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Linking Temporary Worker Schemes with Development

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Linking Temporary Worker Schemes with Development

Unprecedented in United Nations history, last year's High-Level Dialogue on International Migration and Development (HLD) tackled the politically sensitive issue of migration, with a particular focus on exploring the synergy between the movement of people and development in their countries of origin.

Although the two-day event ended without offering firm conclusions on the exact nature of this synergy — or with definite policy paths governments can and should take — the dialogue clearly established that, first and foremost, migration has linkages to development and vice versa. Second, these linkages are complex and worthy of further exploration and dialogue.

This recognition from the international community comes at a time when many migrant-receiving countries are in the middle of hotly contested policy debates on migration. In these debates, temporary worker schemes have reemerged as one of the potential tools for addressing the changing and growing economic needs of receiving countries.

Not surprisingly, the renewed interest in these schemes has already produced a number of policy suggestions. However, with a few exceptions, the recommendations so far have focused on meeting the needs of the receiving countries and not necessarily the needs of migrants and/or their countries of origin.

In the United States, for example, at around the same time of the HLD in New York, the U.S. Congress was considering immigration reform. The discussion did not include any mention of the proposed reform's developmental impact on countries of origin, such as Mexico.

Growth of Temporary Migration and Impact on Sending Countries

Estimates from the International Labor Organization (ILO) reveal a rising trend of temporary migration. Since 1997, the number of temporary migrants going to countries that belong to the Organization for Economic Cooperation and Development (OECD) has increased annually by 9 percent. Temporary migration to East and West Asia, including Saudi Arabia and the United Arab Emirates, has also been steadily increasing by 2.5 percent per year since 1985.

Global estimates of the proportion of low-skilled worked versus high-skilled workers are difficult to attain since receiving governments do not explicitly identify them in published permit statistics. However, according to the OECD, "It would be fair to say that virtually every category of temporary worker...is found in every country."

Despite the prevalence of temporary worker schemes, particularly in the Middle East since the 1970s and in the newly developed countries in East Asia since the 1980s, there are still very few studies on their developmental impact. So far, the results from the studies that have been conducted have been mixed.

The most-cited example of a successful scheme dates back to the 1970s, when Korean firms bid on construction projects in the Middle East and took Korean workers with them. In the process, the firms acquired project management skills. Nearly all Korean workers went home when their projects were completed. It is argued that these new skills were later applied to the large construction projects in the Korean industrialization drive, focused on heavy industry and chemicals, of the 1970s and 1980s.

Other studies of more recent schemes have also revealed positive results. Sociologist Tanya Basok's case study of Mexican seasonal migration to Canada, for example, found that Mexican migrant workers have actually invested in agricultural land and small businesses at home.

Similarly, economist David Ellerman, looking into Slovenia's temporary labor scheme with Moldova in the 1990s, noted that some workers use their savings for investments back in Moldova. He also observed that some Slovenian companies subcontracted and invested in Moldova.

However, the findings of other studies are more negative. In 1999, researcher Gopinathan Nair found that temporary contract workers returning to the Indian state of Kerala from the Middle East are, in general, "middle-aged persons with low-levels of education, skills, and experience," about half of whom were reportedly unemployed upon return.

Early studies of Turkish guest workers returning from Germany in the 1970s also suggested that fewer than 10 percent had received any useful training while in Germany. Recent research confirms that very few returnees to Thailand in the 1990s held occupations that might have imparted new skills.

Indeed, the problem is most acute among the unskilled and semiskilled workers who constitute a significant fraction of overseas migration. Political Scientist Devesh Kapur stated that "little learning" takes place in the many domestic-care jobs held by South Asian immigrants in the Gulf countries and Central Americans in the United States.

In their 2005 book Give Us Your Best and Brightest, Kapur and coauthor John McHale also noted that the Bangladeshis employed in construction in Singapore are "showing little sign of stimulating technological change in that sector back home despite their exposure to superior technologies."

Moving Beyond Traditional Guest Worker Programs

Clearly, temporary worker schemes do not have an easy-to-measure impact on the development of sending countries. The outcome depends on many factors, foremost the design of the schemes themselves. Including the development dimension in designing temporary worker schemes requires careful reconsideration of issues that, in some cases, fall beyond traditional concerns.

