Abstract
Migration has financial and social costs, which if too high can place migrants at risk and reduce their development potential. The Global Forum on Migration and Development (GFMD) has consistently sought to identify which costs are critical for the development outcomes of migration, and where governments, employers, recruiters, and other intermediaries can make a difference, both to their own benefit and that of the migrants and their families (See RT Session 2.1 on “Reducing the costs of migration and maximizing human development,” GFMD 2010, Puerto Vallarta; and Cluster I Subtheme 2 on “Lowering the Costs of Migration for Higher Development Gains,” GFMD 2011, Geneva). Governments can influence recruitment costs directly through the fees they charge for services associated with international migration, such as passports and visas, and in three other major ways: regulating private recruiters, educating workers about the recruitment process and its costs, and establishing low-cost state-run recruitment agencies to compete with private recruiters. This chapter proposes unilateral and joint actions between countries that combine information and education for migrants, regulations with incentives for recruiters, and a range of flanking options from competition between recruiters to government recruitment monopolies to lower migration-related recruitment costs and increase the development associated with international labor migration.
This chapter was prepared by Professor Philip Martin, Department of Agriculture and Resource Economics, UC Davis, California, and elaborates on a paper prepared by the author for discussion at the Roundtable Session 2.1 on “Reducing the costs of migration and maximizing human development”, GFMD, Athens, November 4–5, 2009 (Martin 2009): plmartin@ucdavis.edu
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- 1.
The basic job search model imagines that each job seeker has a reservation wage so that the duration of job search for a worker is a function of the frequency and distribution of job and wage offers received and the availability of unemployment insurance and other nonwork income. The length and cost of job search depend on when and how often applicants receive job offers, their variance (if most of the wage offers are similar, it makes little sense to wait for a much higher wage offer), and the cost of waiting for a better offer in terms of foregone income (Mortensen and Pissarides 1999).
- 2.
Public ES agencies can simply give all workers seeking jobs contact information for employers seeking workers, screen and test workers and only refer those who are deemed qualified, or arrange for the employer to meet job candidates at the ES office. In many countries, recipients of UI benefits who reject job offers can have their UI benefits reduced or eliminated.
- 3.
Workers placed at a firm by a third party generally earn lower wages than direct hires, reflecting in part the costs and profits of the employment agency. In the USA in 2002, median hourly earnings in occupations with both directly hired workers and workers hired via temp firms were as follows: direct-hire laborers, $9.48 versus $7.90 for laborers hired via employment agencies, helpers, $9.25 versus $7.79, and packers, $8.03 versus $7.65.
- 4.
There is an effort to standardize education in some fields, including accounting, IT, and health care, and to speed the assessment and recognition of credentials earned outside the country of employment, but this nascent training and job standardization is mostly confined to professionals arriving in some industrial countries.
- 5.
Social networks are most common when much of the labor migration is unauthorized and informal. For example, unauthorized Mexicans often find US jobs via social networks, while recruiters are usually involved in filling jobs via US guest worker programs that admit low-skilled migrants, H-2A and H-2B (Massey et al. 1990).
- 6.
Harris and Todaro (1970) explained continued rural-urban migration to slums surrounding cities in developing countries by emphasizing expected wages. Migrants compared certain incomes in agriculture at home with the expected income from higher wages but also higher unemployment in cities, and moved if the expected urban income exceeded the anticipated farm income. Migrants moving from informal jobs at home to formal jobs abroad may move from uncertain to certain incomes.
- 7.
The 84,000 taka government-set maximum recruiting charge, effective in 2006, applies to migrants going to Gulf states and Malaysia. It was raised in stages from 8,000 taka in 1992 to 30,000 taka, 50,000 taka, 70,000 taka, and 80,000 taka. The maximum recruitment fee to send workers to Italy was set at 230,000 taka in 2002. Recruiters have generally charged migrants at least twice the official maximum recruitment charge (Islam 2009).
- 8.
Karim-Rajput (2011) estimated the average cost of migration at 106,000 taka for Bangladeshi women and 141,000 taka for Bangladeshi men in 2010.
- 9.
Rural moneylenders charge very high interest rates, often 60–100%. Migrants with few assets sometimes find a local guarantor to cosign the loan; the guarantor often receives 10% of the value of the loan for each year that a guarantee is provided.
- 10.
Since 2008, Bangladeshis abroad who remit foreign currency to Bangladesh have “special citizens’ privileges” in Bangladesh.
- 11.
Samren reported that the families of migrants who die abroad receive 100,000 taka ($1,450)—see www.samren.org/Govt_Programmes/bangladesh/B1.htm. In February 2006, it was reported that the WEWF death benefit was 100,000 taka, and that foreign employers usually pay 500,000 taka to the families of deceased migrants (Islam 2006).
- 12.
