Thursday, April 15, 2010

A brief note on the politics of replacement and planned migration

Replacement migration is a controversial idea, as a thought experiment as much as a serious policy proposal. Immigration into countries and regions with shrinking workforces and aging populations can help manage the economic problems associated with the fourth demographic transition, but as at least one observer noted it's unrealistic to imagine that the very high volumes of immigration assumed under these scenarios will ever come to pass, indeed that--as I wrote in relation to Sweden a while back--that the immigrants will even come, never mind come in the right numbers, which are themselves almost impossible to imagine.

Demographic theory, and numerous simulations, have already shown that immigration cannot compensate for population ageing except with flows so large as to hugely increase population growth and rapidly replace the existing population with a foreign one – ‘replacement migration’ indeed. Immigration is impotent to stop ageing because the average age of immigrants is little lower than that of the natives, and while immigrants from the third world initially have higher birth rates, these are expected to decline. Instead, immigrants themselves age and ‘need’ more immigrants to replace them.

The UN has succeeded in showing dramatically that the demographic characteristics of the very low fertility countries must change if they are to end up with an economically sustainable age-structure. It is also right that up to the medium term, reductions in ‘native’ working-age entrants are inevitable in some countries, and could not be effected by increases in birth rates for 20 years. But its simple-minded mechanistic projections go too boldly into an unknown future, and its one-sided prescriptions send the impossible in hot pursuit of the merely implausible. In diverting its considerable talents to sensational demographic scenarios the UN has missed an opportunity to consider the problem in a broader and more useful context.

(The title of the above essay--"‘Replacement Migration’, or why everyone’s going to have to live in Korea"--refers to the fact that, in the scenario for South Korea, roughly the entire population of the Earth would have to move to South Korea in order to keep that country's dependency ratio at 2000 levels.)

The only sovereign states where the sorts of very high ratios of immigrants to the native population produced by these scenarios are located on the shiores of the Persian Gulf, in the smaller member-states of the Gulf Cooperation Council, where oil-driven economic growth combined with severe shortages in labour--especially but not only skilled labour--to produce massive inwards migration, as detailed here.

From World War II to the October 1973 War, the Gulf States went through a process of wealth accumulation. Rising demand for oil in the world economy matched by rising supply from the Gulf translated into rising oil ‘rent’. High income was transformed into material welfare for natives through the recruitment of foreign workers that would produce national wealth while allowing nationals to largely stand out of the labour market.

The demand for manpower was then commensurate with the potential supply from the Arab Middle East, which became typically divided between two sorts of countries: those with human capital and population surpluses and those with oil and c financial capital surpluses. Labour migration from population-rich to capital-rich Arab countries was regarded by Pan-Arabism as the best way to cross-fertilise the two disconnected assets of the Arab world, i.e. population and capital. Migration was viewed as a strategy to build the Arab nation.

The war of October 1973 opened a second stage of migration to the Gulf. With oil prices soaring, Gulf rulers could launch ambitious programmes of economic construction. A new economic culture emerged and governments understood that oil wealth is transient and must be used to build a strong post-oil economy. They started to construct large-scale modern infrastructures and plants. Because the ultimate goal was to adapt to the local reality - a weak demography combined with a strong wish to preserve identity - mobilising capital was the objective, not creating permanent employment. Capital-intensive rather than labour-intensive industries were chosen.

The construction of infrastructures and plants, however, created large numbers of short-term jobs. Gulf governments opted for turnkey plants ordered to foreign societies that would hire themselves their workers abroad. Asians started to outnumber Arab workers. According to some scholars, substituting Asians to Arabs was also a means to address political concerns: because Arab migrants share a language and a culture with the local society, they are more susceptible than Asians to voice and to defend their workers’ interests. This would have clashed with Gulf rulers’ strategy of importing labour while avoiding the formation of a working class.

Dual societies were gradually born, in which nationals and foreigners were separated de facto (e.g. world lowest levels of economic activity among nationals vs. world highest among non-nationals) as well as de jure (e.g. the obligation for every foreigner to have a local sponsor). During this second, stage migration became the most popular topic among Arab social scientists. The debate was then revolving around issues of regional integration and whether migration reduces or accentuates economic inequalities between countries, and around issues of identity and whether Asian migration would make Arabs a minority in the richest part of their nation and therefore challenge the ideal of that nation.

A third stage started with the 1990-1991 Gulf War and is characterized by the will to construct society, beyond economy. It was triggered by Kuwait being invaded from outside, poorly defended from inside and eventually rescued by an external coalition. The war had an immediate impact on migration as it resulted in three million legal immigrants forced to leave their host countries. Several Arab communities were particularly targeted: Palestinians in Kuwait, Egyptians in Iraq and Yemenis in Saudi Arabia, for the reason that they bore the wrong nationality and found themselves residing in what had become overnight the opposite camp.

