Ratha Migration and post 2015
Migration and the Post 2015 Development Agenda Dilip Ratha The World Bank Integrating Migration into Development Strategies and into the Post 2015 Agenda Session: Migration and Inclusive Economic Growth July 1, 2014, Brussels,, Belgium Key questions Which measurable indicators for reducing the costs of labor migration? What can be done to increase productive use of remittances? What can be done to boost diaspora investments for development? Outline of presentation: Possible migration-specific goals for post2015 agenda Reduce cost of remittances Mobilize additional sources of financing for development Reduce the costs of migrating including recruitment, visa, passport cost and residency permits Protect the rights and safety of migrants Remittances to developing countries estimated to be $404 billion in 2013 800 $ billion FDI 700 600 500 Remittances 400 300 200 100 0 Source: Development Prospects Group, World Bank Private debt & portfolio equity ODA Remittance price is falling, but not as much in low volume corridors where remittances are more important 10% Cost of sending $200 9% 8% Global simple average 7% 6% Global weighted average 5% Source: World Bank (2013), “An Analysis of Trends in the Average Total Cost of Migrant Remittance Services,” Remittance Prices Worldwide, December. Remittance costs are still too high Cost of sending $200 (%) 2013-Q4 12.6 8.3 8.6 7.8 7.0 SSA EAP Global MENA Source: Remittance Prices Worldwide, World Bank. LAC 6.6 SA 6.3 ECA Global remittances agenda • • • • 1. Monitoring, analysis, projection 2. Retail payment system 3. Financial access for households, SMEs 4. Capital market access for countries, companies Size, corridors, channels Counter-cyclicality Effects on poverty, education, health, investment Policy (costs, competition, exchange controls) • Payment platforms/instruments, disclosure, crossborder arbitration • Excclusive partnerships between national post offices and MTOs • Anti-money laundering (AML/CFT) • • • • Deposit and saving products Mortgage, consumer loans, microfinance Credit history for MFI clients Insurance products • Sovereign credit rating • Bonds backed by future remittances as collateral • Diaspora bonds A nation of migrants would be the sixth largest economy in the world Estimated GDP ($ trillions, 2012) United States 16.2 China 8.2 Japan 5.9 Germany 3.4 France 2.6 Nation of migrants 2.6 United Kingdom 2.5 Source: De, Ratha and Reza 2014. The wealth of the diaspora can be mobilized via diaspora bonds Estimated savings ($ billions, 2012) Developing countries 511 East Asia & Pacific 116 Europe & Central Asia 93 Latin America & Caribbean 146 Middle East & North Africa 47 Sub-Saharan Africa 37 South Asia 72 Source: De, Ratha and Reza 2014. Reduce Migration costs Visa, passport cost and residency permits Recruitment costs Reducing recruitment costs Recruitment costs are high, regressive and nontransparent Recruitment costs can be reduced significantly via regulation and monitoring of recruitment practices, educating migrants about their rights, and cooperation between sending and receiving countries Reducing recruitment costs will benefit the migrant, the employers and migrant’s families left behind; it will also encourage more regular migration Recruitment costs can be high Destination/ Occupation Sending country Average migration cost In months of wages Domestic worker in Hong Kong Indonesia $2,708 5.4 Philippines $1,719 3.4 $1,200 6.0 $2,891 14.5 Construction worker in Middle East Nepal Bangladesh Sources: ITUC, IMWU and HKCTU, June 2012; APL-HK and PLU, April 2013; Martin 2013, Human Rights Watch 2013, World Bank 2011 (Nepal report), Korea’s EPS. These data should be viewed as preliminary. Recruitment process 1st mile: Sending country Migration process Last mile: Destination country Recruitment process 1st mile: Sending country Migration process Last mile: Destination country Key questions How to reduce the cost? By how much? Who will benefit? How to reduce recruitment costs 1st mile: Sending country Regulate recruitment agencies Educate potential migrants about their rights as workers Equip embassies abroad to provide services to migrant workers, especially open windows for consultations and complaints Negotiate with destination countries about employment conditions of workers Publish data on recruitment costs by job category How to reduce recruitment costs Last mile: Destination country Regulate employers and recruitment practices (Korea: government-managed Employment Permit System, recruitment cost declined to $950 in 2012 from $3,509 in 2001) Educate migrants about their rights and employment conditions Work with sending countries Publish data on recruitment costs How to reduce recruitment costs 2nd mile: Migration/Transportation Examine visa policies Streamline passport issuance Provide information on employment opportunities to facilitate job-matching Provide loans for migration costs? Perhaps not. How much reduction in recruitment costs is feasible? Compare with the cost of recruiting high-skilled migrant workers (e.g., nurses) Develop bilateral matrices of recruitment costs for agricultural workers, construction workers and domestic workers Who would benefit from lower migration costs? Migrants incomes, savings, remittances would increase; loan burden would decrease Employers would also benefit Sending countries would earn foreign exchange via remittances and investments by migrants Irregular migration is likely to decrease Need for a good analytical study on benefits of reducing recruitment costs KNOMAD work program on indicators Bilateral remittance costs under Global Remittances Working Group Bilateral recruitment costs for construction workers, agricultural workers and domestic workers Indicators of migrants’ access to rights in different countries “Voices of migrants” Thank you www.knomad.org
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