13.10.2006
Labor Migration – Factors and Alternatives
№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.

 

MOTIVES BEHIND MIGRATION

 

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.

 

DEMOGRAPHIC
DEMAND 
FOR
IMMIGRATION

 

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.

 

A LABOR
SUPPLY 
WITHOUT ADDITIONAL
IMMIGRATION?

 

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.

 

REGULATION OF MIGRATIONS

 

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.