59406 September 2010 . Number 30 LABOR MOBILITY IN THE MIDDLE EAST AND NORTH AFRICA: CHALLENGES AND OPPORTUNITIES Stefanie Brodmann, Yann Pouget and Roberta represents the main form of global and regional Gatti1 integration for MENA countries. In the future, increased labor mobility could foster regional Introduction: Increased labor mobility bears economic integration, a recognized priority large potential benefits for human development within the Arab World Initiative (AWI). and poverty reduction through various channels including more competitive global Challenges and opportunities: One of the main labor markets and increased efficiency in the challenges facing countries in the MENA region matching of skills supply and demand.2 Bank over the coming decade will be to absorb the support for enhanced and better managed large cohort of young and increasingly well- migration can complement broader efforts to educated labor market entrants into productive reduce poverty and promote human employment. Currently, the inability to provide development, similarly to how Bank projects on sufficient numbers of quality jobs as well as trade liberalization have helped in reducing economic imbalances within and outside the market distortions and raise welfare. With region contributes to migration towards the MENA countries becoming increasingly eager Gulf, Europe, and North America. To date, full to adopt a proactive approach to improve liberalization of migration is not a feasible migration outcomes, cross-sectoral Bank teams solution and prior efforts to reach a joint global are well positioned to respond to increasing agreement on international migration have demand for migration management systems. failed. There is agreement, however, that a realistic approach entails the establishment of Migration and development: Labor mobility effective migration management systems. has proven to be a forceful driver of Migration management aims at enhancing the convergence in living standards. Estimates benefits and reducing the risks of migration for suggest that gains from the liberalization of key stakeholders by putting in place adequate migration could surpass welfare gains from local institutions, policies and programs and by trade liberalization.3 Currently, migration fostering cooperation between migration sending and receiving countries. 4 1 Stefanie Brodmann, Junior Professional Officer, Middle Context: Recent World Bank reports have East and North Africa Region, The World Bank, Yann Pouget, Consultant, Marseille Center for Mediterranean outlined the main diagnostics on migration in Integration (CMI), and Roberta Gatti, Sector Manager, Middle East and North Africa Region, The World Bank. The authors thank Robert Holzmann and Jennifer Keller for (World Bank: Global Economic Prospects: Economic valuable input. This Quick Note was cleared by Akiko Implications of Remittances and Migration, 2006). Maeda, Acting Sector Director, Human Development, 4 Robert Holzmann and Yann Pouget: Migration Middle East and North Africa Region. Management in the Mediterranean Region: Taking Stocks, 2 UNDP: Human Development Report 2009. Reviewing, and Looking Ahead. Revised paper presented at 3 The yearly gain from a 3 percent increase in the stock of the CMI (Marseille Center for Mediterranean Integration) migrants is an estimated $175 billion compared with a workshop on Migration Management, Marseille, March 8-9, yearly gain from total trade liberalization of $155 billion 2010. MENA5 by gathering and systematically decreased from 72% in the beginning of the analyzing the available evidence while 1970s to around 23% today.7 projecting future labor supply and demand within and outside the MENA region. Demographic matches and skill mismatches: Most migrant destination countries are faced Figure 1: MENA Emigration rates, 2005 with stagnating populations and impending labor force declines, providing opportunities for the outsourcing of production as well as the importing of labor from MENA countries with large cohorts of young labor market entrants. While the demographic profile of migrant- origin countries in the MENA region complements the profile in richer destination societies, the skill profiles do not match. The demand for foreign labor in aging societies is projected to increase for medium and high- skilled labor. Yet, the current profile of labor migrants is dominated by low-skilled individuals (e.g., 70% of migrants from Maghreb countries are low-skilled) and the bulk of new labor market entrants have low levels of education. Regional diversity: The MENA region is economically diverse and includes both high Investments in skill development to prevent immigration and emigration countries.6 Of the `brain drain': Countries in the MENA region top-10 emigration countries in the world in have high rates of skilled migration relative to 2005, three were from MENA (Morocco, Egypt, the available stock of skilled workers. So