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Wednesday, February 18, 2009

Migration in Light of the Economic Crisis

By Grace Augustine

Migration patterns, as illustrated in the Economist.

As I was perusing my Sunday New York Times this past week, two stories stood out to me. Both mentioned migrants struggling to keep jobs in the developed nations where they were working. One article profiled Alexandrina Ciurea, a Romanian cleaning woman working in Rome; the other described Ignace Abdulx, a laid-off Senegalese metalworker worker in Paris.

Both Ciurea and Abdulx had been sending considerable remittances back to their families; Abdulx’s amounted to 200 euros per month for his wife and three children, yet neither knew if their adopted homelands would provide them with continued opportunity. I found their stories to be very interesting, and began to ponder the effects of slowing remittances and potential reverse migration to developing nations.

As many families living at the Base of the Pyramid are dependent on remittances, shifts in remittances and migration are both very timely and potentially worrisome trends. As Manuel pointed out when he wrote on two leading reports on remittances in 2008, "Remittances are estimated to have more than tripled as a share of GDP since the 1980s, rising from 1.1% of GDP to 3.6% of GDP in 2005."

While open borders have meant more choice for the economically disenfranchised, individuals who have migrated based on the promise of better opportunity may be waking up today to rising debt, diminishing job prospects, and fewer dollars or Euros to send back home to wives, husbands, and children who depend on them.

According to a recent report by the Migration Policy Institute, immigrants fit the demographic characteristics of "workers who are most vulnerable during recessions" because they are usually young, undereducated, and have little work experience. They are also disproportionally employed in some of the hardest-hit industries, such as tourism, construction, and services, and usually in jobs with little security or safety net.

In light of this, lower-income regions in Asia, Latin American, Africa, and Eastern Europe may all be affected, due to their percentage of GDP that is dependent on remittances. For more information on the remittances as a percent of overall GDP, see the IFAD’s brochure Sending Money Home.

The situation in Latin America may already be taking a turn for the worse. The IDB reported that 2008 was "the first year on record during which the real contribution of remittances to households decreased." The downturn hit Mexico and Brazil, and "in August of 2008, the drop in remittances growth spread to El Salvador and Guatemala, countries where remittance flows represent a significant proportion of GDP, at 18% and 12% of total GDP, respectively." In Colombia, the central bank recorded $321 million in remittances for November 2008, down 31 percent from $468 million for the same month in 2007. Mexico faces a similar situation. The Huffington post reported that, "Remittances, Mexico's second-largest source of foreign income after oil, plunged 3.6 percent to $25 billion in 2008 compared to $26 billion for the previous year." Although it is too early to tell if this will be a long-term trend, one can't help but worry about the future if the economic situation continues to worsen.

Beyond the potential effects of decreased remittances, there is the worry of vast reversed (or return) migration. While the Migration Policy Institute report "Immigrants and the Current Economic Crisis" found that "there is no definitive trend [in return migration] so far that can be tied to the U.S. economic situation," it also found that if there is a "protracted and severe worsening of the U.S. economy" the issue could become problematic.

While some critics of migration may be optimistic about family members returning home to their families, immigrant-sending nations such as Romania, where an estimated 14% of the population is employed abroad, may not be able to sustain a reverse migration and influx of citizens returning home to look for work. They could become an immediate strain on the economies of these already-struggling nations.

There are not only economic strains. When immigrants return "home" there are often psychological and family adjustment challenges, as described in the NY Times article on Romania. As one academic article described, "Returning to a changed country, where social relations, political structures and economic conditions are not what they used to be may be equivalent to arriving in a new place." These return immigrants, unlike professionals from India and China who come to the U.S. or Europe to study or gain skills, poor immigrants return home with few new skills or savings. In the receiving countries, they are employed in unskilled work (such as agricultural harvesting and house-cleaning).

Immigrants may not return, for reasons such as distance and cost of travel, or policy restrictions such as between Latin American and the United States that heavily discourage those who have already migrated to return. If they stay, however, this means living without stable work and often seeking work in the informal economy, thereby becoming a potential strain on the resources of those countries and still living far away from their families. With reduced opportunities and rising protectionist sentiments in developed economies, what we may see during this global crisis is a migration towards emerging economies. According to the New Yorker, "Between 2000 and 2005, the number of Africans arriving on tourist visas in Guangzhou quintupled, to nearly thirty-two thousand."

Although economies such as China and India are also being hit by the global economic slowdown and depressed consumption, they often have less stringent immigration policies. However, although they don’t stop immigrants at the door they do not usually offer a clear path to residency, again leaving the illegal workers stuck in the complexity and danger of the informal economy.

All in all, although much of the data are currently anecdotal, there are reasons to be concerned about the state of the world economy’s effect on remittances and migration patterns, and how those will affect the global poor.

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