An approach to Reality: Expatriates and migrant workers

This week's topic touches one of the most "talked" international issues in our present time and is perhaps, till now, the most "near" topic to our country and reality; Expatriates and Migration Workers.

According to the presenters in charge; Migration is the movement of people from one place in the world to another for the purpose of taking up permanent or semi-permanent residence, usually across a political boundary, and an expatriate, is a person who lives or works outside of his or her own home country on a non-permanent basis.

The phenomenon of Migration is influenced by "Push" or "Pull" factors; these factors are the ones that make this "movement" hard or easy.

In developing countries such as our country, the decision to migrate is most of the times taken based on the ideas and believes of finding a better quality of life, having job opportunities, education, security and other welfare conditions and privileges. But sometimes these migrations are forced because of violence and discrimination on the native country.

Ernest Ravenstein, an English geographer that is widely regarded as the earliest migration theorist, established the principal reasons ("laws") that cause migration. "Laws of Migration" (1889). Other important migration theorist is Oded Stark, he suggests that the opportunity for emigration can have the opposite effect – that is, improve the welfare of those left behind.

It's important to clarify that migration can have both positive and negative consequences on the host country as well as on the mother country.

Internal, External, Emigration, Immigration, Population transfer, Impelled migration, Step Migration, Chain, Return or circular migration and Seasonal movement, are the 10 types of migration and possible movements. Depending on the type of migration people are classify as emigrant, immigrant, refugee, internally displaced person or migration stream.

Due to its growing history and its present magnitude, governments like the United State's government, had to create immigration policies.

Unlike most migrant workers, Expatriates know what to expect in their experience abroad. Expatriates can be classified according to their working setting; 1) Parent Country Nationals: A parent-country national is a person working in a country other than their country of origin. 2) Host Country Nationals: A host-country national is an employee who is a citizen of a country in which an organization's branch or plant is located, but the organization is headquartered in another country. 3) Third Country Nationals: A third country national is an employee who is not a citizen of the home or host countries.

Expatriate failure it not very common, but sometimes it can happens due to a Culture shock.

In addition to the social and political impact that the expatriation and migratory situation has globally, an important economic impact is also held by the expatriates and migrant workers in their home country as well as the host country.

This economic impact is formed by the remittances: Remittances are the transfers of money by immigrants to their home countries. For the native country the impact is a positive one, because the "beneficiaries" (commonly the workers family), spend this money on the national market and increases consumption. The increase of consumption increases the need of companies to produce, which reflects in the need for more labor force. (Fifield & Saleh 2009) Cash transfers to families in the home country help to alleviate poverty, fuel demand for real estate and provide national economies with an additional source of foreign currency.

In the other hand, the foreign country has a money outflow.

At the end of the presentation the team asked; how will the Crisis affect developing countries in the long term? When searching for the answer to this question I read an article of Heba Saleh and Anna Fifield where they wrote; Cash transfers from nationals living abroad that boost regional economies are under threat.

I thought this affirmation while crude was very realistic; the truth is that the financial crisis that began last year in the United States has spread all over the world and has send many developed economies to recession, such as Spain. This recession means fewer jobs for migrants, so following this trend, remittance levels will obviously drop as a result of the financial deceleration.

In this post I aim to answer this question and confirm "the growing threat" by "revealing" some remittances numbers to date and some world economist analysis and government data.

(Schuman 2009) Remittances from overseas workers--small dollops of cash sent home by workers to sustain families--add up to a major source of income for tens of millions of the world's poor. The World Bank estimates remittances to developing countries totaled $305 billion in 2008, triple the amount of development aid provided to poor nations. Remittances, however, are projected to shrink at least 5% this year.

(Business and Finance 2008) Almost 10% of the Philippines' 90 million people work abroad, many having left frustrated by few economic opportunities in their corruption-riddled, impoverished homeland. The country is world's fourth-largest recipient of remittances, after China, India and Mexico.
This vital cash flow could slow, of course, if the global economic outlook continues to deteriorate and Filipino expatriate workers lose their jobs. But for now, the Southeast Asian nation appears well-positioned to ride out the current storm. Unlike some countries that are heavily dependent on remittances, the Philippines' expatriates are more likely to be filling professional roles in the fields of education and health care, which economists see as less vulnerable to layoffs during a recession.

In contrast, the World Bank said in a recent report that the slowing U.S. construction sector, which employs many migrant workers from Central and South America, was cutting the flow of remittances to many of those countries, especially Mexico. Remittances to Mexico, mostly from workers in the U.S., dropped 6.5% in the third quarter from the same period last year.
"Countries whose migrants are employed in cyclically sensitive sectors such as construction may be relatively more vulnerable to downturns," the World Bank said.

(Castillo 2009) The money Mexicans living abroad sent home fell 3 percent in February (2009) compared to the same month last year, the central bank's president said Wednesday. Even so, the drop was less than in January, when remittances were down 12 percent compared to January 2008, Guillermo Ortiz said during a news conference.
Remittances have been dropping for two reasons: the U.S. recession and a crackdown on illegal immigration that has stemmed migrant flows.
Last year was the first time remittances -- Mexico's second-largest foreign income source -- have fallen year-to-year since the bank started tracking the money 13 years ago.

