A World on the Move: The Benefits of Migration
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It is my pleasure to be here today in Brussels to talk about some of the opportunities and benefits that migration brings to countries of origin and destination as well as to the migrants themselves.
The XXI Century is the century of human mobility and migration. We can no longer think about our economies, societies or cultures without thinking about human mobility. According to all the available information, this human mobility is expected to increase and nearly double in the near future.
The arguments in favour of the facilitation of human mobility are not only human rights-based, but also demographic, social and economic. No one puts in question anymore the impact that ageing populations, low birth rates, longer life expectancy and urbanisation have in the economies and social protection systems of developed and high-middle income countries. The links between migration and development of countries of origin and destination are also much better understood and recognised today, and States are adopting policies and systems that enhance the positive impact of migration into their development and economic growth planning.
Despite the general acceptance that migration is inevitable, necessary and desirable, there is a worrying rise in discrimination, xenophobia, exclusion, and human rights violations of migrants throughout the world. The general public has predominantly negative feelings about migration and migrants, and a sense that governments do not have matters properly under control. This public perception has restricted the ability of politicians to advance the economic arguments in their discourse about migration and develop more realistic and fact-based policy and legislative frameworks.
That is why, I wish to challenge today some of the current misperceptions about migration and the distorted way in which migration issues are discussed. I strongly believe that we need a more balanced and evidence-based debate about migration, where the real facts are presented and discussed openly.
Let me begin by giving you a few examples.
First, a common misperception is that there are too many immigrants. Misconceptions so distort reality that in some European countries ordinary citizens estimate the number of immigrants at three times more than there really are. The 2014 Transatlantic Trends survey conducted by the German Marshall Fund showed that misinformation about basic migration facts is a key factor responsible for anti-immigrant sentiment. In countries like the U.S., the UK, Greece, Italy and others, the proportion of people who agreed that there are too many immigrants in their countries fell sharply when people were told how many foreigners actually reside there.
A second misperception is that the majority of migrants come from the poorest parts of the world. In fact, the 2013 IOM World Migration Report shows that only about 40 per cent of all migrants move from the global South to the global North. Over a fifth of migrants move across developed countries. People are just as likely to move between countries in the South as they are to move from South to North.
Third, migration is commonly perceived as solely an immigration issue. How many Europeans are aware that the British diaspora, some 5 million people, is the eighth largest in the world? We need to change our mind-set, especially given that a growing number of people are moving from the North to the South in search of work. You are all familiar with examples of Portuguese moving to Angola or Spanish moving to Argentina, for instance. Migration is now a global phenomenon affecting nearly all countries of the world.
Coming as I do from Costa Rica, I am not going to pretend that migration does not have its downsides. But what I would like to do today is to outline some of the key benefits of migration. Too often the media and public debate about migration focuses only on the negative aspects of migration.
The reality is that migration brings huge benefits, fuelling growth, innovation and entrepreneurship in both the countries people come from, and in those they move to. When governed humanely to promote safety, order and dignity, migration has endless advantages. It provides opportunities, and raises incomes and living standards. These benefits are important to keep in mind because in Europe, where more, not less, migration will probably be needed in the future. Europe’s population is ageing and the EU is predicting a massive shortage of workers of 45 million in the next 50 years as the working age population will drop. With no further migration to the EU, the population of the EU27 will be 58 million less than it was in 2010 according to Eurostat data. Contrary to public perceptions that European countries do not need migrants, the reality is that migrants mitigate the effects of an ageing and shrinking population and will be key in the sustainability of the dependency rates.
Because of this reason, let me start by the benefits that that migration brings to the countries of destination and try to dispel some of the myths that exist.
A particularly strong misperception is that the EU does not need low-skilled immigrants. On the contrary, low-skilled migrants contribute to the functioning of the European economy by taking up jobs undesirable to natives, which in turns allows natives to take up higher-skilled and more remunerative employment. OECD forecasts show that for some countries like Italy, sectors requiring a low-skilled workforce like home care as well as food preparation and services will continue to grow. In other words, low-skilled workers will be needed just as highly skilled ones. Elsewhere, like in the Gulf Cooperation Council countries, migrants make up 90% of the workforce, so these economies would simply collapse without migrants.
That migrants steal native jobs is another unfounded belief. This misperception is more common in countries where unemployment is higher, and countries with high unemployment rates most often appear to be the ones with lower, not higher immigration rates: this could be due, among other reasons, to the fact that migrants move where they are more likely to find jobs and away from countries with high unemployment.