The biggest criticism of past schemes, particularly European schemes of the 1960s, has been the "permanent" character of what was originally planned as temporary migration. As a result, recent discussions have centered mainly on provisions to ensure that temporary migrants do indeed return. Governments tend to ignore how these provisions affect the social and economic well-being of migrants or the development of their respective countries of origin in the short and long term.

To encourage return, some analysts have suggested the required purchase of financial security bonds or levies either paid by the worker or, more usually, the employer; this approach is similar to schemes implemented in Singapore, Greece, and Israel. As economist Philip Martin has argued, levies level the playing field and generate funds for enforcement, integration assistance, and other purposes.

Another often-cited suggestion is the mandatory saving account whereby temporary migrants pay a proportion of their earnings into a fund redeemable only upon return, similar to savings plans already operational in a number of countries such as Taiwan, and selectively in the United States and the UK. As Martin noted, analysts supporting a more liberal immigration policy towards the unskilled have argued that deferring a portion of wages this way makes it politically more acceptable to allow temporary workers in receiving countries.

A World Bank economist even went so far as to suggest the hiring of a private insurance agency with the power to apprehend temporary migrants who fail to return.

In Maurice Schiff's proposed "solution to the guest-worker program," a private agency buys an employer's foreign-worker bond and charges an insurance premium. If the guest worker returns home, the agency redeems the bond with interest; if not, the agency will try to apprehend the worker to recover the bond's money. If the worker is not found, the agency forfeits the bond.

Whether these proposals are ultimately good for development or not is unclear. If these provisions, by limiting workers' rights, were to make temporary schemes more palatable in receiving countries, and thus result in the opening of more channels, they could be good for development.

On the other hand, some analysts maintain that provisions seriously limiting the rights of temporary workers can only lead to negative results. Pending more serious studies on these issues, firm conclusions are difficult to attain.

However, adding the development dimension further complicates already muddled national discussions on temporary worker schemes. It requires the reassessment of a number of issues from a different perspective and, ultimately, might even call for a restructuring of long-established priorities. Two of the most pressing set of issues at the moment pertain to working arrangements and recruitment, particularly of the highly skilled.

Working Arrangements: Rigid or Flexible?

A recent policy brief from OECD suggests that development-friendly temporary programs should be associated with more flexible and open working arrangements. There is a concern that present arrangements — characterized, for instance, by fixed duration of stay, uncertain prospects for return, and tying of workers to specific employers — are not conducive to development.

The same policy brief also highlights the merits of "circular migration arrangements" associated with multiannual visas for short-term work under flexible contracts. Some of the recent writings on this issue clearly call for more flexibility and openness in the system, such as longer and more flexible contracts, financial return incentives, options of reentry, and free agency.

Longer Contracts

A number of experts have concluded that typical temporary contracts are not long enough for migrants to "generate the net financial gains necessary to make migration financially worthwhile."

For example, Martin Ruhs, a labor market economist, argued in a 2005 paper that the UK's one-year work permits issued to migrants in low-wage occupations do not give workers enough time in the country. He noted that it is "highly questionable whether it is realistic to expect that it makes any financial sense for Bangladeshi workers — who have been the largest group of recipients of [these] permits — to migrate and work in a low-wage job in the UK for one year only."

Economist Catherine Barber and her colleagues raised the same question in a 2005 working paper, noting that to "make migration work for development, temporary migrant workers simply need more time. A 12-month scheme may be too short to earn the kind of money that would set migrant workers up in business, or allow meaningful investment at home."

Indeed, historian Francesco Cerase's analysis from almost 30 years ago that "return of innovation" is the most relevant factor to development still holds today.

In a 2004 paper, sociologists Peggy Levitt and Ninna Sorenson point to studies suggesting that return after a brief period abroad is less likely to contribute to development. This is especially true among low-skilled returnees who had to return unexpectedly and/or were unable to adapt to the host country. They note the greater developmental potential of returning migrants who accumulated savings over a much longer stay abroad.

Financial Return Incentives

Mechanisms to transfer pension or social security contributions to the home country, to be collected by the migrant upon return or by specified members of his/her family, have also been suggested.

The UK House of Commons International Development Committee Report published in 2004 raised this issue by noting the "sense of fairness" in this suggestion given that, upon return, migrants who leave the UK will not be able to make any future claims on their contributions.

Geographer Richard Black also has suggested the offering of preferential interest rates on savings lodged in approved home-country accounts. Another possibility would be for receiving governments to match investments in approved business initiatives, health insurance, or charitable contributions that could be tapped upon return.

