The Hindu Business Line : ‘Outsiders’ in a slow economy

The flow of immigrants from poor to wealthier countries is slowing significantly for the first time in decades even as more people are returning home.

Suparna Karmakar

An increasing number of analysts are trying to foretell the impact of the ongoing recession on economic migrants. The developed world, which for decades has offered a difficult but promising path to upward mobility, appears to be losing its allure. Unemployment is rising, and backlashes against foreign workers (both skilled and unskilled) are mounting.

Anecdotal reports and data from government ministries and other organisations indicate that the flow of immigrants from poor to wealthier countries is slowing significantly for the first time in decades, while more people are returning home. The result is potentially the biggest turnaround in migration flows since the Great Depression, economists say. While many contend that fears of any permanent reverse migration may be unfounded, fact remains that the current economic crisis has already started to deeply affect global demand for labour.

Restricted entry

The International Organisation for Migration (IOM) has identified different categories of effects produced by the economic crisis on migrants.

First and most apparent category is the increased restrictions on admission of migrant workers, and non-renewal of work permits. In fact several countries (like Japan and Spain) have offered migrants cash incentives to return home, under condition that they cannot re-enter for a stipulated number of years. Significantly, during the Great Depression, the only other historical reference point for analysing the potential impact of a crisis on migration patterns, a historic shift in labour migration in the US was driven by the steep drop in immigration, rather than any significant increase in departures.

Worsening work conditions

The other impact is in the form of deteriorating working and living conditions in host countries, especially for migrants keen on staying in the adoptive country rather than return home where conditions may be worse.

In such cases, factory workers often face cuts in hourly wages and a reduced work-week from five to three or four days; there have also been reports of non-payment of wages, and worsening working conditions for irregular and temporary contractual workers.

Workers in the electronics industry in many countries have been put on long-term ‘unpaid vacations’, and some countries have reportedly introduced policies to encourage employers to retrench migrant workers first and/or replace them with unemployed nationals.

Such migratory shifts could have profound consequences for the growth prospects of the developing world, as remittances from migrant workers are slowing. Also, increasing numbers of returning migrants could potentially disrupt economic and social stability. Hence, the more critical concern for developing countries is the management of the ‘push’ factor, namely the absence of desirable employment opportunities at home.

Re-employment worries

For India, this problem presents two very different facets, as the country has to contend with the re-employment concerns of the international as well as internal (as also South Asian) migrants.

Given that the ‘pull’ factor will be weak to nonexistent in the coming years until the developed countries return to pre-crisis levels of growth, the challenge for the government will be to provide jobs for the high-skilled college educated urban youth as well as the low-skilled rural population forced to return to the villages.

With the slowdown in export demand, a large number of domestic migrant industrial workers (in labour-intensive sectors like gems and jewellery, textiles and so on) will be forced to return home.

Furthermore, the NREGA may not be able to provide any succour, as those returning are likely to remain voluntarily unemployed rather than undertake the low-paying, low-skill jobs offered under the scheme.

Other than the potential social unrest that prolonged periods of high unemployment bring into societies, the country needs to find ways of employing the varied levels of skills present in the educated unemployed in both rural and urban centres.

What India can do

This is a formidable challenge for the new government and one that will have to be met if it wishes to return to power after five years.

Extension of employment generation policies mirrored on the employment-guarantee (social security) schemes like the NREGA is unlikely to work in the circumstances. There is an urgent need for: (a) setting up ‘help-desks’ to match skills of returnees with available jobs at home and abroad; (b) offering State-funded/subsidised retraining and re-skilling programmes for returnees as well as domestic unemployed; (c) reform and simplification of labour laws (many of the country’s present problems are easily resolved through administrative and procedural reforms) to encourage industry to adopt labour-intensive technologies; and (d) encouraging self-employment and entrepreneurship in the very high-skilled returnees with adequate funding for businesses (including venture capital availability from official channels) and easing the businessenvironment (especially for entry conditions, as India ranks very low globally in the ease of doing business).

Most of the above are hardly low-lying fruits. It remains to be seen whether this government has the stomach to do the right thing by its electorate.

(The author is a Visiting Research Fellow with the Institute of South Asian Studies, National University of Singapore. Views are personal.)

Related Stories:
US leadership development co Linkage sets up India office
20-30% growth in US visas issued

More Stories on : Human Resources | Economy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Laying the BRICs

Budget should balance growth with distributive justice

Balancing growth and deficits

‘Outsiders’ in a slow economy

Tax rebates

Every drop counts