Notes on the Global Crisis, Migration and Underdevelopment

In Talks on November 23, 2009 at 1:38 am

IBON Foundation
November 1, 2009

Prepared for IAMR2 Workshop No. 1:
Impact of the Global Crisis on Migration and Refugees and People’s Responses

I apologize for not being able to make the workshop as our flight was cancelled due to a strong typhoon. Nonetheless I hope these admittedly hastily prepared notes will, for all their limitations, still be of some help in the workshop discussions.

Hundreds of millions of international migrants and refugees cross the world’s some 200 borders to work under vastly different conditions so there cannot be any easy generalizations about the impact of the global crisis on migration, on remittances and on development. Certainly some general pressures or tendencies can be identified that will more or less hold everywhere. We can try and outline these below. However how these pressures and tendencies actually play out in terms of particular migration trends, remittance flows and welfare outcomes will depend on specific migrant and country contexts. We can also try and raise some observations of the general impacts of the crisis which, likewise, will not necessarily hold in the case of each and every country. Finally we can expose the obscene myth of “migration and development” which is just another maneuver for monopoly capitalism to exploit the working class, especially migrant workers.

General pressures and tendencies. The global crisis and severe economic downturn generates contradictory tendencies and the eventual overall result at the country or global levels depend on how these actually play out.

On the part of the sending countries the onset of the crisis and even more restricted domestic economic opportunities will likely intensify the pressure for nationals to seek work abroad. Migrants and prospective migrants could become even more aggressive in their efforts to go abroad out of greater desperation for work to support themselves and their families. This is a factor for greater deployments and, assuming migrant earnings are unchanged, higher remittances.

On the part of the receiving countries the onset of crisis could prompt employers to resort to even more migrant labor who are desired because they are among the cheapest and most exploited workers. This also could be a factor for greater migration and additional remittance flows back to the sending country.

However there could also be contrary tendencies on the part of the receiving countries. The crisis could lead to large-scale closures, shutdowns, retrenchments or wage and benefit cutbacks where migrant workers could be among those adversely affected. Domestic economic and political conditions could also be such as to prompt an anti-migrant backlash with attendant policies restricting foreign workers. These would tend to reduce the stock and inflow of migrants and, correspondingly, of remittances back to sending countries. But there is however another possibly countervailing factor where displaced migrants out of desperation choose to go undocumented and keep seeking work, no matter how poor the conditions, rather than return home where prospects for jobs and livelihoods are even worse.

There are many possible variations in specific country contexts that condition how weak or strong these respective factors will be: distance of sending from receiving countries and associated costs of travelling or returning, actual or even just perceived work prospects in both countries, extent or absence of support networks, general public and political attitude to migrants in receiving countries, accumulated savings by migrants, and skill level, occupation and gender profiles. The welfare of individual migrants is of course strongly determined by their generally more vulnerable situations: discrimination, insecure contracts, temporary or part-time jobs, and concentration in crisis-affected sectors.

Observed impacts.
The wide range of possible variations means that generalizations of impact run the risk of aggregating vastly different experiences so it is useful if observations are clear as to what level they are made and in which particular contexts they draw from. A year into the unfolding of the crisis some observations have already been made.

The Organization for Economic Cooperation and Development (OECD) has noted “ample signs of a fall in labour migration in virtually all OECD countries due to a significant decline in international economic recruitment”. Its 2009 International Migration Outlook (IMO) cites declines in migrant worker visas in the United States (16% cut in H-1B visas between 2007 and 2008), Spain (32% cut in new entries under its employer-nominated system between 2007 and 2008), Australia (11% drop in applications for temporary skilled migration), United Kingdom (54% drop in approvals under the Worker Registration Scheme) and Ireland (57% fall in grants of Personal Public Service Numbers).

The IMO also notes how “[many] OECD countries have implemented policy changes that make it more difficult to recruit foreign workers”. Spain, Italy, South Korea and Australia have all drastically reduced various quotas for foreign workers in their respective countries. Other countries have imposed more stringent requirements to make international recruitment more difficult. For instance, the UK has strengthened its labor market test to obtain work permits while Canada has put stricter requirements especially for unskilled and low-skilled occupations.

The Migration Policy Institute (MPI), in a report commissioned by the BBC World Service, noted three major impacts of the crisis: 1) “The recession has dampened the movement of economic migrants to the major immigrant-receiving regions of the world. And, counter to the widely held public perception, immigrants overwhelmingly are choosing to stay put in their adopted countries rather than return home despite very high unemployment and lack of jobs.”; 2) “While the overall picture is one of sharp remittance decline, some regions are experiencing remittance increases or are holding steady. Though remittances have dropped globally amid the downturn, they remained an important stable source of income for immigrant-sending countries”; and 3) “The recession has hit migrants and their financial well-being particularly hard, with repercussions not only for the migrants themselves and their households but for immigrant-sending and receiving countries alike”.

