Labor Migration – Factors and Alternatives
No. 4 2006 October/ December

International migration may become a major phenomenon of the 21st century, yet it is not unprecedented; suffice it to recall the invasion of the Roman Empire by barbarians in the 4th-5th centuries, the mass re-settlements in the Middle Ages, and the movement of millions of migrants from Europe to America and Russia in the 19th-early 20th century.


In the decades that saw the United States rise into a world power (between the Civil War and World War I), 13 to 15 percent of its population was comprised of immigrants from other nations. At the turn of the 20th century, every fifth American was a native of another country; immigrants comprised more than half of the manpower resources in major cities. Although the nation and the government were not always enthusiastic about immigrants, the U.S. is generally associated with an open doors policy. Between the 1920s and the 1960s, immigration into the U.S. sharply decreased, while the percentage of foreign-born Americans fell to 5 percent by 1970. By 2004, however, this figure rose to 12 percent, almost reaching the record high of 100 years ago.





The search for material well-being has always been the main motive behind the largest and most stable migration flows. Actually, legal immigration is as easy to control as imports are regulated by means of bans, privileges and preferences. This does not mean, however, that the number of non-residents will necessarily decrease since immigration may take illegal forms.


It would be reasonable to assume that potential migrants compare the expected income utility in the destination country with that in the exit country. This assumption makes sense only if one takes into account the great variety of individual expectations, which differ considerably according to a person’s age, education, qualification, and property status. Even comparatively simple assumptions – where potential migrants compare discounted real incomes and the accessibility of their sources at home and abroad – may significantly differ from the reality which is usually characterized by shortage of information and the inability to interpret it.


However, income differential alone may not be a sufficient motive for labor migration. After all, people are not guided by economic considerations only. An individual’s native cultural environment, especially the native tongue, and the way of life known since childhood that includes family ties and friends, are very important factors of restraint that cannot be expressed in figures. These factors may counterbalance economic reasons for emigration. This is why migration flows between countries often come to an end after some absolute economic threshold has been achieved, and long before the economic development levels of the sending and receiving countries even out.


Empirical studies have shown that the flow of labor migrants from Southern Europe to Western Europe, for example, came to a halt in the 1980s when the gross domestic product (GDP) in Italy, Spain, Portugal and Greece reached U.S. $4,000 per capita. It has also been observed that the levels of net migration between the member countries of the Organization for Economic Cooperation and Development (OECD) decreases when the difference in per capita GDP between them falls to 50 percent.


At the same time, the sum of migration flows on a global scale shows no sign of decreasing. The huge difference in economic, political and social conditions still prompts very many people to move to where life is better. Although the geographical locations of “points of departure” and “centers of gravity” for migrants tend to change, it is difficult to imagine in the foreseeable future that economic conditions in the world will even out to a point where labor migration will cease completely. On the contrary, the unevenness in economic development will increase, while the global accessibility of information will shape motivations to migrate in a more consistent way.


In the receiving countries, immigration helps meet the labor demand, promotes the upward social mobility of the indigenous population by filling the lower level of the social pyramid, and increases the profitability of business. Finally, immigration typically increases the competitiveness of the national economy by reducing the price of labor.


The demographic situation in the developed countries that are the main centers of gravitation for migrants is a fundamentally new factor, and one that will determine the dynamics of international labor migration in the decades to come. But before analyzing this factor, it is appropriate to mention two other features of contemporary migration whose significance has drastically increased.



Graph 1. Natural Population Growth (million), 1950-2050


Source: United Nations (2005). World Population Prospects. The 2004 Revision. Comprehensive Dataset. Sales No. E.05.XIII. 12


First, modern means of transportation and communication greatly facilitate migration. In particular, they create opportunities, formerly unknown, for temporary (return) migration over large distances (for example, from the Philippines to the United States or the Persian Gulf states).


