Labour migration and the brave new world
Opening borders to international labour migration and promoting transnational information networks could help address growth-threatening looming skills shortages across the globe, according to a new report into global labour markets.
The ‘people to jobs, jobs to people’ report released this month by the Bonn-based Institute of Labour Economics says migration is once again a crucial issue with political sensitivities.
It says significant talent challenges are looming in the Northern and Southern hemispheres by 2020 and beyond.
“In the Northern hemisphere, the expected talent gaps will be caused mainly by demographic shifts – notably, the retirement of baby boomers,” the report says.
“For example in the United States, Germany, Canada and the United Kingdom, immigration and expected birth rates will not balance the workforce losses caused by aging populations,” it says.
The study says that over the next decade, Western Europe’s talent supply will continuously decrease, leading to almost empty talent pipelines beyond 2020.
Economic growth expectations coinciding with projected waves of retirements will force employers to find, attract and retain scarce talent, it says.
The report comes as around the globe, some 247 million people – are living and mostly working in a country other than that of their birth.
“Sometimes described as the unfinished business of globalisation, labour migration issues raise complex and sensitive political, human rights, economic and social concerns, as well as an array of legal and regulatory challenges,” the report says.
“Migration accordingly occupies a prominent place on both national and multilateral policy agendas, and in public discourse and debate,” it says.
The report says investment in STEM subjects (science, technology, engineering and mathematics) is increasingly seen as a means to boost innovation and economic growth.
“A global labor market is already here, but we lack the institutions to make it work effectively. A global shortage of STEM skills is not the real problem for the world economy, but the location mismatch between employers and employees is,” the report says.
“Talented people cannot move to where the jobs are. Several US and European firms have moved their R&D operations offshore over the last two decades, which diminishes the number of STEM jobs in both of these locations,” it says.
“Demand has not dwindled, but instead has relocated to countries such as China and India,” the report says.
The aging of populations and ongoing technological change in favour of high-skilled and/or non-automatable labour in developed countries has sparked discussion about suitable policies to counteract potential shortages of skills, the report says.
It says that facilitating labour migration will help to substantially ease the potential labour shortages and contribute to growth and employment.
“The opening of borders should lead to substantial benefits. In turn, the restriction of legal migration in either the sending or receiving countries may well cause a loss of opportunities both at the individual and the aggregate level,” the report says.
“Coherent migration policies hence appear to be useful, in particular policies that systematically account for skill-specific demands by the national economy,” it says.
The report says national institutions in both the receiving and sending countries have important effects on the size and the composition of the migrant population.
“Specifically, certain institutional features such as unemployment benefits or employment protection seem to influence different groups of the potential migration pool in different ways,” the report says.
“Hence, apart from explicit (skill-oriented) migration policies, national policymakers face strong incentives to create ‘good’ institutions in order to attract or retain a skilled and productive migrant workforce in an increasingly global labour and product market,” it says.
The report says also important are transnational networks that furnish relevant information to potential migrants about prospective working conditions and job opportunities in the receiving countries.
“This provides employers in these countries with a reliable pool of foreign workers,” it says.
“Therefore, better understanding and engaging immigrants´ networks can be beneficial for sending countries in encouraging return migration, brain circulation, and engage diasporas abroad and also destination societies in reducing illegal migration.
“From the destination countries’ point of view, the possible influx of highly-educated foreigners may be key in addressing problems related to population aging, labour shortages, and skill mismatches.
“Importantly, informing policymakers about the emigration decisions of those still pursuing their education may help arrange migration policies that encourage brain circulation,” the report says.
AMES Australia Senior Journalist