Moreover, migrants are net positive contributors to the welfare systems of almost every European country, meaning that they contribute to public finances more than they take out in public benefits and services, as confirmed by data from OECD. Migrant households contribute an average €5,000 per year to host countries’ public purses, in contrast with frequent accusations of being “benefit tourists” undermining European countries’ welfare systems. More broadly, studies show that the fiscal impact of immigration is small and moderate and that it strongly depends on the local context. For instance, studies for the UK indicate that the fiscal impact of migration in the country for the period 2007-2009 was of 0.46% of the GDP, greater than in other OECD countries. Immigrants in the UK are less likely to be in social housing than people born in the UK, even when they come from poorer countries. A study by the Bertelsmann Foundation to be released in October shows that each migrant in Germany contributed €3,300 in 2012 on average. In other words, if anything, immigrants make recipient countries slightly richer, never poorer.
Highly skilled migrants and diversity in the workplace positively affect work productivity in recipient countries. Diversity, not only of the highly skilled, but also of the low-skilled, makes countries more productive and richer in the long run. Gains in productivity stemming from ethnic diversity in firms are demonstrated by various studies. There is also evidence that immigration increases labour productivity in US states, through specialization and adoption of technologies for which immigrants are needed.
Furthermore, migrants enhance rather than restrict the innovation capacity of host societies. Patent applications in Europe are higher in countries with policies to attract highly skilled migrants. The presence of high-skilled migrants and foreign students in higher education contributes to the creation of knowledge as well, and evidence shows that immigrants increase patenting activity of natives too. Networks of diaspora members contribute to the diffusion of knowledge and the presence of a more diverse workforce makes innovation more likely. Migrants file the majority of patents by leading science firms – 65% at Merck, 64% at General Electric and 60% at Cisco, just to give a few examples.
Another positive and often overlooked aspect of migration is that migrants are entrepreneurs and create jobs for migrants and natives alike. Companies such as Google, Intel, PayPal, eBay and Yahoo! have all been co-founded by migrants. Migrants have started 25% of US venture-capital-backed public companies and 40% of venture-capital-backed technology firms. In 2 out of 4 of all engineering and technology companies established in the US between 1995 and 2005, there was at least one immigrant key founder. These companies were responsible for generating more than 52 billion dollars’ worth of sales and creating almost half a million jobs as of 2005. Such contributions have only increased in the past decade. Immigrant firm founders tend to have advanced education in Science, Technology, Engineering and Mathematics and high rates of entrepreneurship and innovation.
Migrants also complement local labour force rather than competing with it by providing skills at all levels and labour force that are needed in most developed countries. An analysis of 30 countries by Hays revealed that many of them, including the US, Mexico, Canada, Chile, Brazil, China, Spain, the UK, France, and Sweden, are facing a “talent mismatch”, which means that the available labour force does not have the skills employers are looking for. Research from the Boston Consulting Group suggests that Germany could experience a labour shortage of up to 2.4 million by 2020, and Australia of 2.3 million. But this is not only true for developed countries. A recent report by the McKinsey Global Institute estimated that by 2020, there will be a 38-40 million potential shortage of workers with higher education globally, and a 45 million shortage of workers with secondary education in developing countries. More high-skill workers will be needed in China, and more medium-skilled workers will be in demand in developing economies of South Asia and sub-Saharan Africa.
Migrants, and especially skilled migrants contribute to increased trade and investment flows between countries of origin and destination, in a way that is beneficial to both; research finds that discrimination might be a constraint to these effects entering into full action, and the fight against discrimination starts, again, with knowledge and understanding of how migrants contribute to societies in destination countries.
When talking about migrants’ contribution to society at the global level, we cannot bypass the contributions they make to their countries of origin. It is indeed becoming increasingly difficult to separate contributions to migrants’ countries of origin from those in countries of destination, given how interconnected we all are in this globalised world; migrants themselves contribute to making these connections stronger, moving between home and host countries, often temporarily, and building transnational networks.
A critical element: the money sent by migrants back home – 404 billion dollars in 2013 according to latest World Bank estimates – dwarfs development aid figures. Remittances are “the most immediate and tangible benefit of international migration”, as Kofi Annan once put it. They mean higher health and education expenditure for households who stay behind; better access to information and communication technologies as well as formal financial services; and they provide a cushion in the event of adverse environmental shocks.