far, and Algeria). Among these, Egypt is the largest the loss of human capital as a result of country of origin for workers migrating to Arab migration (`brain drain') are likely limited countries. Egyptian migrants represent 85% of given that unemployment disproportionately temporary workers in Arab countries, affects highly educated youth in MENA representing as much as 10% of the Egyptian countries. Countries in the MENA region can labor force in recent years. Estimates suggest benefit from increased labor opportunities to that at least 2.4 million Arab contractual foreign the extent that they make strong and concrete workers reside in Gulf countries, 1.5 million in efforts to increase labor force participation and other receiving countries in the region and 2.5 improve education. In a context of intense million in countries of the EU25, Iceland, competition for workers at the international Norway and Switzerland. In the Gulf, the level, major receiving countries have a clear immigrant population has increased interest in promoting education and skills dramatically from less than 3% in 1960 to over development and in creating an attractive 70% in 2005. At the same time, the percentage environment for migrants to achieve their of Arab workers among non-citizens has objectives of growth and competitiveness. Challenges to evidence-based policy making: 5 Produced at the Chief Economist's Office of the MENA A critical obstacle to ensuring well-founded region of the World Bank, Leila Zlaoui led the report Shaping the Future: A Long-Term Perspective of People and Job policy options is the limitation in availability Mobility in the Middle East and North Africa, 2009 and and access to data. Data limitations constrain Jennifer Keller managed the report Labor Migration from the analysis of the estimates, determinants, and North Africa: Development Impact, Challenges, and Policy Options, 2010. effects of migration on societies and 6 High emigration countries include Algeria, Djibouti, Egypt, the Islamic Republic of Iran, Iraq, Jordan, Lebanon, Morocco, the Syrian Arab Republic, Tunisia, West Bank and 7 International Organization for Migration: Intra-Regional Gaza, and the Republic of Yemen. High immigration Labour Mobility in the Arab World, 2010. countries include Libya and the GCC countries. September 2010 · Number 29· 2 individuals. In addition, evidence on the policies, and programs to increase the efficiency effectiveness of policies and programs is of the migration process. Migration lacking due to the absence of rigorous management aims at enhancing the benefits monitoring and evaluation (M&E). Such and reducing the risks of migration by putting evaluations are crucial for informing decision to in place adequate local institutions, policies and scale-up or redesign interventions and for programs and by fostering North-South and contributing to the body of evidence-base South-South cooperation between countries of knowledge on best practices. origin and destination. The `win-win' of labor mobility: Overall, labor The role of the World Bank: The Bank is in a mobility contributes to global economic growth unique position to broker such cooperation by and employment through multiple channels. building on its engagement with countries of These include international capital transfers origin such as Tunisia and Egypt, and and productive investments; technology destination countries, such as the Gulf transfers, diffusion of innovation, improved Cooperation Countries. Both labor-abundant governance and business practices; and labor-scarce countries in MENA seek to demographic arbitrage between young and increase the employability of their citizens: aging societies; larger and more competitive countries of origin through increased labor global labor markets with lower prices, mobility and destination countries through the increased efficiency; better matching of skill nationalization of the workforce (e.g., supply and demand; and human capital `Emiratization'). Acknowledging these formation and circulation. competing needs and finding solutions to increase efficiency and employability will Specific impacts on countries of origin and require a mutually beneficial labor migration destination: For the country of origin, the system grounded in a cross-sectoral approach impacts of migration will be primarily evident and sound empirical evidence. In light of at the micro rather than the macro level because pressing economic and demographic relative to population size the number of imbalances within and beyond MENA, emigrants in MENA remains small. Available governments are increasingly aware of the evidence suggests that migration has positive pitfalls of the current ad-hoc approach to returns for migrant families by reducing migration and the need for a coherent strategy. poverty and strengthening households' capacity to save, cope with crises, and diversify Multiple angles of effective engagement: