Impact of the Global Financial Crisis on Migration

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Consider for Migrant Women

 

IOM – International Organization for
Migration

 

IOM Policy Guidance

Note 1

12 January 2009

 

The Impact of the Global Financial
Crisis on Migration

 

Summary: The current global financial crisis is expected to
lead to a downturn in the global economy (and perhaps a deeper recession).  The depth and extent of the crisis is
difficult to predict and the impact of the crisis is likely to vary according
to country, geographic region and employment sector.  During economic downturns, however, migrant
workers are often the first to lose their jobs and while some may well choose
to return home, policies aimed at sending migrant workers home are not the
solution and could have potentially disastrous consequences for development,
given the scale of remittances – expected to reach USD 283 billion to
developing countries in 2008 – and the already high levels of unemployment in
developing countries.  Calls to reduce
migration in destination countries tend to be based on the false perception
that “migrants take jobs” or “compete for welfare benefits”, when in fact the
majority of migrants create economic activity and jobs.  Human mobility, as underscored in IOM’s 2008
World Migration Report,[1][1] makes
economies more dynamic and more efficient. 
Migration may also be a positive force in alleviating various aspects of
the financial crisis and potentially make an important contribution towards
overcoming the economic downturn.  Trying
to combat the financial crisis by simply cutting immigration may make the
situation worse. Nevertheless, countries of origin are likely to experience
some influxes of returning migrants, which may result in economic and social
instability in poorer countries.  Reduced
labour migration flows and increases in irregular migration and trafficking in
human beings are also possible outcomes. 
Therefore, flexible, coherent and comprehensive migration management
policies are needed to maximize the benefits of migration, protect migrants and
take their needs into account in measures addressing the crisis.

 

Likely
impact of the financial crisis on migration

 

There
is no concrete evidence available yet on the impact of the global financial
crisis on migration, but the following largely negative effects have already
been observed or are likely to occur:

 

• 
  Job losses, especially in construction, manufacturing,
  finance, services, retail and tourism, thus affecting migrants in these
  sectors.

• 
  Possible reductions in wages and poorer conditions in
  the workplace as companies and employers seek to make savings, as well as
  cuts in social services provision, impacting on migrants’ quality of life
  and health.
  

• 
  The risk of discrimination and xenophobia as migrants
  are mistakenly perceived as taking the jobs of local workers particularly
  in low-skilled sectors of the labour market.

• 
  The return of unemployed migrants to countries of
  origin (or regions of origin in the case of internal migration) where they
  are also likely to face inferior economic conditions (e.g. high
  unemployment and poverty) and could affect economic and social
  stability.  Such returns, however,
  are less likely to occur from those countries (e.g. European countries)
  where migrants (and their families) enjoy secure residence and the safety
  net of a strong social welfare system.

• 
  A decline in remittance flows to developing countries
  as migrants lose their jobs, thus increasing poverty and exacerbating
  development gaps.  However, the
  World Bank has observed that remittances are expected to remain resilient
  relative to many other categories of resource flows (e.g. trade, foreign
  direct investment – FDI) to developing countries and in 2009 are expected to
  fall by 0.9 per cent and, at worst, by no more than six per cent.[2][2] 
  Migrants may also be more reluctant to send money through formal
  channels due to a lack of confidence in the stability of banking systems.

• 
  Adoption of more restrictive immigration policies to
  protect the local labour market and in response to a demand for fewer
  foreign workers.  For example, a
  reduction in the number of migrants to be admitted for employment has
  already been announced in some countries (Italy,
  U.K.) or is under discussion in
  others (e.g. Australia).  In Spain,
  the Government has introduced financial incentives to encourage unemployed
  migrants to return home.
  

• 
  A reduction in labour migration flows as potential migrants
  choose to stay home and see out the crisis there.

• 
  An increase in irregular migration and the
  strengthening of the informal labour market as unemployed migrants in
  destination countries seek to work without authorization and as
  opportunities for regular labour migration decrease resulting in the
  emigration of more persons from countries of origin more seriously
  affected by the crisis.  An increase
  in trafficking in human beings is also a possibility.

• The crisis is expected to impact differently on male
  and female migrant workers especially in affected sectors of the economy
  dominated by one gender (e.g. construction in which male migrant workers
  predominate).