Options of Reentry

Scholars believe migrants overstay their visas partly out of fear that they will not be able to come back. Thus, Barber and her colleagues have suggested allowing the option of multiple reentries. Programs extending the option of reapplying with some kind of preferential access to work permits potentially may give migrants the confidence to return home.

Indeed, Switzerland's long practice of allowing temporary access to its labor market on a renewable basis appears to encourage return at the end of each contract. A similar system is in place in Canada's temporary worker program with Mexico. A 2006 study by a Canadian think tank, the North-South Institute, found that "between 70 and 80 percent of the migrants are rehired by name from a previous season and receive priority in the immigration processing."

Contract Worker Versus Free Agent

Martin also notes that most temporary worker schemes tie migrants to particular employers and jobs with contracts, and restrict or prohibit migrants from changing employers.

The H-1B visa, for instance, is the largest of such programs in the United States. It enables employers to hire foreign professionals with at least a university education. Although H-1B visa holders can remain in the country for up to six years and, in time, can be granted permanent resident status, they are essentially tied to their employers.

The UK government, through the Highly Skilled Migrant Program (HSMP), allows foreign professionals with sufficient points on a test of personal characteristics such as education, experience, and past earnings to work as free agents. As Martin notes, the HSMP is just "among the few guest worker programs" to do so.

The United States does offer programs with more freedom but on a much smaller scale than the H-1B. Foreign students, for instance, can find jobs as an adjunct to their studies without any employer restriction. Under the North America Free Trade Agreement (NAFTA), Canadian and Mexican professionals with proof of qualifications and a job offer can also enter the United States and are permitted to change employers later on.

Portability of visas gives workers leverage in what is otherwise an unequal employment relationship ripe for abuse and exploitation.

Development-Friendly Recruitment: Who to Recruit and From Where?

Apart from working arrangements, another thorny set of issues surrounds recruitment, particularly of the highly skilled. Some have noted migrant-receiving countries' preference for hiring highly skilled migrants as well as their tendency to retain the highly skilled by providing easier access to permanent residency once migrants' contracts expire.

The UK House of Commons International Development Committee report highlights that migrant–receiving countries are eager to "employ the skills of high-skilled migrants, but are less enthusiastic when it comes to low-skill migration." In development terms, the report argued that this is "regrettable as developing countries have plentiful supplies of low-skilled labor to export but cannot spare their highly skilled personnel."

The competition to attract the best and the brightest has intensified among many developed countries. While not all emigration of highly skilled persons is detrimental to the country of origin, public losses arising from the departure of workers in vital sectors, such as health care and education, can be huge.

There is also growing concern about whether skilled migrants in a temporary scheme will actually return home once their contracts end and whether receiving countries will encourage them to do so.

In the United States, about 100,000 H-1B visa recipients receive permanent residency every year. Economist B. Lindsay Lowell estimated in 2001 that about "half of those admitted under the U.S. temporary high skilled program to meet shortages in high-end occupations ultimately remain in the United States as permanent residents." As Patrick Duffy, a human resources attorney at technology giant Intel, indicated, "The H-1B visa is just one step in making these workers U.S. workers."

To address these growing concerns, current suggestions have centered on three provisions: (1) widening channels for low-skilled migration, (2) adopting a development-sensitive approach to recruitment policies, and (3) implementing strict provisions for return at the end of fixed-term contracts. As can be gleaned from the earlier discussion on working arrangements, the development impact of the third provision (strict rules for return) is less straightforward than the first two.

Open Channels for Low-Skilled Migration

Economic models of increasing labor mobility predict that both developing and developed countries alike gain much more if labor-migration increases focus on the low skilled.

Some countries have already taken this cue. New Zealand has long sought to attract highly skilled migrants. In its recent unveiling of a new seasonal work scheme with a number of Pacific Island nations, the government emphasized the scheme's contribution to the "upskilling of Pacific workers who will then return to their home countries with new experiences and capabilities."

Development-Sensitive Approach to Recruitment

Other analyses have suggested adopting a more development-sensitive approach to recruitment either by compensating countries of origin for their losses or adopting a code of practice. The UK Department of Health in 2001 chose to adopt a code of practice, restricting the ability of National Health Service (NHS) employers to actively recruit in some developing countries unless a bilateral agreement is in place.

Three years later, the code was amended to apply to private recruitment agencies supplying the NHS with nurses and doctors. However, critics question whether the code can truly make a difference on the ground given that the private sector in general continues to recruit from countries on the "proscribed list."

