58208 POVERTY THE WORLD BANK REDUCTION AND ECONOMIC MANAGEMENT NETWORK (PREM) Economic Premise DECEMBER 2010 · Number 42 Toward an Objective-Driven System of Smart Labor Migration Management Robert Holzmann and Yann Pouget This policy note offers motivation and a game plan for achieving a coherent and mutually beneficial labor migration system.1 It argues that migrant workers may make important contributions to economic growth and development in both sending and receiving countries if they find enabling conditions. To achieve a potential win-win-win situation requires (1) a sustainable migration management system that takes into account the interests of the various stakeholders involved; (2) a clear identification and articulation of objectives and interests in migration by key stakeholders, based on a common conceptual framework for migration and development; (3) regional and bilateral coordination mechanisms to balance these (potentially divergent) objectives and to reach compromise under labor agreements and policies; and (4) effective, evidence-based polices and public and private sector interventions to achieve the objectives that are known and applied at the levels of sending, receiving, returning, and circulating. Rationale and Features of a Coherent and capital accumulation and knowledge production and diffu- Mutually Beneficial Labor Migration System sion if they find the enabling conditions to develop their skills and implement their investment projects throughout Regular labor migration between developing and developed the migration cycle. Therefore, if governments around the economies through a coherent and mutually beneficial labor globe wish to leverage the potential of labor mobility to migration system remains a common policy challenge for achieve higher growth and long-term convergence, it is in governments around the world. Labor mobility is not a their interest to create the conditions for human capital for- panacea for development; but if well managed, it can signif- mation, "brain circulation" (the converse of "brain drain"), icantly help close the development gap and improve the and productive investments by migrant workers. long-term socioeconomic prospects of developing countries Creating these conditions calls for a sustainable migration while it increases productivity and economic growth in rich- management system that takes into account the interests of er countries. The mobility of labor makes important contri- the various stakeholders involved: the sending country, the butions to economic growth and employment through mul- receiving country, and the mobile worker. To this end, (1) tiple channels, such as human capital transfer and diffusion the key stakeholders' objectives and interests in migration of innovation via migration across professions, countries, and must be clearly articulated; (2) a mechanism to balance ob- regions; and through demographic arbitrage between young jectives that do not necessarily overlap must be established; and aging societies. Migrant workers may contribute to both and (3) effective polices and both public and private sector 1 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK www.worldbank.org/economicpremise interventions to achieve the objectives must be known and schemes are tailored to the specificities and needs of migrant applied. workers rather than of nonmigrant workers. The training Because migration management requires the involvement programs focus on language, intercultural understanding, ad- of at least two countries, even the best articulation of policy ministrative and hiring procedures, expectation manage- objectives and interests in the (mostly richer and often ag- ment, support of migrant entrepreneurs, and so forth. These ing) receiving countries would not lead to the best outcome measures aim to improve labor market insertion, long-term unless the (mostly poorer and often younger) sending coun- employability, and broader social integration of migrant tries also articulate policy objectives and interests. Only a workers and their families. The second set of interventions few receiving countries have an articulated migration strat- involves skills matching and development measures. These egy, although many are working to produce one (including aim to maximize the allocation of labor in the global econ- the Council of the European Union, with its Stockholm Pro- omy by reducing asymmetries of information between mi- gramme). But most sending countries (except perhaps the grant workers and employers in the labor market and by fa- Philippines) have not thought about migration as a develop- cilitating the acquisition of relevant skills that are in demand ment tool and have not articulated their objectives and in- for migrant workers in the economy. In short, these measures terests. And the interests of migrants are typically not well answer labor market needs through targeted human capital articulated and represented by either receiving or sending formation and information diffusion at all skill levels. The countries. Filling this gap requires analytical and empirical third set of interventions relates to labor regulation and so- work to outline the benefits, costs, and policy implications cial protection measures. These measures are intended to en- for all the key stakeholders. sure that migrants and their families have adequate protec- Bilateral or regional arrangements to balance the interests tion against the social risks and specific vulnerabilities they between sending and receiving countries are poorly under- face throughout the migration cycle, while avoiding benefit stood and articulated. Although there are a few examples of arbitrage and establishing neutrality for mobility decisions. such arrangements from