Second, labor migration is becoming increasingly intertwined with the multifaceted globalization process. The prevailing concept of globalization proclaims the essential significance of greater freedom for the international movement of capitals, goods, services, information and ideas. It would be logical to provide as much freedom for the movement of people as well. However, not everybody supports this idea.


Illegal (more precisely, irregular or undocumented) labor migration has many negative attributes. In particular, it violates a country’s national sovereignty and can even pose a threat to public safety, especially when labor migration is linked with corruption and organized crime. At the same time, it serves as a kind of useful lubricant for inflexible state machinery, removing conflicts between the globalization of the labor market and the traditionally restrictive-prohibitive nature of national migration policies.





The demographic situation in the developed countries – low fertility and increased life expectancy, which result in aging and depopulation – creates a historically unprecedented demand for mass immigration. Therefore, selective immigration (in terms of age) is the only practical way to “slow down” population aging. Attempts to bring about this change by “controlling” fertility or mortality are fruitless for the following reasons.


Mortality. In the second half of the 20th century, the potential for infant and child mortality decreases was exhausted and further increase in life expectancy resulted from health improvements at older ages, leading to demographic aging. As a result, the last few decades of the 20th century were marked by the growth of the crude death rate, which naturally had negative effects on population growth.


It happens, albeit rarely, that infant and child mortality corresponds to standards of the advanced nations, whereas adult death rates exceed those of many developing countries. Russia provides a deplorable example. Male life expectancy in this country stands at only 59 years, which is 20 years less than in Japan, 15 years less than in Germany, and 11 years less than in China (the situation with female life expectancy in Russia is somewhat better). Even if fertility increases by half in Russia, the population will still decrease by 20 percent by the year 2050, provided there is no immigration into the country (or by 25 percent if high mortality remains stable).


Fertility. Meanwhile, the natural population decline is mainly caused by fertility decrease below the level of simple reproduction, that is, two children per woman. In the 19th-20th centuries, the universal and largely spontaneous transition from large to small families, which proceeded without state interference, was both a consequence and a factor of the modernization of European societies. Developing nations followed suit after World War II. Many states, with the support of international organizations, assumed the role of catalysts to reduce fertility and achieved outstanding successes. It should be remembered that the radical fertility decline not only promoted the national development of third world countries (the most vivid examples are the Asian “tigers” and “tiger cubs”), but also curbed the global population explosion that might have had dangerous consequences for all mankind. Nevertheless, the population of the developing countries will keep growing for several more decades.


Yet, contrary to the formerly dominant opinion, decreasing birth rates failed to stabilize at the level of simple reproduction. In all industrialized countries (except for the U.S.) and in an increasing number of developing countries (including China) they fell below this critical level; in about twenty countries (including Russia) they dropped far below this level. Although experts are debating the specific reasons for the “super low” birth rates, it is obvious that the nature and fabric of industrialized, or rather post-industrialized, democratic societies create a system of motivations and possibilities that is incompatible with simple reproduction.


This contradiction has a systemic nature, which several countries have tried but failed to overcome by means of various and expensive measures. There are no grounds to believe that the reasons for the lowest-low fertility in Russia are any different. Therefore, in working out an approach to migration problems, one should proceed from the assumption, recently accepted by the European Union, that the demographic regime of very low birth rates will persist for the medium term (20 to 30 years).



Graph 2. Projection of Population Aged 15-64 (million), 2005-2050


Source: United Nations (2005). World Population Prospects. The 2004 Revision. Comprehensive Dataset. Sales No. E.05.XIII. 12


In Germany, Italy, and all of the European countries located on the territory of the former Soviet Union, the working-age population has been decreasing for several years now. If there is no substantial increase of inflow of migrants (in some countries, including Russia, Italy and Ukraine – by several hundred percent), in the next few years the labor markets will start shrinking in all developed countries (except the United Kingdom and the United States). In 2005, the working-age population of the European Union exceeded that in the United States by 55 percent. If migration into Europe does not increase, this gap will close by the middle of the century. American demographic health is due to high fertility (about two children per woman) and a steady migration inflow (about one million legal immigrants alone), as well as by the interaction of these factors, since birth rates among immigrants are higher than those among the indigenous population.