In an effort to avoid BMET registration as a last rather than a first step in migration abroad, BMET is supposed to operate a lottery so that a recruiter seeking 100 workers is provided with the names of 100 workers with the requisite qualifications who are registered with BMET. This apparently does not happen in practice.
- 13.
Afsar (2009) reported that only one of the 60 returned migrants attended the BMET predeparture training: “Interviews with the recruiting agencies suggest that they obtained BMET certificates on the respondents’ [migrants’] behalf by offering extra money to the desk officer” (p. 24).
- 14.
The results of BMET inspections are not made public, although recruiters whose licenses are suspended are named.
- 15.
Six million taka, 30%, represents BOESL salary costs.
- 16.
BOESL noted that it must often cover at least the local costs of foreign employers who come to Dhaka to interview Bangladeshi workers.
- 17.
Before the EPS system went into effect in 2004, four Bangladeshi recruiting agencies linked to Members of Parliament controlled the migration of trainees to Korea. They reportedly charged trainees 800,000–1,100,000 taka ($11,600–$14,500), which encouraged some to change employers to earn more, including traveling to Japan, where trainees were paid more. Korea eventually banned the recruitment of trainees in Bangladesh (Palma 2006).
- 18.
The Korean language test, which consists of 25 listening and 25 reading questions, is available at www.hrdkorea.or.kr/eng/main.html. Between 2005 and 2009, some 440,000 foreigners took the test, and about half passed.
- 19.
Migrants admitted under the EPS are entitled to the Korean minimum wage of 3,770 won ($3) an hour, but many, expecting to earn a million won a month with overtime, pay fees to recruiters anticipating higher-than-minimum wage salaries.
- 20.
The nonactive BAIRA member recruiters reportedly assist Bangladeshis who have received foreign job offers via friends and relatives abroad, or who are returning to foreign employers, to complete required paperwork in Bangladesh. These migrants go “on-their-own” in Bangladeshi migration data.
- 21.
Some Dhaka-based recruiters place ads in newspapers seeking workers to fill foreign jobs; some smaller recruiters are based outside Dhaka.
- 22.
Migrants going to the UAE must have medical checks done in a facility in Bangladesh approved by the GCC; these facilities are organized into GAMCA, the GAA Approved Medical Centers’ Association.
- 23.
Most migrants expressed trust in the subagents, believing they could recover what they paid from the subagent if the foreign job did not materialize. In some cases, subagents were relatives of the migrants they helped to go abroad. Some subagents reported that if they did not trust the work contract, they would not give it to a relative or a person they knew; instead, they would only give uncertain contracts to strangers (Afsar 2009, p. 21).
- 24.
Ray, Kumar, and Chaudhuri make several sensible recommendations to improve recruitment, but the broader purpose of the 400-page report, to provide advice on new countries to which Bangladesh could send migrants, is flawed. The heart of the analysis is a list of countries and “labor shortages” by occupation (Table 5.5, p. 98–104).
It is not clear how the labor shortage lists were compiled. For the USA, the lists appear to be a mix of fast-growing occupations, such as nurses, and occupations projected to have shrinking employment, such as laborers. Instead of using official Bureau of Labor Statistics projections, the report relies on employer-advocate interpretations of them aimed at persuading the US Congress to approve new guest worker programs (p. 107–121). BLS did not project labor shortages, as the report asserts on p. 121.
- 25.
India issues two types of passports—those for which an emigration check is required (ECR passports) by the POE and passports that do not require an emigration check (ENCR). Holders of “emigration-check-required” passports can nonetheless leave without a POE check for most countries, but need POE permission to travel to 17 countries, including the Gulf oil exporters and Malaysia and Libya.
- 26.
In a bid to persuade foreign employers to use authorized Indian recruitment agents, the Indian government in spring 2008 began requiring foreign employers who do not use authorized recruitment agents to post a $2,500 bond, returned to the employer when the migrant returns to India, for each Indian migrant they recruit.
- 27.
Business Standard, June 28, 2010.
- 28.
Passports cost 1,170 rupees ($26) and emigration clearance 1,425 rupees ($32).
- 29.
Seddon et al. (2002) argue that official Nepalese data on migrants and remittances understate both.
- 30.
Nepal News, August 10, 2010. Retrieved from http://www.nepalnews.com/main/index.php/business-a-economy/8242-nafea-asks-govt-to-restrict-individual-contract-for-gulf-countries.html
- 31.
Nepal News, September 6, 2009. Retrieved from http://www.nepalnews.com/main/index.php/business-a-economy/1300-overseas-jobs-getting-secure-for-nepali-workers.html
- 32.
Nepalese often work in global hotspots. One report in summer 2010 estimated that 300 Nepalese migrants a day were arriving in Iraq; others were arriving in Afghanistan to fill jobs.
- 33.
Nepal News, August 23, 2010. Retrieved from http://www.nepalnews.com/main/index.php/business-a-economy/8583-outflow-of-nepali-migrant-workers-declines.html
- 34.
