03/2007: John P. Martin

MARCH 2007

John P. Martin
Director for Employment, Labour and Social Affairs,
Organisation for Economic Co-operation and Development
(OECD, Paris)


‘Current migration trends in OECD Countries’


Ü Eurasylum Ltd: The latest edition of the OECD’s yearly International Migration Outlook, published in 2006, reports that, in 2004, between 3 and 3.5 million immigrants, including those already living in their new country on a temporary basis, became official long-term residents in the OECD countries. This has included a sharp increase in immigration into the United States, Italy and the United Kingdom. Between May 2004 and December 2005, 345,000 new EU Member State citizens have registered to work in the United Kingdom. Similarly, the number of temporary, seasonal, and contract workers has been increasing over the past ten years in most of the OECD countries. Asylum claims, on the other hand, have fallen drastically over the last couple of years. Could you discuss, briefly, the evolution in the levels and structure of immigration into the OECD countries in recent years, and outline some of the key policy priorities which these trends are generating, particularly as regards possible shifts in emphasis from asylum to immigration policy, and the need for major host regions such as the EU to harmonise their policies and regulations on economic migration?

Ü John P. Martin: There are currently close to three million long-term immigrants entering OECD countries legally every year, and even more temporary movements. And this estimate does not take into account unauthorised migration. The evidence also suggests that there has been an increase in inflows into the OECD area in recent years.

Until now, it has been difficult to provide an accurate overview of immigration flows in OECD countries, because inflow data vary from country to country, and commonly-used national data sources do not all use the same definition of international migration. For example, some countries include short-term entries in the flow statistics, while others cover only permanent entries. The OECD has now, for the first time and for the majority of OECD countries, provided harmonised statistics on permanent immigration flows in receiving countries (for details, see OECD: International Migration Outlook, 2006). Among the countries for which these harmonised data are available, the level of legal long-term entries as a percentage of the total population is highest in Switzerland, New Zealand, Australia and Canada, whereas low levels are observed in Finland and Japan. For some countries, it is difficult to get a reasonably precise picture of migration flows, particularly where much immigration is unauthorised. This is, for example, the case in Spain, Italy, Greece and Portugal. These countries, together with Ireland, have evolved recently from countries of emigration to immigration countries. Spain is now probably the second most important destination country for new immigrants in the OECD area after the United States  although the United Kingdom comes close. Unauthorised migration is not only a feature in the southern European countries. It also accounts for a significant part of migration to the United States.

Temporary migration is also on the rise. Almost all OECD countries now have temporary worker migration programmes, and the scale and scope of these has been growing over the past decade (temporary workers, seasonal workers, working holidaymakers, contract workers). There are also other temporary-type movements, such as intra-company transfers of managers within multinational enterprises, traineeships and cross-border movements linked to provision of services. The international mobility of students also has gained momentum in recent years. In contrast to these upward trends, asylum seeking has been steadily declining over the past few years and is now at its lowest level since the late 1980s.

There has been a shift in the origin countries for migrants to European OECD countries, with a large part of the recent flows coming from non-OECD countries, such as Russia, the Ukraine, China and Latin America (especially to Spain). There is a significant growth in immigration from central and eastern Europe following European Union enlargement in 2004, mainly to Ireland and the United Kingdom. Outside of Europe, the movements are even more diverse, with countries in Asia, Latin America, but also the United Kingdom, figuring among the top source countries in North America, Oceania, Japan and Korea. China and India, for example, now figure among the top three origin countries for migration to Australia, Canada and the United States.

Among many OECD countries, there is a renewed interest in migration for employment, with a view to tackling current or expected future labour shortages in a wide range of skilled occupations, and this appears to be a key driving factor behind the overall increase in immigration. Indeed, accepting more labour immigrants results almost inevitably in higher immigration levels, as most of family and humanitarian immigration is related to generally acknowledged human rights and therefore largely beyond control. The driving force of labour migration is particularly apparent in the new immigration countries  such as Spain and Ireland  where immigration is essentially labour-market-oriented. Yet, one also observes an increase in work-related migration in many other countries. Despite this, family migration (accompanying family of workers and family reunification) is still predominant in the inflows to most OECD countries, even in countries where worker entries are now more common than in the past, as is the case in Portugal, Denmark, Switzerland and the United Kingdom.