(BBC 2009) Konstantin Romodanovskiy, head of the Federal Migration Service [FMS] of Russia, says that because of the crisis the number of labour migrants has fallen by 13 per cent in the first six months of this year. He described the moving of labour migration to the Far East region as a positive trend. "We have exhausted our four-month quota for migrants by 25 percent, we are using the quota sparingly, in order to provide jobs for our citizens in the time of crisis"

(Kathleen Moore 2008) The global economic downturn is likely to cut the amount of cash sent by millions of migrants worldwide to their families back home, the UN and other agencies have warned, and the impact is likely to be felt keenly in Eastern Europe and Central Asia.

"A number of our countries -- Tajikistan, Moldova, for example -- have very, very high dependence on remittances," says Pradeep Mitra, the World Bank's chief economist for Europe and Central Asia. "Therefore, as the world economy slows, as we expect it will -- there will be a slowdown in Russia, Kazakhstan, and Ukraine -- the poorer countries are going to be hit because the flow of remittances is going to go down."

Finally, here are some enlightening parts and quotes of different persons taken from the article of Anna Fifield and Heba Saleh; Tide of migrant income set to fall:

With one or two exceptions, the Arab countries of the Middle East fall neatly into two categories; those that export hydrocarbons and those that export labour. While the first group now faces the threat of a prolonged period of low oil prices, the second has to grapple with the prospect of a decline in remittance flows from expatriates, whether they work in the wealthier oil-producing parts of the region or elsewhere in the world.

The World Bank expects remittance flows in the Middle East and North Africa to decline by 6.7 per cent in 2009, and to plunge even lower if the global crisis turns out to be worse than expected.

"Remittances are hugely important, not only in terms of gross domestic product, but also in terms of domestic consumption," says Simon Kitchen, economist at EFG-Hermes the private investment bank "Any drop will affect consumption. A remittance from a worker might support five people or more, and a lot of the money sent home is used to consume. If it is invested, it goes into real estate."

"Growth since 2000 has been driven by a new wave of immigrants who went to Europe and the US," says one investment banker. "These are mainly skilled people like engineers and IT specialists. But we are now seeing Moroccan investment bankers considering returning home. Everyday we see resumes sent by them."

"Remittances are important to Jordan because they help narrow the current account deficit," says Farouk Sousa, sovereign ratings director at Standard & Poor's. "The external balance, which is already weak, would be even weaker if it weren't for remittances."

"It is very difficult to assess the impact," says Nassib Ghobril, head of research at Byblos Bank. "But there are indicators that show there will be a decline, such as the slowdown in outflows from the Gulf and the US."

Bibliography

Anna Fifield, Heba Saleh. (2009, January 6). Tide of migrant income set to fall. Financial Times,11. Retrieved March 12, 2009, from ABI/INFORM Global database. (Document ID: 1622348781).

Business and Finance. (2008, December 8). World News: Manila Banks on Its Expats. Wall Street Journal (Eastern Edition), p. A.1. Retrieved March 12, 2009, from ABI/INFORM Global database. (Document ID: 1608410891).

E EDUARDO CASTILLO. (2009, April 2). Money sent back to Mexico falls. Tulsa World,E.4. Retrieved May 2, 2009, from Business Dateline database. (Document ID: 1672416031).

James Hookway. (2008, December 8). World News: Manila Banks on Its Expats. Wall Street Journal (Eastern Edition), p. A.13. Retrieved March 12, 2009, from ABI/INFORM Global database. (Document ID: 1608410741).

Kathleen Moore. (2008, November 208).
Financial Crisis Puts Squeeze On Migrants' Remittances. Radio Free Europe Radio Liberty. Retrieved March 12, 2009, from www.rferl.org/content. (Document ID: 1351195)

Less demand for homes, cars means less remittances in 2009. (2009, April 6). The Manila Times. Retrieved May 2, 2009, from Business Dateline database. (Document ID: 1673971781).

Michael Schuman. (2009, April). On the Road Again. Time International, 173(16), 16. Retrieved May 2, 2009, from Research Library Core database. (Document ID: 1683982621).

Number of migrant workers down 13 per cent in Russia - Migration Service. (2009, May). BBC Monitoring Former Soviet Union. Retrieved May 10, 2009, from ABI/INFORM Trade & Industry database. (Document ID: 1707855761).

Penagos, A. M. & Sierra, D. & Peñaranda, S. & Piedrahíta, M.A. 2009. Presentation "Migration and expatriates, An insight outlook" Organization and Cultures Subject, Universidad EAFIT.

Thalif Deen. (20 April). Financial crisis is threatening to claim another casualty :[Source: NoticiasFinancieras]. NoticiasFinancieras. Retrieved May 2, 2009, from NoticiasFinancieras database. (Document ID: 1682300761).

Images where taken from "Google images".