which to draw and apply useful les- Not discouraging labor mobility across professions and bor- sons, successful migration management may need to move ders requires, among other things, portability of acquired so- beyond the current structure and content. A recent assess- cial rights. ment of principal regional consultative processes on migra- tion (IOM 2010) suggests that the current arrangement Examples of Smart Labor Migration should act as facilitators, not generators. And, given the right Management around the World size, leadership, internal arrangements, directions, and fund- ing, they will fulfill that role well. The International Organ- Beyond the conceptual dimension presented above, some ization for Migration (IOM) report, however, also notes that concrete examples in various regions of the world show that, an absence of trust and a lack of understanding the perspec- when well designed and implemented, smart labor migration tive of the other states is often the primary impediment to management can bring significant benefits for all stakehold- cooperation. This finding strengthens the point raised above ers. In what follows, we describe relevant examples of migra- and heightens the need for clearly articulated objectives on tion management plans across the four phases of the migra- both sides. tion cycle: sending, receiving, returning, and circulating. Leveraging the potential of labor mobility to contribute These examples stand as references in the field, but we still to growth and long-term convergence requires several lack consistent impact evaluations to gauge their success things: sound employment, education, and social protection against clear outcome indicators. policies; and well-designed and impact-evaluated public and Managing migration from the perspective of a sending private sector interventions throughout the phases of send- country is best exemplified by the case of the Philippines ing, receiving, returning, and circulating. These facets of the (Ruiz 2008). The Philippine government has built institu- migration cycle are characterized by higher risks and uncer- tional and financial mechanisms in three main areas to sup- tainty for migrants; and they provide windows of opportu- port its migrants on their departure: (1) regulating overseas nity for better informing, facilitating, or shaping the migra- recruitment through the issuance of licenses for private re- tion process. Fostering employment and growth under each cruitment agencies and the disclosure of relevant informa- of these phases calls for, among other things, policy interven- tion concerning recruitment abroad for future migrants; (2) tions in three core areas: employment, skills development informing future migrants of available resources abroad and matching, and social protection (Holzmann and Pouget through a mandatory deployment process composed of pre- 2010). These interventions should apply to all labor market departure training seminars and issuance of overseas identi- participants, but are of particular importance for a mobile la- fication cards; and (3) providing protection and representa- bor force. As a first set of interventions, migrant training tion through a migrant welfare fund with mandatory 2 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK www.worldbank.org/economicpremise membership, legal assistance services abroad, and recording plementation. The RSE program aims to create a mutually mechanisms to monitor migrants' needs and concerns for beneficial circular migration scheme that benefits employers improved migrant services. To finance such a system, the and workers: employers in the New Zealand horticulture Philippine government charges fees to migrants, their em- and viticulture industries can have access to a secure labor ployers, and recruitment agencies; and it builds partnerships supply to circumvent local labor shortages and remain com- with the private sector and relevant nongovernmental organ- petitive in world markets, and selected Pacific Island workers izations. Such supportive measures for migrants are highly can secure access to the New Zealand labor market and con- beneficial for a country where nationals abroad represented tribute to economic development in their home countries approximately 25 percent of the total workforce and the re- through employment experience abroad and remittances. mittances they sent totaled roughly 13 percent of GDP in The government of New Zealand is collaborating with the 2007. Other South Asian countries, such as Bangladesh or World Bank to monitor and evaluate the outcomes of this Sri Lanka, have built similar systems of emigration manage- recent policy scheme. World Bank findings are to be released ment. Besides qualitative assessments of the Philippine ex- soon, but New Zealand's Department of Labor has already perience (Agunias and Ruiz 2007) and of the Sri Lankan published a report that provides a description and assess- case (Del Rosario 2008), no rigorous monitoring and evalu- ment of the first two seasons of the RSE program. This M&E ation (M&E) of such policy schemes has been performed. component has made it possible to revise and significantly Such M&E is an important step to be taken if other sending improve the design and implementation of certain aspects countries around the world want to draw the right lessons to of the policy scheme, including enhanced predeparture replicate, adjust, and improve the South Asian model of mi- training sessions and new pooled savings and remittance grant welfare funds. transfer mechanisms. At the receiving level, the labor market insertion of im- migrants and their children can be handled by local govern- The Way Forward: Helping Developing ments through practical arrangements with key local