As distinct from a majority of other developed countries, depopulation in Russia – a huge and sparsely populated country – poses a potential threat to its security and territorial integrity, impedes the growth of markets for consumer goods and services, prevents the expansion of transportation networks, and complicates the development of the eastern and northern regions that are rich in natural resources.





Potential labor supply is formed by demographic dynamics and the intensity of labor utilization. The dynamics of the working-age population for the next 15 to 20 years has been set by past fertility. The level of economic activity (that is, the level of participation in the labor market), employment rates, and real working time per employed person determine the overall intensity of labor utilization. This indicator varies amongst the Western countries. In Great Britain and the United States, the total number of hours worked annually per person in the working age exceeds that in France by 50 and 100 percent, respectively.


Employment. The most obvious way to use labor resources more intensively is to reduce unemployment, but the European experience in this respect is not very encouraging. In terms of unemployment rates, Russia is close to the EU countries. One must bear in mind that the reduction of unemployment results in appreciation of labor and, more importantly, it puts workers in a better position to uphold other interests, especially in what concerns the length of the working day (week), vacations and holidays.


Economic activity. The intensity of labor utilization has increased in many EU countries over the last decade largely due to one of the three aforementioned factors, namely the level of economic activity, primarily among women. On the other hand, the growth of women’s economic activity has played a role in the fertility decline.


At the same time, it would be reasonable to increase the employment rates of older citizens, as the expectancy of healthy life in all countries (except for Russia and Ukraine) has by far exceeded the statutory retirement age. The expanding service economy better meets the physical abilities of older people than “material production.” This seems to be a promising idea because the number of such people is great and will continue to expand rapidly.


European countries differ greatly in the level of involvement of elderly people in the labor market. For example, the level of economic activity among people aged 60 to 69 varies from less than 10 percent in Austria and Belgium to over 30 percent in Denmark and Portugal. Russia (with about 20 percent) occupies an intermediate position.


Increasing the real working time per employed person. A higher intensity of labor utilization, achieved in various ways, can considerably offset shortages in the labor supply. However, even heroic efforts to intensify labor utilization are unable to counterbalance the accumulated effect of low birth rates, in particular in Germany, Italy, Japan, Russia, Spain, and Ukraine. The problem can only be solved by boosting labor immigration, which Italy and Spain have already started to do.


The alternative is to dramatically increase labor productivity; otherwise, a decline in production is inevitable. On this point, some may suggest arguments in favor of negative economic growth: for example, the reduction of production in a country with declining population is compatible with the growth of well-being, contributing at the same to global sustainable development.


However, a shrinking economy is a theoretical terra incognita. Besides, it is not easy for a country to become reconciled to a decrease of its economic and geopolitical might, especially in comparison with countries that do not suffer from a demographic decline.


Some economists say that a redeployment of industries and agriculture to labor-rich developing countries will let developed countries release enough manpower resources for the services sector. Theoretically, extrapolating the existing trend and using it for restoring the balance on the labor market may seem attractive. Indeed, the outsourcing strategy can mitigate the situation in the medium term (for example, until 2020, that is, at the early stage of depopulation), increase the efficiency of the global economy and promote the development of recipient countries. However, this strategy cannot compensate for the shortage of labor in developed countries, specifically to provide medium-size and small businesses with personnel.


By way of illustration, let’s do some simple math concerning the situation in the European Union. Suppose we are provided with total employment and the share of industry and agriculture in 2004, as well as the working-age population in the years 2020 and 2050. The demographic projection assumes moderately decreasing mortality, medium-level fertility (that is, higher than today but lower than simple reproduction) and stable net migration (at the current level). Now we must determine how much industrial and agricultural employment should be reduced in comparison with 2004 in order to compensate for the reduction of the working-age population and thus prevent a decrease in the number of employed in other sectors (essentially in services).