The livelihoods. With the current trend towards Bank is engaged in dialogue with countries of temporary migration, origin countries would origin and destination in MENA, aimed at gain from fostering brain circulation and seizing opportunities and dealing with the productive uses of remittances. On the challenges presented by labor mobility. receiving side, firms around the world can Different angles of engagement include: greatly benefit from a larger pool of improving the efficiency of labor appropriately qualified workers and improved intermediation and ensuring better matching of intermediation in more competitive labor through the establishment of National international job markets. Beyond the Qualification Frameworks, such as in lending immediate efficiency gains generated by wider operations in Tunisia. The Bank is also engaged and better skills at lower costs, hiring foreign in assisting in designing, implementing, and workers can also help firms to tap into evaluating migration programs to increase the diasporas and international social networks efficiency of the migration process while which facilitate market penetration. exploring the mainstreaming of human rights protection in migration interventions, as Opening up opportunities through migration undertaken by a technical assistance program management: The positive effects of labor for Egypt. In the UAE and Dubai, a technical mobility for origin and destination countries assistance program is proposing to shift the and for the migrants themselves depend largely incentives of the private sector from hiring low- on the type and capacity of existing institutions, skill/low-wage expatriate workers to hiring September 2010 · Number 29· 3 higher-skilled local citizens. Also being vulnerabilities; introducing mechanisms for explored are options towards introducing a skill recognition, such as National Qualification pension scheme for expatriate workers. Frameworks; and regulating recruitment agencies to promote an efficient and safe labor Expanding the knowledge-base: On the intermediation. Finally, sharing policy lessons analytical level, the Bank has taken the lead in and building partnerships among key regional filling the knowledge gap on migration in areas and local actors, including governments, the such as remittances and the developmental business community, donors, private effects of migration. Recent conceptual-level foundations, research institutions, and NGOs, work include the analysis of social protection will be crucial in managing migration for schemes for temporary migrant workers and a development. stock taking of existing and currently operated social protection programs. Contact MNA K&L: Opportunities for further engagement: The Emmanuel Mbi, Director, MNA Operational Core current configuration of migration policies and Services Unit programs leaves ample room to enhance the David Steel, Manager, MNA Development positive effects of migration. A number of areas Effectiveness Unit lend themselves for further engagement, Regional Quick Notes Team: representing areas of Bank expertise and Omer Karasapan, Roby Fields, Hafed Al-Ghwell and comparative advantage. Such areas include: Aliya Jalloh Better assisting client countries in both migrant Tel #: (202) 473 8177 origin and destination countries by mapping out regional interdependencies of economies MENA K&L Quick Notes: and policies. Such work should entail an overview of existing migration policies, http://www.worldbank.org/mena-quicknotes The MNA Quick Notes are intended to summarize bilateral agreements, programs and lessons learned from MNA and other Bank Knowledge interventions across the MENA region to and Learning activities. The Notes do not necessarily improve coherence in policy-making and foster reflect the views of the World Bank, its board or its cooperation. Such an inventory would also member countries. allow to identify best practices and to build capacity for evaluating migration policies and programs. The Bank has considerable expertise in monitoring and evaluation and should take the lead in establishing an empirical evidence- base on the effectiveness of migration policies and programs. Clients increasingly demand assistance in improving migration outcomes for development. To this end, the Bank would be well positioned to assist governments in defining migration policy objectives in line with development strategies, articulating objectives in discussions with receiving countries, and designing and implementing measures to promote the efficiency of processes and improve outcomes. Concrete examples include measures to ensure that diaspora and returning migrants better capitalize on newly acquired skills and capital to the benefit of their home countries; identifying relevant social protection mechanisms for various types of migrants (seasonal, temporary non-seasonal, permanent) according to their specific needs and September 2010 · Number 29· 4