stake- Countries Articulate Objectives in Migration holders, as is the case in two large receiving world cities: and Assess Outcomes of Migration Toronto (Canada) and London (England), where migrant Management Interventions workers represent high proportions of the total population (OECD 2006). The Toronto Region Immigration Employ- There is an increasing understanding that temporary or per- ment Council--comprising government representatives, manent migration can be a powerful instrument for growth professional associations, and local nongovernmental organ- and development around the globe. But experience with mi- izations--runs programs to link local employers with immi- gration management processes between countries also sug- grant workers. Efforts include an internship program for gests that to be successful they need to be based on objec- skilled immigrants, a mentoring program involving local tives clearly articulated by both sending and receiving firms, and a Web-based platform for local human resources countries. The richer, migrant receiving countries have start- professionals. In London, a citywide partnership involving ed to do this and need no external help; but, with few ex- the London Development Agency and five learning and ceptions, the poorer, migrant sending countries have not yet skills councils assesses the qualifications of immigrants and thought about migration as a development tool and so have evaluates brokers' relevant ongoing training. In addition to not articulated their interests. Without external help, they the recognition of migrants' qualifications, local stakeholders may not be able to do so quickly and well. In the absence of in London and in Toronto work to bridge their qualifications such an articulation, the joint objectives likely will not be and the requirements of local employers, notably through achieved because the policies and programs cannot be ap- shortened retraining programs. These city-level initiatives to propriately chosen and interest-balancing processes between match migrants' skills supply with the demands of local countries are bound to fail. firms can be highly beneficial for all the stakeholders in- Helping developing countries articulate their interest in volved, starting with migrant workers and their potential migration as a development tool will require a major analyt- employers. But results from rigorous evaluations to assess the ical and empirical effort to outline the benefits, costs, and effectiveness of these efforts are not yet available. policy implications if a process similar to that taken during Regarding circular migration, New Zealand's Recognized the trade opening in the 1980s and 1990s (led and support- Seasonal Employers Scheme (RSE)--introduced in 2006 ed by the World Bank) is used as a reference. Although the with five Pacific Island countries (namely Kiribati, Samoa, growing academic interest in migration is producing a Tonga, Tuvalu, and Vanuatu)--provides an interesting exam- wealth of information, few studies exist on the impact of mi- ple of how governments can integrate an M&E component gration on development (except perhaps on the role of re- in a migration policy scheme to improve its design and im- mittances). The effect of migration on the labor market of 3 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK www.worldbank.org/economicpremise the sending (and returning) countries remains largely unex- gether the results of migration policy evaluations would pro- plored; and only patchy information exists on the effects of vide a tool for policy makers to draw lessons from the expe- brain circulation and return capital on firm creation, entre- riences of other countries. Building on the recognized ex- preneurship, and productivity.2 Most important, no consis- pertise of key players in this area,3 an emerging joint work tent conceptual framework has been established to outline program should be able to play a crucial and facilitating role the potential key avenues by which migration may help ac- in operationalizing M&Es in the area of labor market and celerate the development process. Such a framework would migration policies. make better use of existing research and would provide guidance for future empirical studies on migration. Work in Conclusions this direction is under consideration at the World Bank (to be led by the Poverty Reduction and Economic Manage- The key conclusions offered by this policy note for establish- ment Network); and with success in finding the financing, ing a coherent and mutually beneficial labor migration sys- such a framework should be available soon. tem between developing and developed economies are these: There is also broad recognition that the current outcome 1. Migrant workers may make important contributions to of migration has room for improvement to generate larger economic growth and development in both sending gains for sending countries, receiving countries, and the mi- and receiving countries if they find the enabling con- grants themselves. Creating a potential win-win-win situa- ditions to develop their skills and realize their invest- tion requires a much better understanding of the effective- ment projects throughout the migration cycle. ness of the current migration management interventions in 2. Creating these conditions requires a sustainable migra- sending and receiving countries. Such an evidence base is tion management system that considers the interests crucial to redesigning or dropping programs, or to scaling up of the various stakeholders involved. the successful ones. There is an increasing number of areas 3. Key stakeholders' objectives and interests in migration of human development where rigorous evaluation is shaping need to be clearly identified and