The Reverse Swing

Migration is a major force of globalization: Workers on the move seek opportunity and alleviate poverty in the process of dispersing and collecting new ideas. A harsh global economic recession has reduced opportunities for foreign and domestic labor alike, stirred protectionist instincts and prompted reverse migration around the globe. The most immediate impact, explains YaleGlobal editor Nayan Chanda, will be felt by poor home nations, forced to operate with reduced remittances yet expected to absorb returning workers. “The returnees would add to the frustration and anger of the home country’s growing army of unemployed, bringing with them new bitterness about their abruptly ended foreign experience,” Chanda writes. Reduced connections and trust, emphasis on nationality rather than talent or skills, is not a sensible or long-term solution for an economic crisis that strikes the entire globe. – YaleGlobal

The Reverse Swing

The return of migrant workers in an already bad market spells bad news for globalization and its future
Nayan Chanda
Monday, February 16, 2009

One of the less noticed aspects of the economic crisis buffeting the world is the reversal of a major aspect of globalisation: the migration of workers seeking jobs. If what has begun as a trickle swells into a reverse mass migration of workers, it will make 2009 the year when globalisation went into reverse gear, carrying incalculable long-term consequences for a connected world.

Migration has been a force behind globalisation. Global connections began when the first humans left home in search of a better life. That first journey some 10,000 years ago to trade and to explore began a process that has continuously grown to connect the world. Mass migration, especially in the 19th and 20th centuries, created the multi-ethnic, multicultural world of today. With the ease of transportation and lowering barriers to migration — at least until the 11 September attacks — the number of migrant workers has grown steadily. A 2005 UN study estimated that there were 200 million legal immigrant workers in the world. Another 10-15 million could be undocumented foreign workers. They have fuelled the economic growth of their adopted countries. From Dubai’s construction sites to Taipei’s or Seoul’s electronics factories and Malaysia’s palm oil plantations, the hard work of the foot soldiers of globalisation has kept the world economy humming. Their remittances home — totalling an estimated $337 billion worldwide per year — injected valuable capital to home countries, which amounted to more than three times the total of foreign aid given to the world.

Some 8 million, or nearly a tenth of the Philippine population, work abroad as domestic helpers, construction and factory workers, sailors, nurses, caregivers and entertainers producing close to 10 per cent of the country’s gross national product. The second-largest labour exporter in Asia — India — has 6 million workers abroad who remit some $30 billion a year. Chinese and Mexican migrants, whose remittances closely trail that of India, also make significant contributions to their countries’ economy.

Now there is a dramatic reversal. As the world economy deflates with a whoosh like a punctured balloon, many factories and construction sites the world over fall silent, and malls see a spate of closing sales, a reverse migration pattern is taking shape. Indonesia, expected to be the largest recipient of returning migrants, is bracing for the return of some 100,000 workers from Malaysia. To prepare for the downturn, the Malaysian government has banned the hiring of foreign workers in manufacturing, retail and restaurant businesses, and advised laying off foreigners first if downsizing is in order. Already some 20,000 Indians are reported to have returned from the Gulf where $40 a barrel of oil prices brought the recession home. The Saudi government has issued a directive requiring that foreigners would be the first to go when retrenchment is necessary. Over 5,000 Filipinos — mostly domestic helpers, construction workers and entertainers — have returned home from South Korea, Japan and Taiwan in the past four months. With the end of Singapore’s construction boom, many thousands of workers who flocked to the island for better wages may also be returning home.

The most immediate impact of this return home by tens of thousands of migrant workers would be felt by the families at home and the governments, which had come to rely on their significant foreign exchange earnings. Loss of income by the migrant families will result in falling demand for goods in an already bad market for the producers. The returnees would add to the frustration and anger of the home country’s growing army of unemployed, bringing with them new bitterness about their abruptly ended foreign experience. The recent strike by British workers demanding “British jobs for British workers” has sent a chill through thousands of East Europeans who had flocked to the UK to take advantage of the European Union’s open door policy for member countries.

If the practice of targeting foreigners for retrenchment irrespective of their skills or merit takes hold, it will leave a bitter legacy that will survive economic revival. Companies will eventually have to look for talent abroad once more.

Recessions, however deep, do not last forever. When the economy revives, migration will resume, especially to European countries that are ageing rapidly and running out of able-bodied workers. But the way foreigners are treated now will leave a lasting impact on the nature of the recovery.

Nayan Chanda is director of publications at the Yale Center for the Study of Globalization and editor of YaleGlobal Online.

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