The answer is as follows: to achieve this goal, the number of employed in industry and agriculture in the European Union in 2020 should be 8 percent less, and 2050 it should be 63 percent less, than in 2004. Since industry includes sectors that cannot be outsourced, such as construction, the required reduction in the sectors that can be outsourced will be even higher.


The aggregated data for the EU average varied demographic situations in the member States. For example, relatively high fertility in France makes the above hypothetical restructuring of the economy unnecessary in the next few decades. Yet, by the year 2050, the number of employed in industry and agriculture will have to be reduced by 30 percent if immigration does not increase. In Britain, relatively high fertility (although lower than in France), combined with steadily high (at the current level) immigration, stabilize the working-age population.


The situation is different in Germany, Italy and Spain – the EU countries where fertility is at lowest-low levels. In Germany, keeping immigration at its present high level will not prevent working-age population from shrinking. Therefore, in order to preserve the services sector, employment in industry and agriculture will have to be cut by 18 percent by the year 2020, and by 90 percent by 2050. The situation in Italy is extreme. The demographically determined reduction of employment in industry must reach 36 percent by 2020, and by 2050 employment in industry, agriculture, and almost half (44 percent) of the services will be eliminated. Since pertinent demographic features of Russia are very close to those in Italy, prospects for the supply of labor for the Russian economy are equally gloomy.


These examples illustrate the far-reaching consequences of demographic changes and indicate the scale of the required increase in immigration.





Many governments of the industrialized countries agree with economic (and now also demographic) arguments in favor of a more liberal approach to international migration. At the same time they are concerned about the growing number of foreigners in their country (even those who have come to stay temporarily) as they think it poses a threat to national security. Such position prevails almost everywhere.


Resettlement. Permanent immigration (resettlement) is a reliable way to develop unpopulated or sparsely populated territories and to fill demographic lacunas. The adaptation of immigrants to a new society and, ultimately, their integration are seldom conflict-free. However, the experience of the United States, Canada and Australia shows that successful integration of immigrants is possible if they recognize the rules of behavior and social values of the country that has accepted them, and if the receiving country ensures the legitimate rights of immigrants and a tolerant attitude toward them. Some countries pursue an immigration policy of full assimilation. The most vivid example is probably France dominated by the idea of a uniform national identity based on cultural homogeneity. The choice between coexistence and assimilation does not necessarily guarantee success.


It is a mistake to think that Russia is not prepared for a mass permanent immigration of a non-Russian population. During its expansion in previous centuries, the Russian state integrated many ethnic and confessional groups. The Russian Empire purposefully invited immigrants from Europe in the 18th century, creating for them preferential regimes of landownership, taxation and military conscription. Later, in the period between the reforms of the 1860s and the Revolution of 1917, Russia became a country of mass immigration: net migration accumulated in those years reached 4.5 million people; before World War I, the average annual migration turnover reached 500,000 people.


Unfortunately, in recent years, Russia has not been successful in absorbing even Russian-speaking immigrants. Although Moscow has repeatedly declared that it views ethnic Russians in the ex-Soviet Union as the main reserve of immigrants into Russia, it still does not have an intelligible strategy for attracting and assimilating these groups, while the existing rules for granting Russian citizenship remain highly restrictive.


At the same time, the emphasis on “ethnic reunification” is dangerous in two respects. First, the division of immigrants into “ours and others” feeds discrimination, as well as inter-ethnic and inter-religion conflicts. Second, viable Russian-speaking diasporas in other countries of the Commonwealth of Independent States, as well as in the Baltic States, meet Russia’s regional and geopolitical interests. Besides, one should not overestimate the numerical potential of such immigration. Therefore, strategically speaking, the main potential reserves of immigrants into Russia are members of the titular nationalities of labor-surplus countries south of Russia.


