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Top 10 of 2009 - Issue #1: The Recession's Impact on Immigrants

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Top 10 of 2009 - Issue #1: The Recession's Impact on Immigrants

Foreign workers from South Asia stroll through a park in Singapore. (Photo by Benny Lim)

The recession that began in the United States two years ago and spread to most other parts of the world has had a deeper and more global effect on migration than any other economic downturn in the post-World War II era.

And while flows of temporary migrants and the unauthorized have dipped, few countries have seen signs of mass return migration (see Issue #4: What the Recession Wasn't).

For some countries, as unemployment rates have risen significantly, the recession has spurred initiatives to persuade unemployed immigrants to go home and to restrict flows of new immigrants, as well as to raise the bar for the highly skilled (see Issue #3: Buyer's Remorse on Immigration Continues).

Among the immigrants most affected are those in North America, Asia, and Europe. Across the world's largest economies, immigrants during this recession generally have higher unemployment rates than the native born. In the United Kingdom and Ireland, tens of thousands of Eastern Europeans who lost their jobs have chosen to leave, in part because their status as European Union citizens means they can easily return.

Not surprisingly, remittances to immigrants' families in Latin America, the Middle East, and North Africa have decreased as well — although they have risen in Asia.

As a rule, however, and despite higher unemployment rates, immigrants are hunkering down and waiting for the economy to improve.

North America

In the United States, the housing woes that started in late 2006 and the subsequent collapse of the construction sector disproportionately affected immigrants from Mexico, which is the dominant immigrant group in the United States, and Central America.

As unemployment in the United States has kept climbing (it now stands at 10.2 percent), the rate for immigrants from Mexico and Central America increased sharply, reaching as high as 13.1 percent in January 2009.

By October 2009, the unemployment rate for this group stood at 11.5 percent compared to 9.5 percent for those born in the United States — a reversal of patterns that have stood firm for two decades. Among the estimated 2.3 to 2.4 million unemployed immigrants in October 2009, nearly half were from Mexico and Central America.

This situation has not caused a substantial wave of returns to Mexico, however. Over the last year, the Mexican immigrant population, about 55 percent of which resides in the United States illegally, has decreased only slightly, from an estimated 12.1 million in July 2008 to 11.9 million in August 2009.

Canada

Although the recession in Canada has been less severe than in other Western countries, immigrants there have also experienced higher unemployment rates than natives, no matter how long they have lived in Canada. For immigrants in Canada five years or less, Statistics Canada reports that unemployment was 13.9 percent in October 2009, up from 10.7 percent a year earlier.

Among immigrants living in Canada 10 years or more, unemployment stood at 4.8 percent in October 2008, comparable to the native-born unemployment rate of 4.5 percent at the time. Yet, by October 2009, long-term immigrants had an unemployment rate of 8.3 percent compared to 6.2 percent for natives.

Asia

According to several surveys conducted in Japan, approximately 40 percent of Latin American workers, most of them of Japanese origin, were unemployed by the end of 2008 and the beginning of 2009, compared to just 5 percent in 2005.

In January, Malaysia's government stopped the hiring of foreign workers in certain sectors and made it clear that companies should terminate foreign workers first. The government reported in August that the number of foreign workers had been reduced by 200,000 in two months, bringing the total down to 1.9 million.

In Taiwan, migrant layoffs were concentrated in electronics and garment manufacturing, affecting primarily Filipina and Thai women.

Singapore's prime minister noted in September that foreigners accounted for most of the job losses in the first half of 2009, and that 21,000 foreigners had left the city-state.

Europe

Similar to the United States, Latin American immigrants in Spain were concentrated in the construction sector, and many have lost their jobs as the sector has shed over 560,000 jobs in the last year, more than in industry or services.

In the third quarter of 2009, the unemployment rate for Spaniards was 17.9 percent but 27.5 percent for foreign nationals age 16 and older, according to Spain's National Institute for Statistics; about 1 million foreign nationals were unemployed.

