Labor migration costs – Too high for low-skilled workers

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In observance of International Migrants’ Day, December 18th
 
In 2012, a 29-year old Pakistani went to Saudi Arabia to work as a driver. To get the job, he paid some 15 percent of his prospective 3-year income, or $4,800, almost half of what he would be earning in a year in Saudi Arabia. Although he found the job through a relative, most of what he paid went for a visa ($3,800). He worked 11 hours a day and earned $880 a month, far higher than what he earned in Pakistan but lower than what Saudis earn. He sent about 60 percent of his earnings home to support four family members. He was unable to freely express his views, and his travel documents were held by his employer.

This information comes from KNOMAD’s novel survey dataset on migration costs incurred by low-skilled migrants, collected in collaboration with the ILO. Not only does the data cover costs to get jobs but also those occurring during employment in destination countries.

This migration cost database is the first step toward formulating sound policy recommendations to reduce migration costs that occur at every stage of the labor migration cycle. Moreover, it provides analytical underpinnings for a global target to reduce recruitment cost as part of the Sustainable Development Goals.

KNOMAD/ILO’s recent workshop discussed, among others, findings from the new migration cost survey dataset, as summarized below:

It matters where you go: structural factors (e.g., destination and types of migration regimes) matter more for the migration costs than individual characteristics (e.g., education and year of experience with working abroad). To get a similar low-skilled job abroad, worker-paid recruitment costs range from one-month of foreign earnings (e.g., migrant workers in Korea) up to 15 months (e.g., Pakistani migrants who returned from Saudi Arabia).
 
Source of costs depends on where you come from: For a destination in the Gulf Cooperation Council, the highest costs were visa-related for Pakistani workers, as opposed to fees paid to recruitment agents for Indian workers. For Vietnamese workers, recruitment fees were highest for those who went to Malaysia, while airfares for those went to Korea.
 
Gender matters: across different corridors, female domestic workers tend to pay less than male migrant workers, most likely on account of bilateral labor arrangements designed for the employment of domestic workers.
 
Hidden costs arising from working conditions depends on the type of occupations (gender-biased and varying by nationalities of the workers and by destination): For instance, Ethiopian female respondents who worked in SAU as domestic workers reported working an average 120 hours per week, versus 70 hours for Ethiopian males who worked as laborers in the construction sector.
 
The initial analyses suggest large gains from managing the recruitment process efficiently, employing technology, and enforcing labor-migration laws and regulations.
 
Plans for 2016. There is the growing interest in measuring worker-paid migration costs. KNOMAD and ILO will conduct migration cost surveys in different migration corridors - Italy, Russia, South Africa, Thailand, and Singapore. A Swedish research institute adopts the KNOMAD survey questionnaire to develop their questionnaire to interview Thai workers who go to Sweden to pick berries. 

Authors

Soonhwa Yi

Senior Economist, Development Economics – Global Indicators Group (DECIG), World Bank

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