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Europe and Central Asia

Are migrants more likely than nationals to be unemployed during economic crisis?

Submitted by Sudharshan Canagarajah on Tue, 08/30/2011 - 08:16

There has recently been heated debate regarding migrant employment behavior in host countries during and after economic crises. The popular view is that migrants have an incentive to remain unemployed as long as they have access to unemployment benefits, free health care, and education. Thus, many argue, that migrants should not be provided with benefits as they create perverse incentives for migrants to stay unemployed. However, recent data does not support such a simple relationship. In fact recent data shows that sometimes migrants that lose jobs tend to find work quickly during and after crises.


A recent article in the Economist based on OECD Migration Outlook 2011 provided some useful data to show the complex patterns of migrant unemployment compared to nationals. The data shows that the relationship between migrants and unemployment incidence depends on a variety of labor market conditions including unemployment benefits, skill level of migrants, business cycle patterns, the sectors they are employed in, and labor market flexibility.

The ECA diaspora can contribute to development

Submitted by Sudharshan Canagarajah on Wed, 06/08/2011 - 14:37

At approximately 46 million, the diaspora population originating from the ECA (Europe & Central Asia) countries is the largest of all the development regions. Over ten percent of the population of the ECA countries currently lives outside their home countries, a much larger share than the 3 percent of the world’s population who are defined as migrants. Even if some immigrants choose to fully assimilate in the recipient countries, there is still a significant number who maintains active links to their countries of origin. The flow of remittances in ECA coming from this Diaspora is also quite significant, more than 30 percent of GDP in some ECA countries. This financial contribution has led to a dialogue on potential Diaspora Bonds to attract much needed investment for capital projects (see Dilip Ratha’s work).

Russia’s Migration Reforms – Learning to look at the Glass Half Full

Submitted by Sudharshan Canagarajah on Thu, 05/19/2011 - 12:09

The more I work on migration issues, I have come to realize the uniqueness of the CIS region migration phenomena. Migration in what is currently called the CIS region (the former Soviet Union) includes both migration within the region and external migration. Although the CIS countries are now nation states, they were earlier part of one country. The migration phenomena, therefore, existed for more than 70 years before the fall of Soviet Union in 1991. Despite being ethnically different, almost all speak Russians (although the fluency in Russian is declining over time, especially in the younger generation). There is substantial movement of goods and services and trade integration across the region.

To build or not to build – that is NOT the question

Submitted by Elina Scheja on Fri, 01/21/2011 - 11:27
Photo: istockphoto.com

Right after the holiday season Greece announced their controversial plan to build a 12 km long wall to stop the flood of illegal immigrants to the EU. The wall will cover only a fraction of the total length of the border and is aimed to be built in the area that is worst affected by illegal border crossings estimated to amount to 350 people every day, making Greece the leading entry point of illegal immigrants to the EU. As provocative as it may sound, in an economy that is suffering from severe difficulties and rampaging unemployment figures, blocking immigrants from entering is becoming one of the priority political actions to moderate fiscal expenses that is visible to the domestic population. Even though opponents have raised loud objections against the project, according to a recent poll 59 percent of the Greeks approved of the plan. And one has to admit it has an intuitive appeal of simplicity and logic: once you close the drain the flow will stop. Yet, as simple as it may sound, this is not how it works.
 

Et tu, Sweden?

Submitted by Elina Scheja on Wed, 09/22/2010 - 08:50
    Photo/Istockphoto.com

Having followed the debate on welfare and economic policy prior to the Swedish parliamentary election, the arguments from both the ruling center-right alliance as well as the left-of-center opposition seemed convincing enough to be considered for the next political leaders of the country. The opinion polls were predicting a tight outcome in slight favor of the ruling coalition. On Sunday the votes were counted and the results surprised everybody: 2010 ended up being a historic election with no clear winners, but only one big setback. Even though the ruling alliance got a renewed mandate as the largest coalition, it failed to get the majority of the seats in the parliament. The leading opposition party, the Social Democrats, preserved its status as the largest party in the country, but thanks to the strong alliance formed by the center-right coalition, it will be unable to take over the country’s political leadership. The real winner of the election, however, was the anti-immigrant ultra-right wing party Sweden Democrats. The party got 5.7 percent of the votes that guarantees it the swing vote in the parliament making both the established party coalitions dependent on their support. Even though all established parties have categorically stated that they will not seek support from the Sweden Democrats, their passive support will be required for any majority decision.

Stepping out of the comfort zone

Submitted by Sudharshan Canagarajah on Mon, 09/13/2010 - 19:19

Knowledge product innovation in ECA: The case of MIRPAL

It is almost eighteen months since World Bank Europe and Central Asia (ECA) region launched a program of knowledge sharing in the post crisis environment for countries heavily dependent on remittances and looking for ways to address the

vulnerability that emanated from the global economic crisis. For many Commonwealth of Independent State (CIS) economies in ECA region, which had seen high economic growth rates on the back of Russia’s economic boom, the global crisis and its impact on trade and remittance flows was an important shock. For many, neither the neither magnitude, nor trends of the remittance shock was clear, because the research and policy response has been very limited.