Stereotyped perceptions of “aliens” and the boundaries for acceptable behavior may have historical and cultural roots, but they are also largely influenced by the mass media. At the community level, the specific projects of local administrations and the degree of maturity of civil society are most important. Yet, the federal government remains passive and this may sow the seeds of dissension. The basic function of the state is to create legal mechanisms that would help implement economic and other interests of the parties while corresponding to the law of the land.


On a more positive note, the government and municipalities occasionally implement special housing programs for immigrants. Some of these programs provide subsidized housing for low-income people irrespective of their citizenship (immigration) status. Formerly, the authorities built special complexes of apartment houses (called “projects” in the U.S. or HLM – habitations а loyer modйrй – in France), neighborhoods, and satellite towns, which later turned into marginalized ghettoes. A more promising variant for large cities, even though more complicated, is helping immigrants to take root in the local milieu. This does not mean, however, that a compact settlement of immigrants is always unacceptable. In the mid-1990s, for example, an interesting idea called the ‘Silver Ring Project’ (later forgotten) was proposed in Russia to attract immigrants to settle in small towns in the northwest of the country, where the population was shrinking.


Return migration. Return (temporary) labor migration can be spontaneous or organized in joint programs between the sending and receiving states. Spontaneous temporary migration can be legal or illegal; organized return migration is legal by definition. In Russia, gastarbeiters are equated with illegal immigrants, although in German this word means ‘guest workers,’ referring essentially to foreign workers who have legally entered the country.


The main advantage of spontaneous return migration is that labor, housing and other markets regulate its flows. In particular, this means the absence of the need for risky large-scale and long-term public programs. At the same time, the effectiveness of this form of migration directly depends on the state.


First, it is necessary to simplify immigration formalities in order to adequately react to an increased demand for labor. Meanwhile, administrative obstacles that hamper the movement of immigrants have become more stringent in the last few years, thus boosting levels of illegal immigration in many countries.


Second, the state can influence migrants to return back to their homelands. There have been intensive efforts in the last few years to find economic incentives in offsetting pension savings or partial compensating social taxes.


The organized recruitment of labor migrants was widely practiced in postwar Europe. In the 1950s-1960s, there were large-scale interstate programs to temporarily attract unskilled labor into Germany from Italy and Turkey, and into France from Algeria. The programs succeeded in attracting the required number of labor migrants, but the large majority of them stayed indefinitely. Moreover, in the early 1970s the decisions to terminate labor immigration from beyond the Common Market discouraged even more labor migrants from returning home and increased the flows of immigrants entering a country on the grounds of family reunification. At the same time, an industrial crisis and the restructuring of the economy made a large part of the unskilled labor redundant.


As the gastarbeiters, as a rule, were segregated territorially, there emerged conditions for their large-scale marginalization and this has become something of a hereditary trait. Yet, the main problem was rooted not in the cultural or confessional alienation of the immigrants, but in the primary goal pursued by the governments of the receiving countries: the filling of the lower strata of the socio-occupational pyramid. Despite serious difficulties in some Western countries in the past due to the organized recruitment of labor migrants, temporary migration programs are still widely discussed around the world in various contexts. For example, the Philippines, in cooperation with the migrant-receiving countries (i.e., Persian Gulf states and the U.S.) have created an efficient system for the rotation of their citizens working abroad.


The encouragement of return migration meets the economic and political interests of the CIS countries, and is largely facilitated by their still viable common cultural space. In reality, this must translate into the creation of a single labor market in the CIS, for which there are many historical, economic and demographic prerequisites. Besides, there is no need to erect an insurmountable wall between resettlement and return migration – let the economy, marital ties, the socio-cultural environment and people’s own choice decide where they should settle and for how long.


But this does not mean that the state should keep aloof from these problems. When non-citizens enter a country it is not a right but a privilege, and the state can and must establish criteria for granting this privilege. These criteria must meet national and international law and be reasonable. When taking into account these considerations, we must remember that population aging combined with negative natural population growth will for a long time be crucial factors in the development of many countries, including Russia.