Ü Eurasylum Ltd: Several studies conducted in the 2000s have shown that, whilst remittances have contributed significantly to improving the living conditions of migrants and their families, the positive impact of such transfers on the economic development of the countries of origin has been marginal. A study on Migration, Remittances and Development published by the OECD in 2005 has shown that many attempts to channel these funds towards development have been unsuccessful, due to the fact that they have failed to recognise the primacy of individual choice. The crucial role of the banking system in helping to reduce the costs of the transfer of remittances was also emphasised, particularly in relation to the development of new technologies that have the potential to increase competition among suppliers of banking and financial services in both receiving and sending countries. However, according to this OECD study, good governance, respect for property rights, and an outward-oriented trade and FDI strategy, are equal prerequisites for enhancing the efficiency of remittances in an economic development perspective. Can you summarise some of the key policy recommendations of this study, and relate these to wider on-going international discussions on the role of remittances, particulary those engaged at the UN High Level Dialogue on Migration and Development ?

Ü John P. Martin: In several emigration countries, remittances in 2005, estimated by the IMF at USD175 billion, largely exceeded the volume of official development aid (ODA), and in certain cases even of foreign direct investments (FDI) or income from the export of goods and services. Remittances constitute a considerable source of hard currency for countries of emigration, sometimes covering several months of imports. As a result, the issue of remittances, and the contribution they can make to spur economic growth and cut poverty, has attracted increasing interest on the part of several international organisations (IMF, World Bank, OECD), at a time when the volume of ODA is tending to diminish slightly.

The Marrakech Conference, organised by the OECD in February 2005, underlined the fact that relative to macroeconomic indicators, remittances are significantly higher in low and lower middle-income countries than in the other developing countries (see OECD: Migration, Remittances and Development, 2005). Remittances are also unequally distributed across regions, with Asia receiving the lion’s share, followed by the American continent and, far behind, Africa. A review of recent studies on remittances and development has shown that they have indisputably contributed to improving the living conditions of migrants and their families, reducing household poverty and increasing investment in health and education in the countries of origin. It is, however, less evident that these transfers have had a positive impact on the economic development of the countries of origin. In fact, the large diversity in the personal characteristics and economic situations of immigrants, and the ways in which they make use of their savings, makes it very difficult to attract and massively orient these funds towards the economic development of their home countries.

The Marrakech Conference highlighted the crucial role of the banking system in fostering remittances and identified several good practices to reduce the costs of the transfer of remittances. For example, in the case of Portugal, private banks have attracted the greatest part of remittances and they are transferred abroad at relatively low costs. In Turkey, the system is more complex. It is first based on the networks of Turkish banks abroad, and the savings banks in receiving countries, mainly in Germany. The Turkish Central Bank pays a large proportion of the transfer costs of remittances to Turkey. The migrant is not only considered by these banks as a foreign hard-currency provider, but as a valued client who can benefit from all the bank’s services. Consequently, not only is the transfer cost reduced, it is also easier to channel part of the remittances to productive investment. The Philippines showed how it is possible to use mobile phones to transfer remittances at a lower cost and provide for secure transfers.

The Marrakech Conference also revealed that the best way to maximise the impact of remittances on economic growth in developing countries is to implement sound macroeconomic policies and policies of good governance, as well as development strategies involving all actors in the economy. Good governance, a sound banking system, respect for property rights, and an outward-oriented trade and FDI strategy, are prerequisites for enhancing the efficiency of remittances. The state has a primordial role to play in establishing these key building-blocks for economic development, supported by the international community. Remittances are neither a substitute for ODA nor for FDI flows.

In order that remittances may play a greater role in the economic development of countries of origin, it was also recommended that information be widely distributed on remittance channels and opportunities for investment, and that one-stop shops be created, in order to provide information at all stages of the migration process. Policies should support and accompany migrants who wish to engage in entrepreneurial activities in their countries of origin. If special incentive schemes are put in place, they should be designed for everybody, and be open to migrants and non-migrants alike.

Over and above remittances, migrants make other, invisible, transfers to their countries of origin: economic behaviour, knowledge and know-how, and social and cultural exchanges. Numerous examples, notably from Mexico and Morocco, show that migrants can contribute to the financing of the infrastructure at local level (electrification, water provision and irrigation, road building, medical centres and schools). A participative process, involving all the actors (migrants, villages, local authorities), constitutes the best guarantee of sustainability of the infrastructures and ongoing productive projects.

