Lower Migration’s Costs and Raise Migration’s Benefits


This page in:

In observance of the International Migrants Day, Dec 18

Every year up to 10 million workers leave one country to work in another. Most are legal guest workers, and many arrive in debt to recruiters and other agents who place them in foreign jobs. If 10 million workers pay $1,000 in fees, the business of international labor migration is worth a $10 billion a year, including a large share that flows to agents in destination countries. Cutting migration costs in half would save migrants $5 billion a year.
Migrant workers who pay high fees to recruiters, governments, and other agents are vulnerable to exploitation once they are abroad. After arriving abroad, some learn that they will earn less than expected because of unanticipated deductions from their wages. If presented with a new contract that offers lower wages, most feel pressured to sign because they do not want to return to recruitment debts at home.
The wage wedge or gap that enables workers to earn in an hour they could earn in a day at home motivates international labor migration. How should this wage gap be shared among workers, employers, recruiters and governments?
ILO Conventions and laws in many countries are clear: employers should pay all migration costs, especially for low-skilled workers. But when more workers want to go abroad than there are jobs, employers and recruiters know that some workers will pay.
Each of the three major phases in international migration can cost workers money. The first involves the employer being certified to fill a job with a foreign worker. These costs are not usually passed on to migrants, but when migrants must have local sponsors, or governments impose levies on employers, some of these costs may be borne by migrants.
Most worker-paid fees arise in the second phase, when workers get contracts to fill foreign jobs. Foreign job orders usually arrive in major cities, most low-skilled migrants live in rural areas, and layers of intermediaries between the migrant and the contract extract fees. These intermediaries usually accompany the workers they recruit to cities, where licensed recruiters help migrants to obtain passports, undergo health, criminal and other checks, and have their contracts approved by government agencies.
The third phase is return after two or three years abroad. Many contracts call for end-of-service and other bonuses, but hard-to-understand requirements sometimes prevent migrants from receiving these benefits.
Reducing worker-paid migration costs requires several steps. First is promoting cooperation between governments to simplify recruitment procedures and reduce opportunities to charge workers. Second is developing uniform contracts so that workers can more easily anticipate migration costs and net earnings abroad. Third are a variety of policies. Why can’t migrant workers arrive on cheap one-way tickets rather than more costly round-trip tickets? Would standard contracts make it easier to educate and protect workers?
International labor migration is often marked by controversy. Moving workers over borders can generate win-win-win benefits for workers as well as migrant-sending-and –receiving countries, but these gains for workers can be reduced or eliminated by high migration costs. Reducing worker-paid migration costs could benefit workers at the expense of the “merchants of labor” who are now taking a large share of the wage gap that motivates migration.
The writers are respectively the retired director of the International Labor Organization’s Migration Branch and an economist at the University of California, Davis

Join the Conversation

December 19, 2014

When there are more than ten applicants for each job available then the job seekers must pay for the 'privilege' conferred. It is simple demand and supply theory coming into play. No amount of ILO's acts are going to stop it unless the government of host country intervene and start recruiting directly.
Moreover, most of the recruitment fees charged is kept by local middlemen of the migrants' country themselves. This very fees have given birth to new 'recruitment middlemen' industry employing thousands. So, lowering such fees, though beneficial to the migrants, is zero sum game for the finance of the migrants' country.

Tsewang Bhotia
July 12, 2017

fees, illegal or higher than the government recommended levels are charged on both sides of the fence by agents or brokers, not just the middlemen in the villages. Collusion in the public and private partnership is rampant, bribery is widespread. The industry is opaque and transparency is needed across the entire process from pre and post departure.