University Press, August 25, 2013.
[lxxv] Ruhs, Martin. “The Price of Rights: Regulating International Labor Migration.” Princeton University. Princeton University Press, August 25, 2013.
Tuesday, January 19th | 10:00 – 12:00 CEST | Online
Registration for this event is now closed.
This event is hosted on the sidelines of the Global Forum on Migration and Development and is organized by the Center for Global Development (CGD), Labor Mobility Partnerships (LaMP), Enabel, The European Commission’s Joint Research Centre, and the OECD Development Centre. This event will be simultaneously translated in English and Arabic.
SPEAKERS
Raffaella Greco Tonegutti, Lead Expert Migration and Development, Enabel-Belgian Development Agency
Dawit Dame, Manager, Jobs Creation Commission, Ethiopia
Khadijat Abdulkadir, Manager, Digital African Women
Linda Adhiambo Oucho, Executive Director of Research and Data Hub, African Migration and Development Policy Centre (AMADPOC)
Zainab Naji, Employment Expert, Enabel-Belgian Development Agency, Morocco
Simon McMahon, [Project Officer], Joint Research Centre, European Commission
Jason Gagnon, Development Economist, OECD Development Centre
Helen Dempster, Assistant Director and Senior Associate for Policy Outreach, Migration, Displacement, and Humanitarian Policy, Center for Global Development (CGD)
The youth population in Africa is booming, creating a large working-age group with the potential to contribute to labor markets around the world. African youth are nonetheless facing increased constraints in finding safe and regular pathways to countries of destination, a dynamic exacerbated by COVID-19. This event, on the sidelines of the Global Forum on Migration and Development (GFMD) will bring together experts focused on up-skilling and moving African youth. It will attempt to answer several questions. Why, how, and where do young people in Africa want to move? What skills, experience, and income gains will they acquire by moving abroad? What contributions will they make to their countries of origin and their countries of destination? And how can major countries of destination open legal migration pathways to allow them to migrate safely, regularly and orderly, maximizing the potential of migration?
Populations in high-income countries are rapidly aging while, at the same time, low-income countries are facing a sharp increase in their working-age populations. These demographic trends are an “unstoppable force” toward increased labor mobility, pushing against the “unmovable object” of political resistance from citizens in high-income countries to increasing immigrant populations. Temporary mobility programs (TMPs) may be a politically viable solution, as they increase the number of workers without the same political implications as permanent migration.
However, TMPs themselves are also politically unpopular, in large part because they have been plagued by bad outcomes for workers. Many of these bad outcomes have been related to the low quality of the existing mobility industry, resulting in migrant indebtedness, fraud regarding job terms and quality, worker abuse, and irregularity within temporary mobility programs. These bad outcomes in turn are driven by perverse incentives built into the design of mobility systems, information asymmetries, and poorly constructed migration controls. The primary point to take away from this analysis is that the mobility industry is not inherently unethical, but rather that it is badly designed.
In this report, we argue that the emergence of a quality mobility industry could improve outcomes in temporary labor mobility by reducing migration costs per worker through greater economies of scale (allowing a broader range of employers to benefit from labor mobility), increasing the accessibility of labor mobility for employers, decreasing the burden on migrant workers, and building trust and capability among actors within labor mobility systems. By improving outcomes and faith in temporary mobility programs, we posit that a quality mobility industry could lessen political resistance and allow for temporary mobility programs to be built at scale as a solution to the rapidly approaching demographic cliff in high-income countries. We then conclude by proposing the next steps toward facilitating the emergence of a mobility industry that is “a good industry and an industry for good.”
Jason Wendle, Strategy Lead, Labor Mobility Partnerships (LaMP)
PANELISTS
Joe Martinez, Chief Executive Officer, CIERTO
Alex Silberman, General Manager, The Ethical Recruitment Agency (TERA)
Amit Saxena, Director, AMBE International
MODERATOR
Darin Kingston, Organizational Development lead, Labor Mobility Partnerships (LaMP)
Populations in high-income countries are rapidly aging, while at the same time, low-income countries are facing sharp increase in their working age populations. These demographic trends are an ‘unstoppable force’ towards increased labor mobility, pushing against the ‘unmovable object’ of political resistance from citizens in high-income countries to increasing immigrant populations. Temporary mobility programs (TMPs) may be a politically viable solution, as they increase the number of workers without the same political implications as permanent migration.