articulated within a policy dynamics, design, and evaluation culture. Conditional common conceptual framework for migration and de- cash transfers may be the most rigorously evaluated program velopment. worldwide. (Essentially all programs have rigorous M&E as 4. Regional and bilateral coordination mechanisms must part of their benefit design and implementation, with broad be established to balance stakeholder objectives that international lesson sharing.) And they may be the most ef- may not converge and to reach some form of compro- fective social protection program implemented thus far in mise under labor agreements and policies. almost 40 economies (including New York City). Similar 5. Effective polices and both public and private sector in- patterns are emerging in active labor market policies, educa- terventions to achieve the objectives need to be known tion interventions, and the like. Much less attention has been and applied at the sending, receiving, returning, and paid to measuring the effectiveness of migration manage- circulating levels of the migration cycle. ment interventions. Despite an increasing number of calls for 6. Rigorous M&E needs to be performed and the results evidence-based policies (from the Global Forum on Migra- must be shared internationally to identify effective in- tion and Development [GFMD 2010]; the Stockholm Pro- terventions and to scale up those that are successful. gramme at the European Union level [Council of the European Union 2009]; and the Marseille Center for Mediterranean In- Notes tegration [Holzmann and Pouget 2010]) and a substantial in- vestment in migration capacity-building programs in recent 1. This policy note reflects the thinking of the authors and years, the impact and costs of migration policy measures are does not necessarily represent the opinion of the World Bank often unknown and performance indicators are rudimentary. or other institutions with which they are involved. Current evaluations focus on the output of policy interven- 2. A research program supported by a multidonor trust tions--that is, the project deliverables within the control of fund (comprising Austria, Germany, Norway, and the Re- the implementing agency. Modern impact evaluation tech- public of Korea) is investigating these issues. Preliminary re- niques move a step farther, looking at the use of outputs by sults were presented at the May 2010 research conference project beneficiaries and stakeholders outside the control of convened in Cape Town, South Africa, by the Institute for the implementing agency (on the demand side). Shifting fo- the Study of Labor (IZA) and the World Bank. See http:// cus from outputs to outcomes measurement would allow www.iza.org for information. for a more precise understanding of the actual effects of pol- 3. This expertise includes, for example, the IOM's exten- icy interventions in the real world. In addition to filling this sive operational and policy experience in implementing mi- gap, a cross-national database or clearinghouse that brings to- gration programs; IZA's leading role in knowledge manage- 4 POVERTY REDUCTION AND ECONOMIC MANAGEMENT (PREM) NETWORK www.worldbank.org/economicpremise ment and in facilitating contacts among researchers and pol- Del Rosario, Teresita. 2008. Best Practices in Social Insurance for Migrant icy makers; and the World Bank's leadership in conducting Workers: The Case of Sri Lanka. Working Paper 12. Asian Regional Pro- gramme on Governance of Labour Migration, International Labour Or- rigorous impact evaluations of policy interventions in edu- ganization, Geneva, Switzerland. cation, skills, and labor markets. GFMD (Global Forum on Migration and Development). 2010. "Five Clus- ters of GFMD Outcomes Concerning Policy Coherence, Data and Re- About the Authors search." Presentation by the Ad hoc Working Group on Policy Coher- ence, Data and Research, Geneva, Switzerland, February. Robert Holzmann is research director for the Labor Mobility Holzmann, Robert, and Yann Pouget. 2010. "Migration Management in the Mediterranean Region: Taking Stock, Reviewing, and Looking Ahead." Program at the Marseille Center for Mediterranean Integration Revised paper presented at the Marseille Center for Mediterranean In- (CMI), and senior adviser for the Financial Literacy and Edu- tegration Workshop on Migration Management, Marseille, France, cation Program at the World Bank. Yann Pouget is a consultant March 8­9. economist at the CMI. IOM (International Organization for Migration). 2010. "An Assessment of Principal Regional Consultative Processes on Migration." Migration Re- References search Series No. 38. Geneva, Switzerland. OECD (Organisation for Economic Co-operation and Development). Agunias, Dovelyn R., and Neil G. Ruiz. 2007. "Protecting Overseas Work- 2006. From Immigration to Integration: Local Solutions to a Global Chal- ers: Lessons and Cautions from the Philippines." Migration Policy Insti- lenge. Paris, France. tute. Insight September. http://www.migrationpolicy.org/pubs/MigDev Ruiz, Neil G. 2008. "Managing Migration: Lessons from the Philippines." Insight_091807.pdf. Migration and Development Brief 6. Migration and Remittances Team, Council of the European Union. 2009. The Stockholm Programme--An Open World Bank, Washington, DC. and Secure Europe Serving and Protecting the Citizen. Brussels, Belgium. The Economic Premise note series is intended to summarize good practices and key policy findings on topics related to economic policy. It is produced by the Poverty Reduction and Economic Management (PREM) Network Vice-Presidency of the World Bank. The views expressed here are those of the authors and do not necessarily reflect those of the World Bank. The notes are available at www.worldbank.org/economicpremise.