On September 2, 2004, recruiting agencies in Katmandu were attacked after 12 Nepalese migrants were killed in Iraq. NAFEA continues to press the government for Rs 500 million in compensation for damage done to recruiter offices. Nepal News, August 10, 2010. Retrieved from http://www.nepalnews.com/main/index.php/business-a-economy/8242-nafea-asks-govt-to-restrict-individual-contract-for-gulf-countries.html
- 35.
Nepal News, October 20, 2010. Retrieved from http://www.nepalnews.com/main/index.php/business-a-economy/9940-agents-dismiss-govt-plan-to-issue-id-cards-for-migrant-workers.html
- 36.
The FEA did not reference Nepal’s Decent Work Country Program for 2008–2010, which states “Given the lack of productive employment opportunities in Nepal, exacerbated by the decade-long conflict, foreign labor migration represents a possible channel for employing them effectively.” Outcome 1 of the DWCP on “Improved policy coherence supporting increased productive employment opportunities for men and women” anticipated a national employment policy and “gender sensitive policies to protect migrant workers” by June 2009 (p. 7); this did not occur.
- 37.
Peace in 2006 brought a number of UN agencies to Nepal; coordination between them has been poor. UNIFEM, the major advisor on the FEA, did not consult the ILO; the Nepal UNDAF in 2008 referred only to UNIFEM in reference to migration. IOM negotiated a capacity-increasing agreement with the Ministry of Labor in 2008.
- 38.
Filipino migrants have protested the charges levied by Philippine consulates for passports and employment contract authentication.
- 39.
The OWWA, funded by a $25 fee collected from migrants, provides emergency services at 28 Philippine embassies, including shelters abroad for migrants who run away from abusive employers.
- 40.
RA 1002 limits the interest on loans provided by recruiters to migrants to cover predeparture costs to 8%, and prohibits recruiters from requiring migrants to obtain loans from particular lenders. Violators can be subject to fines of P500,000, imprisonment of up to 6 years, and loss of their recruitment license.
- 41.
There are also a growing number of businesses that help migrants to invest their remittance savings at home. In 2004, there were over 200 cooperatives, associations, and self-help groups that pooled some of their remittances to launch small- and medium-sized enterprises. Many returned migrants buy in “jeepneys,” the 20-passenger vehicles with facing rows of seats that transport riders for up to 4 km for 4 pesos (41.08). A used jeepney can be bought for 250,000 pesos or about $4,500, can generate fares of 500 pesos a day, and after paying a driver and maintenance, will have paid for itself in a year or two. Other popular investments made by returned migrants are raising pigs or poultry or developing handicraft businesses.
- 42.
About 900 recruitment agencies specialize in placing Filipinos in land-based jobs abroad, and 300 in sea-based jobs.
- 43.
Most police stations in the Philippines have an OFW desk to receive complaints.
- 44.
The POEA deployed about 10,000 OFWs directly in 2003; the largest private recruitment agencies deployed 3,000–5,000 migrants.
- 45.
In November 1998, a Malaysian, a Briton, and an Australian were arrested after they recruited Filipinos for jobs in a fictitious country, the Dominion of Melchizedek, said to be in the South Pacific (in the Old Testament, Melchizedek was a model priest to whom Abraham and others paid tithes).
- 46.
Another 59,400 departing migrants in 2008 were classified as low-skilled, while 2,800 were classified as professionals; almost all low-skilled and professional migrants were men.
- 47.
Since August 2008, UAE households pay Dh 200 ($55) for an insurance policy to provide death and repatriation benefits for Sri Lankan domestic helpers; the insurance pays up to Dh 30,000 ($8,175) in death benefits.
- 48.
The governance part of the National Policy outlines the institutional structure to manage labor migration and the legislative and regulatory framework. The protection part covers predeparture, employment abroad, and return and reintegration. The development section outlines ways in which remittances and the return of skills can accelerate development.
- 49.
The largest recruiter in 2009 was Lord Manpower, which sent 10,600 migrants abroad, followed by Nafa Travels, 5,400 migrants, and Gulf Line, 3,100 migrants.
- 50.
The SLBFE plans to launch a Web-Based Recruitment System (WBRS) in 2011 that will allow foreign employers and recruiters to view the qualifications of SL workers registered with SLBFE.
- 51.
Some migrant-receiving countries required employers of migrant workers to pay them via regulated financial institutions, such as requiring them to deposit migrant earnings in banks. The immediate goal of direct-deposit programs was often to expedite the resolution of unpaid wage disputes, but a side effect was to encourage migrants to use the bank receiving their earnings to remit funds to family at home.
- 52.
Sharma and Zaman (2009) put the average cost of migrating at $2,300 in 2007.
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Martin, P. (2012). Reducing Migration Costs and Maximizing Human Development. In: Omelaniuk, I. (eds) Global Perspectives on Migration and Development. Global Migration Issues, vol 1. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-4110-2_2
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