However, TMPs themselves are also politically unpopular, in large part because they have been plagued by bad outcomes for workers. Many of these bad outcomes have been related to the low quality of the existing ‘mobility industry.’ Emergence of a ‘quality’ mobility industry could improve outcomes in temporary labor mobility by reducing migration costs per worker through greater economies of scale, increasing the accessibility of labor mobility for employers, decreasing the burden on migrant workers, and building trust and capability among actors within labor mobility systems.
In this event, the LaMP team presented the findings of our report on the case for a quality mobility industry, and our efforts in the next stage towards facilitating the emergence of such and industry. This was followed by a panel of quality mobility industry actors and employers, who will discussed how to facilitate the emergence of such ‘quality’ mobility industry.
This event was the fourth in Labor Mobility Partnerships’ (LaMP’s) event series on the case for labor mobility from the perspectives of key actors (receiving countries, sending countries, employers, workers, and ‘mobility industry’). Sign up for our newsletter to stay updated on future events!
Low-income countries are unlikely to create sufficient number of jobs to absorb into productive work the millions of additional young workers who will enter their labor markets in the upcoming decades.
Income gains from labor mobility from low productivity to high productivity places overwhelmingly exceed gains from other programs aimed at poverty reduction.
Labor mobility has been an effective tool allowing people in low income countries around the world to escape poverty.
Introduction
Many people around the world are trapped in poverty as a result of their country of birth. More than half of variability in income globally is explained by their country of birth; meaning that individual effort or luck can explain only a small portion of the global distribution in income.[i] This implies that, mostly, “there are not poor people but only people in poor places.”[ii] Labor mobility allows people to leave their homes to work abroad, and thus secure better life for themselves as well their loved ones. However, when addressing labor mobility, politicians, researchers as well as general public often focus primarily on the impacts on sending and receiving countries. While it is certainly important to consider and assess impacts of labor mobility on the involved nations, their economies and citizens, it is necessary to also analyze the impact on those who are affected by labor mobility the most directly – foreign workers and their families themselves. Despite a number of risks and challenges, labor mobility has proved to be, at the margin, the most effective tool to reduce poverty among people in low-income countries.
Why Do Workers Go Abroad?
Foreign workers’ desire to leave stems primarily from the desire to find better employment opportunities. There are already millions of workers in low-income nations, who are trapped in low-productivity places, and this trend unlikely to change. By 2050, low-income countries’ working-age populations are estimated to grow by millions, and even hundreds of millions in case of sub-Saharan Africa and South Asia (Figure 1). Most of these additional workers are young, between 19 and 30 years old, which presents a number of concerns. According to research, lack of productive employment at the beginning of a young people’s careers negatively impacts social cohesion, physical[iii] and mental health,[iv] as well as long term employment and income outcomes.[v] Youth bulges are also associated with increased risks of violent conflict[vi] that are particularly aggravated by youth unemployment.
At the countries’ current employment levels, research shows that up to half of the new workers would remain unemployed (Figure 2)[vii]. In other words, low-income countries are unlikely to create sufficient number of jobs to absorb the additional labor market entrants.
Figure 1. Change in working-age population (20–64) between 2015 and 2050[viii]
Source: UN DESA, Population Division (2015)
Figure 2. At current employment rates, only 819 million of the new working age people would enter employment[1]
Sources: UN DESA, Population Division (2015); ILO (2019).
The size and demographic composition of the nations’ future labor force is expected to fuel migration outflow as many of the new workers will want to move and follow the opportunity[ix], since working abroad is the single most effective step towards improving their own well-being and in many cases prosperity of entire families as we discuss below.