Despite the well-known challenges that the “brain drain” present to developing countries, what is often not mentioned is that emigration of highly skilled professionals serves as an incentive for natives to acquire more education that they would have without the prospect of migration. An empirical study on 127 developing countries shows that doubling high-skilled emigration prospects multiplies the proportion of highly skilled natives in those countries by 1.054 after 10 years, and by 1.226 in the long run. Emigration of highly skilled individuals from countries in the Pacific region makes more people willing to acquire tertiary education in those countries. I think that we need to understand better how countries can collaborate to reduce costs and increase benefits of highly skilled emigration, for instance through programs of temporary return of highly skilled migrants resident abroad for skills transfer and training, to promote “brain circulation”, similar to the ones implemented by IOM.
On the other hand, migrants can also decide to return and increasingly do so. People return with a rich baggage of skills and experience to contribute in their home countries, meaning emigration can ultimately be good for developing countries. Moreover, migrants’ intentions to return do not only depend on a pure financial calculus and surveys among migrants indicate the frequent intention to return, for example for Indian medical doctors in the UK, or among the best students in Tonga, Papa New Guinea and New Zealand.
Migrants also facilitate the flow of goods, factors and knowledge between origin and destination countries and establish fruitful networks which are beneficial to their communities of origin. One of the most striking cases of the positive contributions of diaspora is given by the rise of the IT sector in India in the 1990s – a real IT revolution – through brain circulation, return migration and the contribution to formal institutions and networks of experts abroad. Indians headed 9%of Silicon Valley start-ups at the end of the 1990s, mostly in the software sector. There is evidence that skilled migration helps increase foreign investments in migrants’ countries of origin and creates trade networks between origin and destination countries. The creation of transnational scientific networks between members of the diaspora contributes to the diffusion of technology across countries. The Chinese diaspora is also a prime example of how knowledge is transferred across countries of origin and destination thanks to the presence of nationals abroad, and how this makes manufacturing activities more productive in the home countries.
In sum, although highly skilled individuals leaving a country represent a loss of human capital, gains for communities in the countries of origin from having highly skilled nationals abroad need also to be acknowledged.
Lastly, but just as importantly, let me briefly talk about migrants’ contribution to their own lives.
Consider a simple fact. A research from Branko Milanovic suggests that more than 80% of a person’s likely income in the future is determined by two elements only: the individual’s country of birth and the income class of her or his parents. If this is true, this means that an individual’s personal characteristics and capacity are altogether less relevant to predict how well off the individual will be in the future on a global scale than the country where she or he happens to be born. Migration then becomes eventually the most effective way for people to have better opportunities ahead of them. Workers from developing countries who move to the US earn four times as much as they would have at home to do exactly the same job. Moving from Malawi to South Africa more than doubles the wage of a nurse. Thai workers moving to Taiwan or Hong Kong earn at least four times as much as they would in Thailand.
Of course, higher earnings are just part of the story. People obviously migrate to improve their livelihoods as well as those of their families. The effect of migration on migrant well-being was the focus of IOM’s World Migration Report 2013. Based on data from the Gallup World Poll, the report shows that migration improves various aspects of the well-being of migrants across a range of dimensions. Migrants in the North, particularly those who migrated from the North, are those who are better off in terms of life evaluation, finances and health, and they tend to rate their lives better than if they had not migrated. While migrants in the South are better off financially, they rate their well-being similarly or worse than if they had not migrated. Furthermore, migrants in developed countries report less trouble in affording food and shelter than if they had not migrated, although the picture is not so positive for migrants moving across developing countries. Importantly, migration improves migrants’ health outcomes when comparing migrants to those who stayed behind.
I hope to have convinced all of you that migrants greatly contribute to home and host societies in a variety of ways. However, we should not forget that such contributions sometimes come at a very high cost for migrants. Dispelling the many and all too common myths and misconceptions about migration is essential if we are to maximize the benefits of migration for all involved actors. That is why IOM has launched the Migrants Contribute campaign. The countering of misinformation to make the case for migration requires a strong evidence base, and making sure that the facts are presented in a way that people understand. Better evidence, data and evaluations of the impact of migration policies and programmes are all essential if we are to counter misconceptions about the real scale and impact of migration.
It is only then, that politicians will be able to develop fact-based policies and legislative frameworks that respond to the real needs while promoting the protection and integration of migrants in host societies.
I hope that you have an interesting discussion this afternoon and that you all become ambassadors of this cause.