Hundreds of thousands of Eastern Europeans entered Ireland and the United Kingdom after their countries (known as the Accession 8 or A8) joined the European Union in May 2004. They were able to come because the United Kingdom and Ireland, along with Sweden, immediately allowed citizens of the new Member States to work without restrictions.

In Ireland, nationals from the new EU Member States collectively make up the largest immigrant group in the country, with about 5 percent of the population age 15 and older in the second quarter of 2009, according to the Quarterly National Household Survey.

The foreign born from Poland were the second largest foreign-born group (after the Indian foreign born) in the United Kingdom in 2008. Many of these immigrants took lower-skilled jobs in manufacturing, construction, and the services industries — among those shedding the most jobs in the recession.

Unlike labor migrants in most parts of the world, the Eastern Europeans in Ireland and the United Kingdom have been going home in large numbers knowing that returning to Dublin or London when conditions improve is as simple as booking a flight.

In Ireland, where the unemployment rate hit 12.0 percent in the second quarter (Q2) of 2009, there were 25 percent fewer nationals from new EU Member States employed in Q2 2009 compared to Q2 2008. At the same time, the number of Eastern Europeans in Ireland who were unemployed more than doubled, from 12,000 to 29,100. While non-Irish nationals made up 15.8 percent of Ireland's labor force in Q2 2008, a year later they accounted for only 14.2 percent.

Data on employment level by nationality show that the number of A8 nationals working in the United Kingdom dropped from 503,000 to 483,000 (or 4.0 percent) between July-September 2008 and July-September 2009.

Over the same period, the employment level for UK citizens went down 1.6 percent and the level for all non-UK nationals decreased 2.0 percent. The total unemployment rate in the United Kingdom as of July-September 2009 was 7.8 percent.

According to provisional 2008 data from the UK International Passenger Survey, emigration among A8 citizens began rising in early 2008, from 32,000 for the year ended March 2008 to 66,000 for the year ended December 2008.

Immigration of A8 citizens reached an all-time high in the year ended December 2007, at 109,000. But immigration dropped to 79,000 for the year ended December 2008. For A8 nationals, net migration in December 2009 was at its lowest point since the A8 joined the European Union.

UK national insurance number (NINO) data provide additional evidence that fewer Eastern Europeans are arriving (any non-UK citizen looking to work or claim benefits/tax credits in the country must have a NINO). The number of NINOs issued to citizens from the new EU Member States dropped 23 percent from their peak of 332,440 in 2007-2008 to 257,040 in 2008-2009. But the decrease for Polish nationals was 36 percent over the same period, from 210,660 to 134,360.

Remittances

When migrants lose their jobs, they have less money to survive on and to send home. In terms of remittances, the $338 billion total for 2008 came in above World Bank expectations, for the most part due to very large increases of remittances to India ($14.4 billion more than in 2007) and China (+$9.7 billion), as well as Bangladesh (+$2.4 billion) and the Philippines (+$2.3 billion).

In the case of India, the increase was mostly due to currency exchange fluctuations and extremely favorable conditions for purchasing real estate.

The World Bank projected in November that remittances will drop 6 percent to $317 billion for 2009, largely because of the recession.

According to Migration Policy Institute analysis of Central Bank data, the countries that have experienced the steepest declines between 2007-2008 and 2008-2009 are Turkey, Moldova, Poland, Ecuador, Morocco, Mexico, and Kenya. In contrast, remittances to South Asia have risen, not surprising given India's substantial increase in 2008. Also, many South Asian migrants work in the gulf countries, where the recession has not been as severe.

With 31 percent of Moldova's GDP coming from remittances, the decrease there is far more significant than the one in Turkey, where remittances are just 0.2 percent of national income. Ecuador has suffered because its migrants are concentrated in recession-battered Spain and the United States.

The World Bank reported that remittances to Mexico declined 13.4 percent for the first nine months of 2009 compared to a year earlier but noted that the downward trend for all of Latin America appears to be bottoming out.

Since many economists are predicting a jobless global recovery, immigrants will probably not be much better off in 2010 than they were in 2009.

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