Political lessons were also drawn. The war was an occasion for major oil countries to reassess their vision of labour and to adopt policies of ‘gulfization’ of the workforce. The context was the economic crisis that followed the Gulf war. Not only it had not produced any escalation in oil prices comparable to that of October 1973, but the reconstruction bill was astronomical and to be paid with cheap oil. For the first time, young nationals in the Gulf found themselves confronted with a drop in purchasing power and the emergence of unemployment. Immigrants started to be viewed as competitors and indigenising employment became a stake. One after the other, Gulf States adopted gulfization policies along two lines: on one side, reducing the supply of migrant workforce by reinforcing barriers at entry and stay, and on the other limiting the demand for migrant workers by expanding the list of jobs kept for nationals and taxing employers who hire non-nationals. Gulfization policies have had mitigated results and labour markets dependency on migrant workers is still at its peak.

As Noel Maurer, occasional commenter, noted in one of a series of posts, the political economy of these immigrant-receiving states--Dubai, actually, but that's arguably prototypical of the Gulf model--is certainly not permeable, allowing migrants into the national community.

The Dubai government charges fees for labor permits, but doesn’t view them as a source of income. The upside for Dubai is obvious. Production and construction costs are more like Shanghai than Seattle. Firms can recruit in a global labor market, and offer salary premiums to skilled workers over what they would get in London or Paris without raising their own labor costs. The resulting growth creates a wonderful cycle: since firms in many industries like to near other firms in the same industry, growth begats growth, and the owners of Dubai real estate (e.g., the ruling family) make a boatload of money.

It gets better. First, Dubai doesn’t pay the costs of educating all those workers; nor does it have to worry about their retirement. They come, do what they do, then go home. Governments in places like the Republic of the Philippines or the United Kingdom subsidized their education and will handle their old age. Second, the labor force drops in downturns. No worries about the social cost of unemployment. For example, the Indian embassy to the UAE reported that 20,000 seats on flights to India had been “bulk-booked” by Dubai employers for March 2010. The workers are flown out the same day they get fired because, in the words of a British construction site manager, “a lot of them commit suicide and we don’t want that on our hands.”

The age pyramid's hugely distorted, biased towards working-age men, as a result of this.

Will the age pyramid be evened out, as immigrants are allowed to bring their families over or form their own families in Dubai? I doubt that; with only 17% of its population being United Arab Emirate nationals and a powerless labour force, the odds of change in the majority's favour barring something radical are trivial.

There are many, many examples of countries where mass immigration has been entirely compatible with permeable citizenship regimes and pluralistic policies. Argentina, as Wikipedia suggests, was transformed.

Most immigrants arrived through the port of Buenos Aires and stayed in the capital or within Buenos Aires Province, as it still happens today. In 1895, immigrants accounted for 52% of the population in the Capital, and 31% in the province of Buenos Aires (some provinces of the littoral, such as Santa Fe, had about 40%, and the Patagonian provinces about 50%). In 1914, before World War I caused many European immigrants to return to their homeland in order to join the respective armies, the overall rate of foreign-born population reached its peak, almost 30%.

Yes, Argentina has had its problems, but its problems have related to its economic structure, not with the origins of its population. I could also bring to you the example of my Toronto, where nearly half of its population was born outside the country but nonetheless lives in a prosperous city in a prosperous country.

Those of you reading this blog know that, by in large, I've been supportive of free migration regimes. I've only been supportive of them in the context of relatively permeable citizenship regimes in pluralistic polities, however. One thing that proponents of the replacement migration that's been talked about over the past decade, or the similar planned migration, have to be very, very conscious of, in my opinion, is the risk of seeing immigrants not as people but as work units, as disposable entities providing useful services to the indigenes but unworthy of admission to the community or of fair treatment. The Dubai model has its flaws which surely should not be replicated.


Richard said...

It is not correct to describe inflows to the Gulf states as 'immigration' as these people cannot become citizens without the express permission of the ruling families - rarely accorded. They are mostly temporary residents even if they have been there for many years.

You refer to Buenos Aires in the late 19th century. Does not Toronto now have a population with more than 50% born outside the country?

Randy McDonald said...

Toronto's a bit less than half, although this might have changed in the past couple of years.

The movements into the UAE counts as immigration, temporary and circular though it might mainly be. That sort of pattern is actually quite common for most immigrant groups, with certain exceptions (i.e. Russian Jewish immigrants in the belle époque overwhelmingly did not return to their ancestral homelands).

Kimberly said...

I thought that the concept of migration replacement was to try to change theimmigration that a country had for a new qualified and young one. Something like that happened in Argentina. I was there a few years ago and they were working on a plan like this. I talked to the lady of the company that got me my buenos aires apartment and she said that lately the temporary renters had changed from people around 50 to people around 25!