Moreover, even if the nations managed to introduce reforms aimed at reduction of unemployment, it would not automatically guarantee lower level of emigration. A recent study revealed that while policy intervention to decrease unemployment, no matter whether among the relatively poor or the relatively rich populations, could lead to decline of emigration in the short term, the same would not be true in the long term. Higher income not only fails to prevent peoples’ decision to leave, it actually allows individuals in those poor nations to unlock more opportunities, and thus empowers them to go abroad. In fact, research shows that people in low-income countries, who are actively preparing to emigrate, have on average 30 percent higher incomes than those who do not actively prepare to leave.[x]
Therefore, in addition to reforms to boost peoples’ incomes in their home countries, politicians should also put more emphasis on establishment of well-regulated labor mobility policies, which are clearly more beneficial to foreign workers and their families.
Foreign Workers’ Income Gains
One of the main reasons why people decide to move for work, often across the entire world, is the opportunity to seek more lucrative jobs,[xi] and thus ensure better future for themselves and their families. And the differences have been quite considerable. When workers find employment abroad, estimates show they can increase their income as much as 6 to 15 times for their wage in their home country.[xii] Additionally, workers from low-income countries hold about 7 percent of jobs in high-income countries, and as Jason DeParle cited economist Lant Pritchett in his book A Good Provider Is One Who Leaves, “every increase of a percentage point would leave them more than $100 billion richer.”[xiii] As for a more concrete example, a separate study on alleviating global poverty recently showed that income gains from allowing an additional low skill worker to move to the USA from various countries are between $10,000 and $20,000 a year (Table 1).
Table 1. The income gains from allowing an additional low skill worker to move to the USA from various countries
Similarly, in a separate example focused on specific occupations, the study showed a nearly $15,000 annualized gap between the real (PPP) adjusted wages of waiters in the top 10 wage countries when compared the bottom 30 countries. For occupations in construction sector, the difference is even bigger – almost $25,500 (Table 2).[xiv] Additionally, it is likely that the wage gains from labor mobility as a whole are even larger, as the total consists for a mix of skill levels; and higher skill levels typically equal larger wage gains. However, in this note we focus particularly on wage gains of individuals with lower skill levels, since the growing young populations in sending countries are very low skilled in comparison to richer nations.[xv]
Table 2. Earnings (PPP) for identical low to medium skill occupations are different between poor and rich countries
As the studies mentioned above suggest, labor mobility is clearly a powerful tool for poverty alleviation, as it provides even low-skilled foreign workers with an opportunity to obtain massive income gains if they get hired in a high-income country. For example, in 2011, an Ethiopian with very little to no schooling would, on average, earn PPP$405 annually. However, this same individual could earn PPP$24,000 in the Netherlands. It is also important to note that in many countries, the potential income gain from mobility exceeds the gain from investing in schooling. For an Ethiopian, potential return on investment in schooling (if he or she decided to pursue postsecondary schooling rather than remain without any schooling) is quite negligible in comparison to the return on moving to a country like the Netherlands. This is given by the fact that, on average and at the margin, an Ethiopian can increase his or her income by a factor of 6 by pursuing postsecondary schooling in Ethiopia, while the same individual with no schooling can earn 10 times the Ethiopian’s wage in the Netherlands (Figure 3).[xvi]
Figure 3. In many countries, the potential income gain from mobility exceeds the gain from investing in schooling
With such large income gains, labor mobility has been clearly a powerful tool allowing people in low income countries around the world to escape poverty. Research shows that implementation of effective policies, allowing for well-regulated mobile labor force, is far more effective than any other poverty reduction tool.[xvii] For instance, the Ultra-poor Graduation Program, has been touted as a gold-standard poverty reduction program that has been adopted by several nongovernmental organizations (NGOs) and widely celebrated for its demonstrated impact based on a cross-national rigorous study. On average across the countries studied, the program invests a net present value (NPV) of $4,545 over the course of two years[2] and generates on average $344 gain in non-durables consumption gains in the third year. However, as the Figure 4 below shows, the less than 10 percent average rate of return on the program. Even on the most optimistic assumptions about the duration of the program gains, the lifetime gain from this program is much smaller than the additional wages from one year working in the USA.
Figure 4. Income gains from labor mobility dwarf the less than 10 percent average rate of return on the Ultra-poor Graduation Program—a gold-standard poverty reduction program.
