Migration crisis

Immigrant workers from Peru demonstrate in Tokyo on May 24 against the Japanese governments Bill to revise an immigration law.-KIM KYUNG-HOON/REUTERS

WHEN the global financial and economic crisis broke in the latter part of 2008, observers were quick to point out that all the elements of global integration would be affected adversely. This has been only too true for trade and capital flows. Exports have declined sharply across the world, and the World Trade Organisation (WTO) predicts a further worsening of the situation over the course of the current year. Capital flows have deglobalised in the sense that foreign direct investment (FDI), portfolio capital and bank lending to developing countries have dropped sharply and typically turned negative for most developing regions.

A similar tendency was definitely expected for labour flows and workersremittances stemming from such flows. When economic activity slows or even contracts in destination countries, migrant workers are typically the first to be laid off and sent home. This is true for both legal and illegal migrants, especially as more of all migration tends to be explicitly short-term in terms of meeting specific labour shortages in the host economies.

Thus, by late 2008 it was widely predicted that remittance income flows that have been the single largest source of foreign exchange for many developing countries, and therefore crucial in shoring up the balance of payments would quickly show signs of decline.

The Inter-American Development Bank estimated that 2008 would be the first year on record during which the real value of inward remittances will fall in Latin America and the Caribbean. Remittances into Mexico (which are dominantly from workers based in the United States) in August 2008 were already down 12 per cent compared with the previous year, and the World Bank pointed out that this would only get worse. There was also evidence of declining remittances from other countries that relied strongly on them, such as the Philippines, Bangladesh, Lebanon, Jordan and Ethiopia.

But as the crisis unfolds, it is also becoming clear that the patterns of migration and remittances may be more complex than was previously imagined. In several countries (such as India, for example) remittance inflows have not yet shown that much of a decline. To some extent this, too, can be expected, because if the crisis leads to large-scale retrenchment of migrant workers who are forced to come home, they would obviously return with their accumulated savings. In such a case, there could even be a (temporary) spike in remittances rather than a continuous or sharp decline because of the crisis. Eventually, as the adverse conditions for overseas employment further aggravate, this would then lead to a decline in remittance inflows.

But even this may not be as clear-cut. One important aspect that is ignored frequently in the discussions on migration is that of the gender division of the migration. It is clear that international migration for work in particular is highly gendered, with male migrants going in dominantly for employment in the manufacturing and construction sectors, while women migrants are concentrated in the service sectors, such as the care economy broadly defined (including activities such as nursing and domestic work) and entertainment.

Two features have been noted about this gendered pattern. First, female migrants are far more likely to send remittances home, and typicallysend a greater proportion of their income back. Second, male migrantworkers incomes are obviously much more linked to the business cycle in the host economy, and their employment and wages tend to vary with output behaviour there.

By contrast, care activities in particular are affected by other variables such as demographic tendencies, institutional arrangements, and the extent to which women work outside the home in the host country. So employment in such activities is often relatively invariant to the business cycle, or at least responds to a lesser extent. Therefore, female migrant workers incomes are more stable over the cycle and do not immediately rise or fall to the same extent. This, in turn, means that source countries that have a disproportionately higher share of women out-migrants (such as the Philippines and Sri Lanka) would tend to experience less adverse impact in terms of downturn of remittances. This does not mean that there will be no impact, simply that it will be less adverse and will take longer to work through, than if the migration had been dominated by male workers.

There are other factors at work as well, which have meant that the negative effects of the crisis on patterns of migration have not been evident as immediately or sharply as expected. For example, one expectation was that the return migration would be dominated by the worst-hit workers, who in turn were expected to be the undocumented, irregular or illegal migrants, who are mostly in low-wage and low-skilled occupations and do not qualify for any kind of official support, such as welfare benefits or social security, from the host country.

But the initial evidence seems to suggest that this category of migrants has not been affected as adversely as was expected originally. There are several reasons for this. Such migrants may be unwilling to return home to possibly even more fragile and insecure employment conditions in thehome country. This is also likely to be a factor where the undocumented migrants have already developed some local social networks, which allowthem to survive for a period while they look for other employment.

In the host country, the undocumented migrant workers may even bepreferred by employers, who see in them a cheaper source of labour thanlegal migrants or local workers. A context of crisis may well make that preference for cheaper labour even sharper. This may be yet another reason why women migrants may be less badly affected, since women migrants dominate in the undocumented and illegal category.

The fact that the crisis that originated in the U.S. has spread so quickly to other parts of the world, and that developing countries now seem to be even worse affected in terms of real economic variables, suggests that the push factors that operated to cause international migration in search of work are as strong as ever and may even be stronger.

The past decade has been one of rapidly increasing international migration, and the share of work-oriented movement within such migration has grown. While the current crisis is likely to slow down this process, possibly even significantly, it is unlikely to reverse it.