Ü Eurasylum Ltd: At a seminar on The economic integration of immigrants, organised by the OECD in May 2006, recent empirical findings on the labour market outcomes of natives and immigrants were discussed. These showed that differences between the two groups were small compared to those between men and women.The findings also indicated that, given gender and immigrant status, important predictors of labour market outcomes are age (or labour market experience), educational attainments, and marital status. The effects of these variables are remarkably similar between natives and immigrants and, while cross-country differences are sizeable for natives, they are much less significant for immigrants. However, in an OECD Policy Brief published in November 2006, the point was made that national policies designed to manage immigration are rarely accompanied by strong policies to support integration, particularly as regards the adaptation of labour market and education policies to the needs of immigrants. The OECD Policy Brief thus concluded that, rather than generating new initiatives and establishing new providers or new partnerships at the local level, there was a need to increase the flexibility of existing policies, and in particular to tailor training and labour market policies to the needs of the migrants. Could you outline and comment on some of the key proposals resulting from recent OECD research on economic integration of third-country nationals?

Ü John P. Martin: In many countries, immigration is seen as one possible route, in conjunction with other policies, to alleviate the adverse consequences of ageing populations. For this to be a feasible policy option in the future, it is clearly necessary that the current stock of immigrants, their children, and future arrivals be well integrated into the societies of OECD countries. Since they now constitute a significant proportion of the resident population in many countries, the integration of immigrants and their children into the labour market are key factors in the process of ensuring social cohesion.

Although integration into the labour market does not necessarily guarantee social integration, it is a major step with respect to immigrants ability to function as autonomous citizens in the host country, and to ensure both acceptance of immigration by the host-country population and the sustainability of migration policy over the long term.

There is a general perception that the labour market integration of immigrants has become more difficult in many OECD countries over the past two decades. While the empirical evidence suggests that this is indeed the case in some, but not all, countries, the interpretation of this trend is not straightforward. The most important factor to explain the differences in labour market outcomes is the category under which the immigrants entered the country. Migration for employment may be the result of selection, which is not the case for family reunification or formation and humanitarian migration. Comparing a period when labour migration was predominant (the 1960s) with one when migration consisted more of humanitarian and family migration (the 1990s), it is hardly surprising that the outcomes during the latter period were worse for many immigrants and their families. The situation differs across countries. In southern Europe countries, for example, which have seen high inflows of labour migration in recent years, the current employment rates of new arrivals are even higher than those of the native-born population. In most other European countries, flows have been largely humanitarian and family-related for some decades, and although the differences in employment rates relative to the native-born are a cause for concern, they have narrowed in some countries over the past decade. The negative perception of immigration reflects in part the fact that the immigrant population itself is more visible, due to the large numbers which have arrived over the1990s, and that certain channels of entry have been abused.

In addition, the outcomes themselves still leave a lot to be desired, especially for children of immigrants in some countries. As the native-born children of immigrants (the so-called ‘second generation’) have been born and raised in the host country, it would be expected that they have similar outcomes as natives, at least similar to those who have a comparable socio-economic background. But this is generally not the case, as the OECD’s Programme for International Student Assessment (PISA) has shown comparing the skills of 15-year-olds from the second generation with their native counterparts. It can also be observed that even for given educational levels, children of immigrants have more difficulties in obtaining employment.

What helps in promoting better labour market integration for immigrants? For new arrivals, early work experience is crucial  not only for entry in the labour market, but also for integration in the long term. Host-country language acquisition should thus be linked with work experience. In general, measures which help to overcome uncertainties about the skills and performance of immigrants, such as enterprise-based training and temporary employment, have been shown to be quite effective. New arrivals also tend to lack knowledge of the functioning of the labour market of the host country. Mentoring and network-building seem to be promising avenues for overcoming this obstacle, but there is little empirical data to back this hypothesis. To surmount, at least in part, skills recognition problems, many OECD countries are now increasingly recruiting international students and persons already in the country on temporary status.

The uneven integration record of low-qualified migration to Europe calls for more and better accompaniment to ensure that the children of these migrants do not start with a disadvantage. Early and frequent contact with the host-country language has been demonstrated to strongly influence the educational outcomes of the second generation, which, in turn, are an important determinant of labour market success later on.