Further, labor mobility achieves these powerful gains in poverty reduction without an upfront investment from governments or donors, whereas programs like the anti-poverty interventions mentioned above require someone to put up money. This means that the “least you can do for the world’s poor is better than the best you can do;” that is, simply not prohibiting workers and employers from engaging in mutually beneficial cross-border transactions is much more powerful than the best programs development aid can finance.[xviii]
The considerable increases in income gains stemming from labor mobility have been a strong incentive for individuals in low-income countries to seek jobs abroad. Labor mobility represents a much more effective poverty-reduction tool than other programs. And last but not least, besides helping the foreign workers themselves, the income gains also represent a great relief to their families back in their countries of origin. As Jason DeParle said during a LaMP virtual event, migration is in fact an anti-poverty program.[xix]
Remittances Received by Foreign Workers’ Families
Every year, many foreign workers send money back home to their families. These transfers, generally known as remittances, serve as a powerful tool uplifting well-being of families around the world, and especially in low-income countries. In many cases, remittances have been responsible for lifting the receiving families out of poverty. Specifically, a study conducted among seventy-one low-income nations revealed that a 10-percent gain in remittances reduces the number of people living in poverty by 3.5 percent.[xx] In Philippines, for instance, a 10-percent income gain from remittances lowered the poverty rate among receiving households by 2.8 percentage points.[xxi] For families in Afghanistan, remittances averaged $1,680 annually, which accounts for more than half of their income, and the households typically use them for basic needs.[xxii]
Since remittances flow directly into households who are able to use them to bolster their consumption, education and health spending,[xxiii] they have proven to positively impact nutrition standards,[xxiv] healthcare,[xxv] and children’s school attendance[xxvi] as well as reducing child mortality.[xxvii] In general, evidence suggests that consumption, health and education are the three main areas for which families in low income countries typically use their remittances. However, remittances are often touted also as a potential source of investment financing. Even though this trend has been less proven, there have certainly been places where it occurred. Scattered data suggests that families in low-income countries use resources accumulated while working abroad also for investment in building a house, starting a business, and financing education.[xxviii]
Overall, remittances inflows are counter-cyclical in sending countries, stabilizing income and insulating families of migrants from adverse economic shocks.[xxix] Estimates show that total global remittances reached $689 billion in 2018, out of which $529 billion went to “developing” or low-income countries.[xxx] In India, for example, remittances received from migrants in Gulf alone rival private investment the country gets from the entire world.[xxxi]
However, while incredibly powerful, it is important to keep in mind that remittances capture only a small portion of the foreign workers’ income gain. Adhikari and Stellitano[xxxii] estimated the total wage gains from 19 non-OECD countries residing in 8 OECD countries. Figure 5 below reflects these total gains compared to total remittances and foreign aid for each of the non-OECD countries, showing that the total wage gains are clearly way larger than either remittances or foreign aid.
Figure 5: Wage gains are vastly larger than either remittances or foreign aid[3]
Source: Adhikari, S., & Stellitano, N. (2015). Migration as an Instrument for International Development. Retrieved October 26, 2020, from http://adhikarisamik.github.io/
Upskilling and Skill Gains Upon Return
Besides income gains and remittances that can be expressed in financial terms, workers employed overseas also accumulate skills which they then bring back upon their return home. Specifically, workers gain skills abroad due various training they gain either on the job itself, or through the company as well as other external mandated or voluntary courses. Upon their return, the workers can then capitalize on these acquired skills to secure a job that requires higher skills and provides better salary than they would have if they had not migrated.[xxxiii] For example, research showed that returnees in Brazil, Chile, and Costa Rica have been overrepresented in highly skilled occupations and underrepresented in least-skilled trades.[xxxiv]
Additionally, the new abilities may make the workers more attractive to potential employers, or in combination with potentially accumulated savings possibly allow them to open their own new businesses and train people at home.[xxxv] Evidence shows that when Indian- and Chinese-born software engineers, returned after the U.S. stock market bubble in late 1990’s, also known as the U.S. dotcom bubble, they had transferred institutional and technical knowledge and techniques to their home countries.[xxxvi] Also, when the Greek sovereign debt crisis spurred a return of large numbers of Albanians, more than half of the returnees took jobs as skilled workers in the industries, in which they were employed in Greece, while many other engaged in entrepreneurship using techniques they had learned abroad, creating jobs for themselves as well as non-migrants.[xxxvii]
Overall, migration opportunities increase earning potential for the workers, who in turn increase the return to skilling in their sectors. The new skills allow the returned workers to get better jobs, open new businesses, while teaching others what they had learned abroad. studies show, migrants return home wealthier, multilingual, more educated than people in their communities, with more work experience than those who have never lived abroad, and larger social networks and new technical abilities. Therefore, their homecoming typically results in a “brain gain” that benefit not only themselves and their families, but also their community and often even their country of origin as a whole.[xxxviii]
Challenges Faced by Foreign Workers
While labor mobility clearly represents the most effective tool to help individuals and their families to escape poverty, there are also some challenges that must be taken into account while creating and implementing labor mobility policies. The current labor mobility systems have been struggling with defects such as fraud, extortionary costs, worker abuse, and illegality, that adversely affect foreign workers. One of the best examples of these dynamics have been the nations of Gulf Cooperation Council (GCC), which have helped to millions of families to escape poverty through labor mobility flows, but also saw frequent cases of worker abuse and fraud.
