Dux Nest

In this current economic slowdown, is it better to migrate or stay put?

During time of economic turmoil and recession the idea of packing our bags and moving to a country with a more stable employment market is certainly desirable but is it feasible? This article seeks to examine the concept of flight or fight in the credit crunch.

Skill shortages exist when employers are unable to fill or have considerable difficulty in filling vacancies for an occupation, or specialised skill needs within that occupation, at current levels of remuneration and conditions of employment, and reasonably accessible location.

Skill gaps occur where existing employees do not have the required qualifications, experience and/or specialised skills to meet the firm’s skill needs for an occupation. Workers may not be adequately trained or qualified to perform tasks, or may not have upskilled to emerging skill requirements.

A market economy is a very dynamic thing. Firms and their jobs are constantly being born, expanding, contracting and dying. Due to the global financial crisis, the economy has become front page news.

Many skills take years to acquire (especially professional and technical skills) and are quite specific to a particular type of work. For example, a music teacher cannot readily become an accountant; a chef cannot readily become an electricity linesperson. It is inconceivable in such an environment that there will be a continuous precise match between the types of skills that are required and the types of skills that the workforce has to offer.

When there are sizeable levels of unemployment, under-employment and non-employment, much of this inevitable imbalance is hidden from the notice of firms. With a few exceptions, they find that when they advertise a job, they have a number of people with the relevant skills who apply - sometimes a large number. They are then able to look for additional qualities, such as precise relevant experience, desirable personal qualities, evidence of enthusiasm and commitment to the firm. From the employers’ perspective, the skills system therefore seems to be working quite well. However, the consequences of the imbalance are borne by workers, who cannot find employment that uses the skills that they have laboured (and paid) to acquire. More skilled people can usually find work ahead of less skilled people (since the former can generally do the latter’s work, but not vice versa): the metal fitters and machinists can become truck drivers or cleaners. But there are many cases when the jobs they get do not make use of their formal qualifications or less formal skills. It is recognised that some component of people working below their skills is voluntary, in that people value aspects of jobs such as geographical convenience, suitability of hours, quality of the workplace. But to the extent that it is not voluntary, these mismatches are costly to the individual and to the economy. The value of this loss is rarely calculated, or even noticed. Sue Richardson.  (2009). What is a Skill Shortage? Australian Bulletin of Labour, 35(1), 326-354.

Thomas Friedman’s metaphor of a flat earth is in most ways true-information, money, and sometimes people moving easily from place to place. But much of the movement on the flat earth is between mountain tops-clusters of innovation where creative people and institutions reinforce each other. Mark Regets.  (2008). Evolving Markets: Adapting to the New High-Skilled Migration. Harvard International Review, 30(3), 62-66.

Why People Migrate

International migration is usually a carefully considered individual or family decision. The major reasons to migrate to another country can be grouped into two categories: economic and noneconomic. The factors that encourage a migrant to actually move fall into three categories: demand-pull, supply-push, and networks. An economic migrant may be encouraged to move by employer recruitment of guest workers, or demand pull reasons. Migrants crossing borders for noneconomic reasons may be moving to escape unemployment or persecution, or supply-push factors. Philip Martin and Gottfried Zürcher, “Managing Migration: The Global Challenge” Population Bulletin 63, no.1 (2008).

This article examines those that are moving for economic reasons.

Job Sprawl

When economies were roaring, there were mostly winners. Heady growth created labor shortages in many places that were eased by foreign manpower. stumbling economies witness an exodus. Most of the world’s migrants go abroad because there are few job prospects in their home countries.

The economic crisis is forcing many to return, and poverty awaits them back in the villages. Governments are also scrambling to employ displaced returnees.

The return of overseas workers can be good news for countries as a whole. In the past, highly educated Indians often sought choice jobs in New York City or London, but now, with Western economies in shambles, they are returning in ever greater numbers. Not all countries, however, are so welcoming. Economists fret that the global crisis is causing a rise in protectionism against the international movement of people, just as it is with trade and investment. With unemployment soaring everywhere, politicians are trying to preserve jobs for their own nationals by slapping restrictions on imported labor. (2009, April). On the Road Again. Time International, 173(16), 16.

For Britain the exodus could be painful. Poles worked on Terminal 5 at Heathrow Airport and manpower will be required for the next great infrastructure project: the 2012 Olympic park in east London. “The challenge in the next few years will be to attract enough migrant workers with the right skills who can drive economic growth in the UK,” warns Jill Rutter of the left-leaning Institute for Public Policy Research think tank.

Britain has dipped into a recession this year. The construction sector is under pressure as the housing market softly implodes. That means fewer day jobs for Poles, but also a possible backlash against immigrants.

Poland is enjoying growth of more than 5 percent, and jobs are easier to come by. Workers are sought to help prepare the country to host its first major postcommunist event, the 2012 European football championships. “Poland has become a good place to live,” says Treczynski. Mark Rice-Oxley.  (2008, September 10). Polish newcomers say goodbye as hard times hit Britain. The Christian Science Monitor,p. 4.

In the long run, however, the recession will not put an end to migration. Foreign workers have become integral to the workings of the global economy. People with special skills and those willing to work for less will always be in demand–and they’ll continue to be willing to follow the money. Dilip Ratha, an economist and specialist on migration at the World Bank in Washington, says workers face more hurdles in moving about the world–such as immigration laws and visa restrictions–than do trade goods and dollars, and as a result, the number of people abroad is actually lower than what the global economy is able to absorb. He expects the total population of migrants to expand in 2009, albeit at a slower pace. “While workers are coming home, there are those that are still leaving, and leaving in big numbers,” says Carmelita Dimzon, administrator of the Overseas Workers Welfare Administration in Manila. Michael Schuman.  (2009, April). On the Road Again. Time International, 173(16), 16.

Mitchell Moss, a professor of urban policy and planning at New York University’s Wagner Graduate School of Public Service suggests a different approach. He says government and business should work together to come up with solutions to efficiently get urban residents to the areas where the new jobs are springing up. Laura Petrecca.  (2009, April 6). Workers follow jobs to suburbs :Companies shift from downtowns for lower costs. USA TODAY,p. B.4.

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Tags: Credit Crunch, Economics, Employment, Global Financial Crisis, Immigrants, Labour, Migration, Recession, Skills, Workforce