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January 2021, Volume 27, Number 1

Global Migration: OECD

The OECD’s annual migration report emphasized that immigration and temporary migration fell sharply in 2020. Both immigration and temporary labor flows are expected to fall by half in 2020 for two reasons. First, the economic recession means that employers are sponsoring fewer foreign workers for immigrant and temporary work visas. Second, governments closed visa-processing facilities and borders to prevent the spread of Covid, making it hard to complete the paperwork required for immigration and temporary work abroad.

Governments made exceptions for some migrant workers, especially in health care and agriculture. The demand for health care workers is rising due to population aging in a sector where taxes often pay the wages of caregivers. A reluctance to raise taxes depresses caregiver wages and leads to shortages of health care workers.

Specialized farms that produce labor-intensive commodities prefer just-in-time guest workers to just-in-case local workers who may do farm work while seeking better nonfarm jobs. The efforts of EU countries to persuade jobless local workers to accept seasonal farm jobs by keeping most of their unemployment benefits while doing farm work failed to yield many local farm workers.

There were 5.3 million immigrants admitted to the OECD countries in 2019, including a quarter to the US. The OECD countries had over 135 million foreign-born residents in 2019, making international migrants over 10 percent of all residents.

There were over five million temporary foreign workers admitted in 2018, including 1.1 million in Poland, which sends seasonal workers to Western Europe and admits Ukrainians and citizens of other ex-USSR countries to fill seasonal jobs in Poland. Many countries opened otherwise closed borders to seasonal farm workers in 2020.

Most migrant workers are low skilled. The greatest gap between the share of migrant- and native-workers is in domestic work (activities of households as employers), but hospitality (accommodation and food services), support services and construction also have high shares of migrant workers. The migrant share of farm workers is higher than average in the US but not in in Europe, where there are more small family farms.

Impacts. Covid may reverse the trajectory of ever more labor mobility. As governments and firms reorient supply chains from just in time to just in case, investors may become more cautious about making investments that assume just-in-time guest workers will be available, as with apple orchards planted in remote areas. The rise of remote working arrangements may open a new era of more trade in medical and other services via the internet rather than labor mobility to provide services in-person.

Before Covid, migrants were overrepresented in some of the sectors where employment is growing and labor productivity is low, as in hospitality, administrative support and warehouses. One perennial migration question is the proper role of industrial policy in migration policy. If employers in a particular sector complain of labor shortages, should governments respond by admitting migrants to fill vacant jobs or is the better strategy to admit migrants based on their human capital, such as youth, education, and language ability, and allow them to find jobs?

What happens if there are still vacant jobs in high-immigration countries, such as vacant farm jobs in Australia and Canada that accept far more immigrants per capita than the US?

Most OECD countries have sector-specific policies for agriculture and health care, but not always sector-specific migration policies. At least 15 OECD countries have programs to admit seasonal foreign farm workers. The usual admissions procedure requires employers to try and fail to recruit local workers before being certified to hire migrants.

Procedures for recruitment vary. Employers make the decision on whom to hire, but some sending governments maintain work-ready pools to expedite employer recruitment and selection. Migrants have contracts that tie them to one employer, and must usually depart after up to 10 months abroad, although Israel and Japan allow migrant farm workers to remain three to five years.

Governments make four key labor migration policy decisions: labor market tests, recruitment, employment and dependence. First, what must employers do to be certified to recruit migrant workers, that is, what labor-market testing is required to ensure that local workers are not available? Second, how do employers recruit migrants abroad, and what laws apply, that is, may employers recruit only men? Who pays recruitment costs?

Third, who enforces the contracts that tie migrants to employers, and what happens to migrants who complain about their employer and are fired? Are dis-satisfied or fired migrants allowed to change employers, or must they leave the country? Fourth, should governments worry if dependence on migrants increases over time? If yes, what is the optimal strategy to reduce dependence, quotas, levies or some combination? Finally, do the remittances and returns from seasonal migration speed development in migrant areas of origin?

When countries tailor migration policies to specific sectors, should they require employers who seek certification to hire migrant workers to also develop plans to reduce dependence on migrants over time? A US policy that gave inner-city hospitals easy access to foreign nurses around 2000 required the hospitals to develop plans to reduce their dependence on foreign nurses over time.

This end-migrant-dependence requirement prompted hospitals to hire consultants to develop plans that were not implemented. New Zealand is launching a program in 2021 that allows industries seeking foreign workers to negotiate agreements with the government that expedites migrant admissions in exchange for plans to employ more native workers over time.

Inertia is a powerful force. A quick return to normal with a Covid vaccine may also return labor mobility patterns to their pre-Covid trajectories. Countries could once again admit migrants to fill jobs on the top and bottom rungs of the labor market.

A slow return to pre-Covid economic conditions may break some migration patterns and the networks that link employers in one country to workers in another. Future migration reports may emphasize that Covid led to a break in migration patterns similar to the 1989 fall of the Berlin Wall or the September 11 terrorist attacks that marked before and after points in foreign and security policy.

Golden Passports. Many countries, especially small island nations, offer citizenship to foreigners who invest in the country or make a donation to a government-approved project. Chinese, Russian and citizens of ex-USSR countries are most likely to buy so-called golden passports, which permit visa-free travel to many countries.

Many of those purchasing golden passports are hiding ill-gotten gains. After issuing passports to 3,000 foreigners who each invested at least E2 million in Cyprus, the government halted its visa-for-investment program in October 2020 after journalists pretending to represent a corrupt foreign businessman who wanted to buy a passport persuaded leading politicians to support his case. Bulgaria and Malta also have citizenship by investment programs that are under scrutiny.

Growth. The IMF reported that the world’s economy contracted by four percent in 2020 and projected five percent growth in 2021. China grew by two percent in 2020, while the US economy contracted by four percent and the EU by eight percent. In 2021, China is projected to expand by eight percent and the US by four percent.

Global debt was $255 trillion at the end of 2019, more than three times the world’s $80 trillion GDP. This debt included $70 trillion of government debt, double the $33 trillion of government debt just before the 2008-09 recession. Many developing countries took on large amounts of debt over the past decade.

Demography. Africa has the youngest average population, but some of the world’s oldest leaders. In several African countries, the average age of the population is under 20, but the country’s leader is over 75. The 25 million residents of Cameroon are an average 19. President Paul Biya is 87, and has been in office since 1982.

OECD. International Migration Outlook 2020.

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