It is well documented that many foreign workers in a variety of existing migration systems experienced practices such as wage withholding, forced overtime, workplace health and safety violations, passport withholding, and a range of other forms of abuse. Some of the most disturbing examples include the 2022 Doha World Cup, with repeat reported cases of migrants going for months without pay,[xxxix] being forced to work overtime, living in sub-standard conditions, and even dying.[xl] Nepal has recently experienced an alarming trend of kidney disease in its young population, primarily among migrant workers who do long hours of physical labor in the desert, become dehydrated, and use painkillers at higher rates, all of which combine to make them vulnerable to renal failure.[xli] Canada has had famous cases of temporary foreign workers being subjected to unsanitary housing, wage withholding, and recruitment fraud.[xlii] Additionally, women migrants, who often work in the domestic sphere where there is little or no oversight, are uniquely vulnerable, resulting in excessive working hours,[xliii] physical and sexual abuse,[xliv] and again in the most severe cases death.[xlv] Moreover, workers, especially those working at low-skill jobs, are less likely to feel “comfortable acknowledging that they have rights and exercising them,” as pointed out by William Gois, the Regional Coordinator of the Migrant Forum in Asia, during a LaMP’s virtual event.[xlvi]
The COVID-19 era has further stressed vulnerabilities of foreign workers in many countries. Migrants have been at higher risk of contracting the virus due to inadequate health care, worse economic conditions, and overcrowded living conditions. For example, 40 percent of Singapore’s COVID-19 cases in in mid-April were low-skilled foreign workers, resulting from their overcrowded and unsafe dormitory accommodations.[xlvii] At the same time, a majority of individuals infected by the virus in the Gulf are migrants.[xlviii] The International Monetary Fund expects the Middle Eastern and North African economies to fall by 5.7 percent in 2020, which will lead to a surge in unemployment, wage theft and unpaid work as businesses close their doors, spike in detentions and deportations due to visa expirations and increasing need for food handouts. In Lebanon, 250,000 foreign workers have been already hit by such hardship, being left abandoned and unpaid.[xlix] Overall, the pandemic further stressed the flaws of existing labor migration systems, pointing out the multitude of abusive practices and behaviors.
Moreover, labor mobility flows are frequently characterized by extortionary high costs that amount to as much as nine months to more than a year’s salary abroad. For example, a recent study revealed that workers from Latin America and Asia paid intermediaries between $3,000 and $27,000 to secure visas to the US,[l] while the World Bank reports that South Asian workers regularly pay $3,000 to $4,000 for jobs in Gulf Cooperation Council countries.[li] These costs are primarily paid towards recruitment agency fees; in Bangladesh, intermediary fees account for more than 75 percent of the overall migration costs.[lii] Therefore, many workers arrive abroad in debt which puts them into very sensitive situations, as they must maintain employment to be able to pay down their debts regardless of the potential abusiveness of their employers. A recent study on foreign workers in Singapore revealed that indebted workers “sometimes choose to endure harsh and/or unsafe working conditions rather than risk the [premature] repatriation” from raising concerns with their employers.[liii] It has been clear that the excessively high costs caused by the lack of transparency within the current market structure undermine the development potential of labor mobility.