Economic Crisis is affecting net migration rates in the European Union

Submitted by Sonia Plaza on Thu, 08/12/2010 - 16:17

Eurostat just released the latest estimates of the European Union demography numbers . According to the report, “EU gained only 1.4 million residents in 2009. (See article)

However, the population change has decreased from 2’046,029 in 2008 to 1’366,372 in 2009 (-33%). This is explained by a decrease in the natural population change and in the net migration. The decrease in natural population change has been due to a slight decrease in the crude birth rate and a constant crude death rate. Hence the major factor responsible for the slowing population growth is the decrease in net migration.

Due to the global recession, migration to the EU slowed down in 2009, for a net migration of  1,464,059 in 2008 to 857,186 in 2009 (a 40% decline). The reduction in migration flows is due to employment losses in countries of destination (especially Spain, Italy, UK) and to more restrictive immigration policies devised by European countries (e.g. UK points system, Italy prohibition on access to health service for undocumented migrants, Spain’s reduction in the number of positions available for immigrants).

Is Russia the second-largest sender of remittances? Or is it Saudi Arabia?

Submitted by Ani Silwal on Tue, 05/04/2010 - 17:38

Saudi Arabia was the second largest sender of remittances (after the United States) from 1988 to 2006. In 2007 and 2008, it was displaced by Russia as the second largest sender of remittances (figure 1). Flows from Russia have increased rapidly in recent years, reaching $26.1 billions in 2008. However, this rapid growth was interrupted in 2009, when remittance outflows fell by 29% to $18.6 billions in 2009. We don't have 2009 outflows data for Saudi Arabia yet but based on inflows data from Bangladesh, Pakistan, and the Philippines, Saudi Arabia's remittances outflows have not fallen much. Saudi Arabia was likely the second largest sender of remittances in 2009.

There are two possible explanations for why remittances from Saudi Arabia have been more stable than those from Russia (see Migration and Development Brief 12 for details). First, oil prices are more closely related to economic activity (thus, better employment prospects for migrants) in Russia than in Saudi Arabia. As major oil-exporters, both countries benefited from the surge in oil prices in the last few years. But only in Russia did remittance outflows move closely with oil prices (figure 2). This was not the case in Saudi Arabia, which has had ambitious development plans for a while and an aggressive counter-cyclical fiscal policy. Second, Russia’s borders with its neighbors are much more porous than those of Saudi Arabia, which enforces immigration quotas strictly. Russia’s porous borders have allowed migrants from neighboring countries to move in an out in response to changes in labor demand.

The impact of the global crisis on remittances: Case of Russia and Tajikistan

Submitted by Sudharshan Canagarajah on Mon, 03/01/2010 - 17:18
  Photo © iStockphoto.com

The Russian economy suffered a double blow in 2008; first from the drop in world crude oil prices and secondly from a reversal of capital account inflows. The fall in national income and the adjustment of the balance of payments to the external shocks triggered a steep recession. After recording real GDP growth of 8.1 percent in 2007, growth fell to 5.6 percent on 2008 and then to negative 9 percent in 2009, one of the steepest falls of any major economy. This affected remittances, mainly to other CIS economies, through two channels: first because of a contraction in employment, especially in the cyclically sensitive construction industry and secondly because the depreciation of the Russian rouble, by 51 percent against the US dollar between March 2008 and March 2009, reduced the dollar value of remittances.

Remittances to Tajikistan fell much more sharply in the final quarter of 2008 than can be attributed to seasonal factors alone. The slump continued throughout 2009 with gross inflows of remittances valued in US dollars for the year falling 31 percent below the total for 2008. How did this fall in remittances, of more than $800 million (about one sixth of GDP) relative to the level in 2008, affect the macroeconomy in Tajikistan? There are three possible channels of adjustment to a reduction of foreign exchange inflows of this magnitude.

Labor Mobility and Circular Migration: What are the challenges of the Stockholm Program?

Submitted by Sonia Plaza on Mon, 11/02/2009 - 19:35

I recently gave a presentation and participated in a conference organized by the Swedish Presidency of the European Union(EU) on “Labor Migration and its Development Potential in the Age of Mobility"on October 15-16. The conference focused on two main themes: a) Labor immigration, and b) Circular migration and its development potential.

Speakers and participants discussed the importance of improving labor mobility in Europe given demographic changes. New players such as China and India are competing for global talent. The EU should become an attractive market for immigrants if it wants to remain competitive in the coming decades.  Within this context mutual recognition of skills and accreditation becomes key for developing countries. (See my previous post)