Managing Migration: Recruitment - IOM Office UN (NY)unofficeny.iom.int/sites/default/files/Martin-ManagingRecruitment.pdf · Managing Migration: Recruitment ... employers pay, (2)
Post on 06-Mar-2018
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Highlights 1
• Migration has costs: financial, opportunity, & social
• Int’l conventions: employers should pay all financial costs of recruitment. But S & D mean:
– Employers often pay recruit costs for high-skilled
– Many low-skilled workers pay their recruitment costs
• Wage wedge between COO & COD helps to determine how much workers pay
– Usual maximum: 1 month’s foreign earnings, 4.2% of earnings on 2-year contract, 2.8% on 3-year
– But: migrants can pay 30-35% of foreign earnings, = 1 year of 3 years’ foreign earnings
Highlights 2
• Governments influence recruitment costs:
• Direct: charges for passports, criminal checks, etc
• Indirect: regulate private recruiters; agreements with receiving countries (what role for ES)
• Top-down & bottom-up policies to lower recruit costs:
• Top-down: (1) employers pay, (2) govt offers incentives for good recruiter behavior in addition to penalties on bad behavior; (3) subsidies to get multinationals involved & speed use of standard contracts & achieve econ of scale?
• Post 2015 goal: cut recruitment costs in half in a decade
• Overall: link govt investment in migration mgt to remittances? POEA: 285 mil pesos ($7 mil). If POEA = 1/10 of 1% of $24 billion remittances, Phil spending on POEA would triple to $24 million; $400 billion remittances to ldcs = $400 million
Gallup 2009-10: 1/7 of adults want to emigrate & settle in
another country; 1/12 plan to move in 12 months
Migrants: Seek higher wages, more opportunities
• Wage wedge stimulates migration: how should it be shared between:
• Workers who get higher wages
• Employers who get work done cheaper than the alternatives
• Recruiters & the migration industry that take some of the wage wedge for matching workers with jobs, navigating bureaucracies, and moving them over borders
• Governments take some of the wage wedge in fees, taxes etc (what balance between protection and taxes?)
Matching workers and jobs is hard
• Asymmetric information:
• Employers know more about the jobs they offer
• Workers know more about their abilities
• Theories of employer screening and worker signaling
• Recruitment within borders:
• Employers advertise, job fairs, social networks: little use of ES
• Workers read ads & use networks to find jobs: little use of ES
• Recruitment over borders:
• For-profit recruiters: employers pay most fees for high-skilled, but low-skilled workers pay their recruitment costs
• Why do low-skilled pay? More workers than jobs
• Best protection for migrants: the ability to say NO to a bad job offer or a high recruitment charge (having good alternatives)
Wage gap or wedge influences recruiter fees
• Wage gaps are often 8 : 1—earn more in an hour abroad than in a day at home
• Sharing the wage gap between recruiters, governments, and workers
• What WILL workers pay? More than the $0 specified in ILO conventions or the 3-5% of foreign earnings maximum set by many migrant-sending govts
• Many roles of recruiters:
• Provide information and advice to job seekers
• Screen workers, fill job orders, and deploy (accompany) workers abroad
• Supervise workers abroad
Foreign Job Offers & Migrant Workers
• Employer receives permission to recruit & employ a foreign worker to fill a job (What labor market tests for local workers? What wages? certification vs attestation)
• Job offer is transmitted by employer or recruiter in COD to recruiter in COO • Most recruiters are in COO capital city; many low-skilled migrants are in
rural areas
• Agents find workers, bring them to recruiters, help them to navigate bureaucracy (financial and opp costs; subagents = piece rate pay)
• Govt approval of contract, pre-departure training etc
• Worker leaves COO for employment in COD
• Still same job & contract terms? Did worker understand the contract? Remember—workers may make several transitions: rural-urban, traditional-modern etc = many opportunities for mis-understandings
Government Regulation of Recruiters
• Require recruiters to identify themselves: register, pass tests & post bonds to get licenses; join association. Can foreign employers recruit directly, or must they use recruiters who are citizens of COO to recruit?
• Educate migrants about their rights & max recruitment fees, check the contracts offered to migrants, provide pre-departure training etc
• Govt agency monopolies OR govt compete with private recruiters? N.B. the only way to go to Korea is under G-to-G MOU; new Bangladesh-Malaysia G-to-G MOU drew protests from recruiters
• Workers may pay more to jump the queue; “victimless crime” if worker gets what he wants—foreign job
Remittances vs Recruitment
• Reduce cost of sending small sums via regulated financial institutions after 9/11. Global: average cost of sending $300 dropped from 15% or $45 in 2000 to 10% or $30 between in 2010. WB’s 5 x 5 program
• Remittance transactions: standard & frequent (1 or 2x/month), consequences of bad outcomes = lost money
• Recruitment transactions: less frequent, consequences of bad outcomes = debt peonage, trafficking victim
• Big potential savings:
• Typical Bangla worker in GCC: earn $200/mon or $7,200-3 yrs
• Remit $5,000—reduce remittance costs in half, from 10% to 5%, & save $250 over 3 years
• Recruitment cost $2,000: reduce in half and save $1,000
Moving Forward: 3 Big Ideas
• Improve the data base:
• National teams to document costs—financial and opportunity—in various migration corridors
• Where do recruitment problems & costs appear? Regulations respond to abuse—which regs satisfy B/C test?
• What incentives to induce good recruiter behavior (faster processing, lower fees etc?)
• Would subsidies to multinational recruiters (1) speed use of standard contracts and (2) achieve econ of scale? (like cities subsidizing low-cost airlines to lower airfares)
• Goal: Reduce recruitment costs by half by 2020 or 2025?
– Each 1 million migrants paying an average $1,000 = $1 billion
– Reduce by half means $500 million more for migrants & devel
Bangladesh: lend up to 84,000 taka ($1,075) at 9% to migrants
using OWWA funds; (1,700 loans made April 2011-April 2013)
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