In the case of the Philippines, monthly remittance growth is still positive but has been at much slower rates – from a peak of 30% growth (year-on-year) in June 2008 to an average of just 3.7% in the first eight months of 2009.

Migration and underdevelopment. One of the feared consequences of the global crisis is that drastic contractions in migration and remittances would undermine development in the receiving countries. This however assumes that migration and remittances are key tools for development when, in reality, they are not.

The Philippines offers a useful case study exposing the myth of migration and remittances as a tool for development. The country is the largest among the most remittance-dependent countries in the world, receives among the most remittances of any country, and likely has among the most developed and systematic labor export policies anywhere. Yet it remains an extremely backward country with the largest majority of its population in deep poverty. Its negative lessons will be relevant to most any other Third World country whose underlying conditions and context of underdevelopment are essentially the same.

First of all a vital distinction must be made between migrant remittance-receiving households and the national economy where what appears beneficial for one is not necessarily so for the other. This makes it easier to see how the supposed development impact of migration and remittances is greatly exaggerated.

Remittances from overseas Filipinos undoubtedly boost household- and family-level consumption. They finance consumption, education and health spending with all the attendant positive welfare effects. Still, this is only the case for so long as remittances are received and there is little evidence to show that migrant households are always, universally and unambiguously raised to new and higher levels of income. Moreover these cash benefits often come at very significant social costs that while unquantifiable nonetheless constitute very negative welfare outcomes.

Because they are generated abroad remittances cannot but have scant contributions to solid domestic production, investment and employment. They mainly support the consumer-oriented – aside from usually being import-dependent –  sectors of domestic economies such as retail and wholesale trade, transport and communications, financial services, and real estate.

Meanwhile they contribute little to developing domestic manufacturing and agriculture which are the real foundations of national economies. For there to be real and sustainable domestic development the incomes nationals spend have to be grounded in domestic production. Far more than consumption per se it is domestic production and inter-relating local producers that provide the growth dynamic necessary for development. These generate substantial capital for reinvestment, create jobs, and are the basis for technological progress.

It is often argued that international migration transfers skills and technology but this argument is greatly overblown. Overseas Filipinos are largely in low-skilled and low-paying jobs. And even with the very few Filipinos who are in high-skilled high-technology jobs the supposed ‘technology transfer’ cannot really happen. Much technology is proprietary and zealously guarded as sources of competitive advantage. Also, it is far from enough that individual Filipinos have personal experience with technologies and a wide range of factors also has to be present locally. For instance there has to be a critical mass of related skills, machinery and equipment and there have to be local firms engaged in suitable activities and having the appropriate organizational set-ups – these are more likely to be absent than present.

The migration and remittances hype also grossly underestimates – indeed diverts – from more basic and critical economic problems. At the macroeconomic level the most significant contribution of remittances is as a relatively steady stream of foreign exchange which contributes to macroeconomic stability. However the more far-reaching underlying problems of structural backwardness, poor local incomes and systemic inequities are unaddressed. In this context it then becomes relevant to ask who really benefits from this foreign exchange and if they mainly go to supporting economic transactions not geared towards domestic development – e.g., foreign debt payments, profit repatriation by transnational corporations, capital flight by domestic elites, and paying for imports of foreign export-oriented firms.

Indeed, the excessive focus on migration has even created new problems. Domestic education and training are increasingly short-sighted and geared towards what foreign labor markets demand. When migrants work the greatest part of what they produce – in productive and reproductive tasks – goes to their host economies and in return they only get the equivalent of their low salaries which are very much less than the total value of what they produce. There is also the brain and brawn drain both in absolute terms (leading to outright shortages) as well as in relative terms (with the best and most experienced workers drawn abroad). It is also possible that the large inflows of foreign exchange create significant pressure to overvalue the Philippine peso which undermines competitiveness abroad as well as makes imports unduly cheap.

Finally the inherent limits to remittances must be recognized. From the point of view of individual countries the prospects of continued migration and remittances cannot but eventually worsen as more and more countries, and more and more aspiring migrants within countries, get on the bandwagon. At the very least this will tend to drive potential earnings of migrants down as foreign labor markets become bloated – having such a rich army of cheap labor to exploit is something that only the monopoly capitalists will celebrate.

At some point it is also likely that opportunities for migrants will start to constrict. However growing domestic populations mean that remittance flows have to grow much faster for the consumption benefits to be more widely felt. The focus on external economies to drive domestic consumption – much less development – is undesirable and unsustainable.

The “migration and development” hype is self-serving propaganda by the imperialist countries to gain ever greater access to and exploit the workers of the world. It is even brazenly opportunistic and takes advantage of the desperation of workers seeking jobs and livelihoods wherever they can find these. Instead there needs to be an end to the modern-day slavery of forced migration and the people must be free to live, work and develop to their full potentials in their home countries. ###

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