Further, in many migration systems, work visas, and especially temporary work visas, are tied to a specific employer. This means that the workers cannot leave their employers without losing their visa status. For example, in the U.S., employer-tied visas have been directly linked to potential for worker abuse, as workers on employer-restricted visas filed over 100 complains to the Federal Court for wage and hour deception between 1990 and 2017 compared to eight from workers on unrestricted visas.[liv]
And last but not least, psychological studies show that migrant workers have been increasingly prone to serious, psychotic, anxiety, and post-traumatic disorders caused by a number of socio-environmental factors, such as loss of social status, discrimination, and separations from the family. The verbal or physical abuse that foreign workers often face when employed in dangerous, unhealthy jobs leads to a variety of disorders, including depression, anxiety, alcohol or substance abuse, and poor sleep quality, causing low life conditions.[lv] And yet, foreign workers are willing to undergo all the hardship and arrange their lives around family separation, rather than returning to the in many cases extreme poverty in their home countries. In other words, while we may see migration as tragedy, for many foreign workers it is an opportunity, as DeParle put it.[lvi]
Still, all the bad outcomes of labor mobility work to create a powerful political coalition against it, with irregularity fueling the anti-immigrant right wing and concerns around worker abuse building opposition from the left wing. However, it is important to point out that these outcomes are not inherent to labor mobility, but rather a result of poorly constructed systems and incentives. Therefore, workers from low-income countries need well-regulated efficient labor mobility systems, which will allow them and their families to escape poverty while protecting them from risks and eliminating challenges that come with the decision to move abroad. Moreover, as Joe Martinez of CIERTO suggested, a part of these systems should be also an ecosystem of actors creating oversight of governments and safety for the workers.[lvii]
Conclusion
Despite the unquestionable benefits labor mobility brings to foreign workers and their families, sending as well as receiving countries tend to implement inefficient policies that further restrict labor mobility. The stringent measures have been typically based on the thinking that without restrictions on migration, migrants from poor countries could transmit low productivity to rich countries.[lviii] However, models show that a 3-percent increase in the OECD labor force through relaxed restrictions on labor mobility would produce $150 billion[4] in global welfare gains, accounting for gains to the movers, gains and losses in host countries, as well as gains and losses in sending countries. According to 2006 estimates from the World Bank, a 3-percent increase in OECD labor force over a decade-long period would result in $674 billion in global welfare gains, which is 5 times total development assistance.[lix] These vast gains, unrealized as a result of policies restricting labor mobility, are what economist Michael Clemens’ famously refers to as ‘trillion dollar bills on the sidewalk.’[lx] Additionally, according to a separate research, gains from lowering barriers to emigration appear to largely exceed gains from further reductions in barriers to goods trade or capital flows.[lxi]
So, what does this mean for the existing as well as future labor mobility policies? A recent study aimed at making the case for efficiency-enhancing migration barriers[5] showed that while dynamically efficient policy would not mean any open borders measures, it would certainly include relaxations of current restrictions. In other words, the new efficiency case for some migration restrictions seems to be a case against the stringency of these existing restrictions.[lxii]
As an example, New Zealand is one of the first countries that have recognized the potential of seasonal worker programs to become part of international development policy. Its Recognized Seasonal Employer program is one of the most prominent systems designed through this perspective, and its results revealed increased per capita incomes, expenditure, savings, and subjective well-being among the participating migrants.[lxiii] At the same time, displacement of the native-born workers has remained low. Data also showed that foreign workers, who come to New Zealand through the program, seem to be more productive than local labor and their productivity rises as they return for more seasons.[lxiv]
Labor mobility clearly holds vastly more promise for reducing poverty than anything else on the development agenda.[lxv] It allows workers from low-income countries to go abroad, and thus support themselves as well as their families and relatives back home – a practice that eventually leads to overall poverty reduction. Therefore, the existing labor mobility systems with overly strict restrictions hurt not only the foreign workers themselves but also the involved sending and receiving countries overall. At the same time, the current policies often fail to prevent abuse of foreign workers, allowing for dynamics that leave physical as well psychological harm on the affected individuals.