Another recommendation is for receiving countries to help increase the supply of needed skilled workers in the developing world, for example in the health-care sector. Developed-country governments may choose to increase financial support for the education and training of additional key workers. Temporary visas could therefore be associated with on-the-job training programs and skill-replenishment schemes.

Others highlight the option of training medical personnel in special skills and in treatment of diseases relevant to developing countries.

For instance, during the 1960s and 1970s, China gave medical training to mostly young peasants in an intensive, three-to-six-month course. Called "barefoot doctors," the peasants provided basic health care to the rural population, including first aid; immunizations against diseases such as diphtheria, whooping cough, and measles; and health education, all without totally abandoning farm work. Governments can adapt this approach by sponsoring training in basic medical treatments.

Training and/or exchange schemes between institutions in sending and receiving countries, such as twinned hospitals or universities, can also be particularly promising.

One program often cited as a model is the U.S.-based AIDS research program of the National Institute of Health's Fogarty International Center (FIC) that started in 1988. An FIC study in 2004 found that nearly 80 percent of African trainees reportedly return home after finishing their academic training.

Incentives such as the development of health infrastructure in the trainee's home country and provision of research support upon return, coupled with the use of short-stay visas and repayment agreements to discourage continued stay, have worked well.

Whether the experiences at FIC are truly relevant, and could therefore serve as a blueprint in other areas affected by brain drain, is still a matter of debate. Relative to traditional temporary work schemes, the program itself is quite unique. Its main goal is to strengthen the capacity of institutions in low- and middle-income countries to conduct HIV/AIDS-related research. Return of the trainees is thus a critical component to the success of the program.

Other programs or schemes, however, might not be purely development oriented and thus will have different priorities. This is particularly true in areas of research and work that have critical demand in host countries, such as nursing and education.

Strict Provisions for Return?

Indeed, encouraging the return of the highly skilled seems to be the most broadly accepted way to address the brain drain. Some analysts have, therefore, advocated strict imposition of return at the end of fixed-term contracts, especially among the highly skilled. Economist Allan Findlay recommends making return a condition of issuing visas as well as more strongly discouraging employers from applying for visa extensions.

France's new immigration and integration law, passed in 2006, seems to follow this trend. The new law allows the granting of "skills and talent" visas to highly skilled foreigners. To dispel concerns about brain drain, these visas are offered only to workers who agree to return to their home countries within six years. Another criterion for issuing these visas is the expectation that the temporary stay will benefit the migrant's country of origin as well.

Unlike the first two suggestions, however, it is important to note that the developmental benefits of enforcing return among the highly skilled at the end of every fixed-term contract is not straightforward.

Some analysts have adopted the opinion that out-migration, even of the highly skilled, may positively affect the country of origin. As Kapur puts it, by the mid-1990s, "Despite continued concerns about human capital flight (especially from Africa, Russia, the Caucasus, and the Balkans), the expression 'brain drain' was less in vogue, and while not replaced was certainly challenged by concepts that implied a reversal of 'reverse technology transfer' — 'brain gain,' 'brain bank,' 'brain trust.'"

In this view, imposing return after every contract and even discouraging pathways to residency or citizenship may not be the optimal solution in what has been called the "'optimal brain drain' world."

The international mobility of highly trained workers actually enables migrants — both the educated and those with few formal skills — to gain skills that will be relevant once they choose to return, or even if they do not return permanently. Some studies looking into the return of Taiwanese and Korean expatriates in the 1990s, as well as the more recent return wave to India and China, generally support this claim. The studies further reveal that most the successful returns, in the sense that they brought investments and human capital to the countries of origin, occur in primarily voluntary settings and are not forced by an expired or nonrenewable temporary visa.

New concepts such as "virtual" return and "diaspora knowledge networks" are also attracting interest because they capture emigrants' ability to contribute to their countries of origin without returning at all. Using the Internet and other technology-based programs, migrants can establish networks and impart new skills and ideas to counterparts in countries of origin.

Conclusion

The issues surrounding temporary worker schemes are already complex. Including the development dimension clearly further complicates the picture.

However, the emerging concern over the nature and extent of the developmental impacts of temporary migration schemes on countries of origin is clearly warranted. The HLD pointed to the synergy between the movement of people and development in countries of origin. If the synergy is as strong as some argue, any migration policy, such as a temporary migration scheme, that does not consider development impact may only be setting itself up for failure.

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