Can blockchain improve labor mobility in Pacific Island countries? Lessons from Tonga

International labor migration plays a substantial role in the economy of Pacific Island countries through remittances. In Tonga, a small archipelago in the South Pacific Ocean, remittances account for nearly 40.7 percent of GDP. Due to the COVID-19 pandemic and its impact on labor mobility, remittances to the East Asia and Pacific region are projected to fall by a steep 10.5 percent in 2020. And for the first time in recent history, the stock of international migrants is likely to decline.

Labor mobility is key to economic recovery and longer-term resilience in the East Asia and Pacific region after the COVID-19 crisis. There are three main labor mobility programs from Pacific Island countries to Australia and New Zealand. But it is challenging for participants in sender countries to obtain credentials and for the receiver country visa authorities to verify the credentials required during the employment visa process. This results in a costly and time-intensive process hindering seasonal labor migration.

The World Bank explored how mature and emerging technologies could help with the verification of credentials for labor mobility program applicants from Tonga (and other Pacific Island countries) to Australia and New Zealand for seasonal work.

The World Wide Web Consortium (W3C), which is the main global body that develops protocols and guidelines for the web, consists of several working groups including on verifiable credentials and decentralized identifiers. Verifiable credentials are a set of tamper-resistant information that some authority claims to be true about an individual or entity. These are cryptographically tamper-proof, machine readable and privacy-respecting, which provide strong digital verification characteristics.

The World Bank team experimented with these emerging approaches/ “Open Standards” in addition to the use of conventional and blockchain technology. The prototype considered a few credential certificates like education, police clearance, and job offer, which are required to be obtained and verified by the applicants during the process of labor mobility programs. We examined various aspects such as verifiable credentials framework, verification process flow, and potential considerations and challenges for operationalization and implementing models to figure out how blockchain technology could be efficiently employed. A solution overview is provided in the diagram:

Some key design criteria for the prototype:

• Focus on functional identity credentials: For simplicity’s sake the team focused on functional identity credentials like educational certificates, police clearance certificates, etc.
• Mobile first approach: The team adopted a mobile-first approach in the prototype for labor program applicants to demonstrate ease of use.
• Privacy-by-Design: Maintaining user privacy as embedded into the design and the technical architecture resulting in privacy as a core functionality being delivered (ID4D Practitioner’s Guide).
• Open Standards: Prototype solution leveraged the evolving prominent W3C working group standards for verifiable credentials.

Some Lessons Learned:

• Use of blockchain for a specific narrow purpose: No private credentials or private identifiers are stored on blockchain. Only the decentralized identifier and credential schemas and definition benefit from the shared immutable ledger.
• Enhanced privacy: The technical architecture to allow for selective disclosure of credential attributes as required by the verifiers for labor prevent correlation of digital interactions and no personally identified information (PII) goes on blockchain.
• Mature and emerging tech: In addition to using blockchain, the exploration also leveraged mature technology components such as traditional databases, Signal R for peer to peer connections, APIs, and WebSocket connections.
• Prototype: The output from this exploration resulted in two prototypes with different user interfaces and using different blockchain protocols, namely Hyperledger Indy and Parity Substrate. While Indy is purpose built for identity and credential use cases, Parity can provide toolkits for speeding up development. Both prototypes illustrated the potential of verifiable credential framework and blockchain technology in building a secure and resilient digital credential authentication and verification mechanism. While the technology holds promise, there are various considerations such as governance and conducive regulatory framework that are important to take into account.

Potential of wide-ranging application in digital identification for access to services

Technology-enabled verifiable credentials are not just applicable for this use case but also present a much broader set of opportunities to reimagine the digital verification of credentials, which often is a critical component for access to services and benefits. To materialize the full potential would, however, involve creation of an ecosystem of issuers and verifiers with usage of open standards to ensure smooth interoperability.

Blockchain technology in conjunction with other mature technologies can be harnessed to facilitate credential sharing and verification in labor mobility programs. The key insights and lessons learned through this exploration could be useful for further deliberations and knowledge exchange in designing and utilizing similar innovative technology solutions for digital credential exchange in order to address pressing development challenges.

This work was a collaboration between World Bank teams from the ITS Technology and Innovation Lab and the Poverty and Equity Global Practice. To learn more: technologyinnovation@worldbankgroup.org