 

Conversely,
the following less negative effects have also been identified:

 

• 
  Demand for migrant workers in destination countries may
  remain stable in certain employment sectors, particularly where there
  exists a structural demand for migrants, such as healthcare and domestic
  work (and agriculture in some countries).

• The volume of remittances to countries of origin
  affected badly by the crisis may actually increase, as well as the level
  of investment and trade, as migrants and diasporas seek to reduce the
  harmful impact of the crisis at home.

 

Elements for
policy responses

 

Previous
downturns in the economy at both global and regional levels (e.g. the oil
crisis in the early 1970s and the 1998 Asian financial crisis) indicate that
migration will continue regardless (and irregular migration may even increase)
because of the continuing structural demand for labour in certain sectors of
the economy and despite increases in unemployment.  Such demand is partly attributable to broad
demographic considerations – aging and shrinking populations in much of the
industrialized world compared to growing populations in much of the developing
world — as well as to the fact that in many countries local workers either
lack required skills or are reluctant to take up certain low or semi-skilled
jobs.  The Asian financial crisis also
demonstrated that keeping markets open to migrants and migration is important
to stimulating a quicker economic recovery.

 

 

 

 

 

Therefore, flexible, coherent and comprehensive
policies are needed to ensure that:

 

• 
  The rights of migrants are effectively protected, for
  example in terms of their working and living conditions and in the event
  of loss of employment.
  

• 
  Measures to facilitate remittance flows through
  lowering transaction costs as well as public and private sector
  initiatives to encourage the productive use of remittances are promoted in
  both countries of destination and origin to counter potential declines and
  also protect the families of migrants.

• 
  Migrants are not stigmatized for job losses that occur
  and are protected from discrimination and xenophobia – this also calls for
  measures to inform the general population and raise awareness in
  destination countries about the valuable economic and social contributions
  made by migrants.
  

• 
  Regular labour migration channels remain open with a
  view to meeting any continuing demand for migrant workers thus helping to
  prevent irregular migration and trafficking in human beings.

• 
  Measures are adopted to assist with the repatriation,
  reception and reintegration of returning migrants.

• 
  The consensus achieved
  between destination and origin countries in recent international fora on
  migration and development is not weakened as a result of the financial
  crisis.  For example, measures could
  be taken to increase official development assistance (ODA) or, at the very
  least, to guard against reductions given that part of ODA contributes to
  the creation of conditions (e.g. poverty reduction, job creation) that
  limit the precipitation of irregular movements and related abuses – the
  objective is to ensure that migration remains a matter of choice.

• 
  Labour mobility and the interests and needs of migrants
  are fully factored into any remedial measures (including reforms to the
  global financial system) proposed to address the crisis.

• The impact of the financial crisis on migrants is
  carefully monitored.

 

IOM’s position

 

IOM
considers the following four points to be of particular relevance when
responding to requests for policy guidance from government policymakers and
other stakeholders:

 

1.       On the basis of past experience with similar crises
and the current economic outlook, the financial crisis is likely to have
negative effects on both migrants and nationals, although these effects will
differ according to country, geographic region as well employment sector.  Considerable attention, therefore, needs to
be devoted to ensure that migrants, who are particularly prone to
stigmatization in such circumstances, are adequately protected from xenophobia
and discrimination in the employment and social spheres.

2.       Given that migration, and labour migration in
particular, is an integral part of today’s global economic, political and
social life, flexible, coherent and comprehensive policies are needed to
effectively manage migration, and such policies are all the more pertinent in
an economic downturn.

3.       A strong degree of solidarity between countries of
origin and destination is called for to safeguard and continue to harness the
benefits flowing from the migration and development relationship to both sets
of countries as well as to migrants and their families.

4.       Migration is part of globalization and the global
economy.  Consequently, this requires
that it be factored into policy responses aimed at economic recovery.

 

In
addition, IOM underscores the need to carefully monitor the impact of the
financial crisis on migrants as well as countries of origin, transit and
destination, and to carry out, collect and disseminate relevant research and
data in collaboration with its Member States, international agencies (e.g.
those agencies participating in the Global Migration Group) as well as other
pertinent stakeholders.