It is necessary for the governments of sending as well as receiving countries, employing sectors and other actors in the mobility industry to cooperate with foreign workers and organizations that represent them. Together these actors can establish common policies and standards allowing for efficient and safe mobility of foreign workers, resulting in overall reduction of poverty on global scale.
[1] Figure 2 shows how many of the total number of new working age people would likely be able to find employment versus those who would remain unemployed by 2050, if the current employment rates were maintained. Under this scenario, an estimated 590 million of the 1.4 billion new working age people would have limited access to employment opportunities. Yet even this is an optimistic forecast, as the current projections of job growth would not be sufficient to absorb even the remaining 819 million.
[2] Measured across the five countries where the program has the biggest impact.
[3] Adhikari and Stellitano assessed a set of 19 non-OECD and 8 OECD countries. Wage data was provided by Claudio Montenegro of the World Bank. Bilateral migration data by educate and gender from 1980-2000 was drawn from the IAB Brain Drain Data. Bilateral remittance data for 2010 was drawn from the World Bank. Bilateral aid data for 2010 came from AidData.
[5] The study considered three main parameters – transmission, which is defined as “the degree to which origin-country total factor productivity is embodied in migrants”; assimilation defined as “the degree to which migrants’ productivity determinants become like natives’ over time in the host country”; and congestion, which is “the degree to which transmission and assimilation change at higher migrant stocks.”
[xxiv] Antón, José-Ignacio. “The Impact of Remittances on Nutritional Status of Children in Ecuador.” The International Migration Review. 44(2). Summer 2010. https://www.jstor.org/stable/25740850?seq=1
[xxv] Amuedo-Dorantes, Catalina and Pozo, Susan. “New Evidence on the Role of Remittances on Health Care Expenditures by Mexican Households.” IZA Discussion Paper No. 4617. December 2009. http://ftp.iza.org/dp4617.pdf
[xxvi] Acosta, P. “Labor Supply, School Attendance, and Remittances from International Migration: The Case of El Salvador.” World Bank Policy Research Working Paper 3903. 2006. Washington, DC: The World Bank.
[xxviii] Wahba, Jackline. “Return migration and economic development.” Chapters, in: Robert E.B. Lucas (ed.),International Handbook on Migration and Economic Development, chapter 12. 2014. Edward Elgar Publishing.
[xxxi] DeParle, J. (2019). A Good Provider Is One Who Leaves: One Family And Migration In The 21st Century. Viking.
[xxxii] Adhikari, S., & Stellitano, N. (2015). Migration as an Instrument for International Development. Retrieved October 26, 2020, from http://adhikarisamik.github.io/
[xxxiv] Dumont, J.-C., and G. Spielvogel. “Return Migration: A New Perspective.” In International Migration Outlook, Part III. 2008. Paris: OECD Publishing.
[xxxvi] Giordano, A., and G. Terranova. 2012. “The Indian Policy of Skilled Migration: Brain Return versus Diaspora Benefits.” Journal of Global Policy and Governance 1 (1): 17–28.
[xxxvii] Hausmann, Ricardo and Nedelkoska, Ljubica. “Welcome Home in a Crisis: Effects of Return Migration on the Non-migrants’ Wages and Employment.” European Economic Review. 2017.
[liv] Gibbons, Eric M., Allie Greenman, Peter Norlander, & Todd Sørensen, “Monopsony Power and Guest Worker Programs,” IZA Institute of Labor Economics, IZA DP No. 12096 (January 2019).
[lviii] Clemens, M. A., & Pritchett, L. (2016, February). The New Economic Case for Migration Restrictions: An Assessment (Rep.). Retrieved October 25, 2020, from http://ftp.iza.org/dp9730.pdf
[lxii] Clemens, M. A., & Pritchett, L. (2016, February). The New Economic Case for Migration Restrictions: An Assessment (Rep.). Retrieved October 25, 2020, from http://ftp.iza.org/dp9730.pdf