The Economist, June 26 2008
A SHARP-EYED coyote, dollars sprouting from his ears, glowers at the roadside. Beside him a muscle-bound American border agent, clad in green and with pistol drawn, looms over a cowering migrant. Nearby a man-sized dollar sign flits away on silver wings. That graffito on a concrete border wall in Nogales, on the Mexican side of the frontier with the United States, tells a simple story: the business of migration in this part of the world is both lucrative and increasingly dangerous.
Residents of Nogales advise visitors to avoid “Buenos Aires”, a hillside quarter controlled by violent gangs, where smugglers corral their human cargo in safe houses. At dusk the migrants sneak across a dry river bed and through scrubland for the hazardous trip into Arizona. They are increasingly likely to carry arms or drugs. A resident grumbles that there are more desperate types around. “They will take your socks when they steal your shoes.”
The smugglers may feel increasingly bad-tempered, too. For years a flow of migrants has waxed when the American economy is in rude health, waning only slightly during recessions; it flows north in the spring when agricultural and construction jobs need filling and goes south for Christmas. Where illicit traffic has been heaviest, the migrants’ many footfalls have worn narrow, winding paths into the rocks. But now a big change is visible: the flow of migrants from Latin America to the United States appears to be slumping.
For the third successive year, America’s Border Patrol reports a sharp drop in arrests on and near the frontier. In 2006 the figure dropped 8% to around 1m. Last year it dropped by a full fifth. The six months to March showed a year-on-year drop of 17%. In short (and by the imperfect measure of border arrests) the migrant flow today is roughly half the torrent seen in 2000, when 1.64m arrests were made.
Such figures miss those who cross successfully and recount those detained several times, but they show a clear trend. So does evidence from remittances. Mexico’s central bank reports that, after years of eye-popping growth, the amount of cash sent home by migrants inside America is falling. Last year such flows were worth $24 billion—more valuable than tourism. But in the first quarter of this year the year-on-year figure was down 2.9%, according to a new report by Goldman Sachs.
Better scrutiny of flows across borders after 2001 probably exaggerated the real rate of growth, so it was bound to taper eventually. But even with that in mind, it is clear that migrants really are sending less money home. A poll of migrants across America published by the Inter-American Development Bank in April confirmed that fewer are sending money back regularly: in 2006 three-quarters of migrants did, this year only half report doing so. Nor is it only Mexico; Brazil, the second-largest recipient of remittances in the region, saw them slide by 4% last year, to $7.1 billion.
Two factors, each as ugly as the other, probably explain the double downturn in flows of people and money: hostility to migrants, especially illegal ones, and America’s deepening economic gloom. The impact of the former is plain: state-level laws that make it illegal to employ migrants without documents, ever more aggressive raids on businesses that hire such workers, and better technology to share information that will lead to catching them.
High spending on border defences is the most visible example. The Department of Homeland Security is budgeting $12 billion in the next fiscal year to guard the frontier against job-seekers (and the odd mythical terrorist walking to his target). The idea is to use more drones, helicopters, hi-tech sensors and cameras, 20,000 agents (on horseback, in jeeps, on bicycles and on foot) and of course the big metal fence that unfurls along several hundred kilometres of dustblown territory. All this discourages foreigners, as did the failure last year of the Senate to pass an immigration-reform bill.
No surprise, then, that polls show migrants feel less welcome and more worried by xenophobia. Many fear deportation and picking up a criminal record. Those who would once have been sent back now risk jail. As the border gets harder to cross, migrants are pushed further into the hands of smugglers and the natural hazards of the desert.
Hostility and fences would matter less if the economic draw remained strong. Instead America’s economy appears to be in the dumps, even if it avoids a recession. Jobs figures in May showed unemployment had risen to 5.5%. The slump in housing and construction—where many migrants, especially newer arrivals, work—has been especially painful. The Pew Hispanic Centre published a study in June showing a 7.5% jobless rate among immigrants, rising to 8.4% among Mexicans and to 9.3% for those who came to the country after 2000. Over 220,000 migrants lost construction jobs last year. And those in work are earning less: wages of Latino construction workers tumbled in 2007.
That trend is part of a bigger picture. Many places, including Australia, the Persian Gulf, parts of Asia and much of Africa will no doubt see migration continue apace for some time yet. Where economic growth remains strong, as in most emerging markets, migrant workers will be drawn in, just as they will keep on surging out of dirt-poor places with more people than jobs. Even in South Africa, where anti-migrant riots have sent tens of thousands of foreigners fleeing into camps (or back home to Mozambique, Zimbabwe and elsewhere) and have led to dozens of deaths, migration is likely to stay high.
But where recent economic booms had been strongest, and where the inflow of migrants had reached record highs, the prospects for a sharp decline are clear. This is particularly the case in western Europe. Ireland and Spain, both historically countries of emigration, have seen massive arrivals of foreigners in the past decade. Romanians, in particular, flocked to man Spain’s building boom; Poles and Lithuanians went to Ireland. Britain has drawn an exceptionally large number of migrants from Europe’s east, especially Poland; Greece attracted Albanians; Italy drew in Romanians and others. The rush of people on the move went hand-in-hand with the expansion of low-cost travel in Europe, especially by air.
Now some of these flows are slowing, even reversing. A study by the Institute for Public Policy Research (IPPR), a British think-tank, this year noted that of the 1m or so East Europeans who came to Britain since 2004, around half have already left—some for better economic prospects back home, others because they intended to stay only to learn English or to work temporarily, or because they wish to return to their families. The inflow of migrants to Britain from this region has also dropped sharply, by 17% last year. Danny Sriskandarajah of the IPPR concludes that “After one of the most intense periods of migration there has to be a natural end. The dominoes are starting to fall.”
Mr Sriskandarajah believes that what is true for Britain probably holds in much of continental Europe, too. In part, the factors in Europe match those in America: more hostility to migrants, including tougher policing, and an economic downturn in many recipient countries.
Greater hostility comes in various forms. As with America’s border fence, the European Union border operations, known as Frontex, boast of more success in turning back (or at least displacing) flows of would-be illegal migrants from north Africa. Nicolas Sarkozy is planning more pan-European co-operation to deter unregulated migration: in July, when France takes over the EU presidency, he will push for closer collaboration on this, for example with better sharing of information on migrants across borders.
National initiatives are also making life tougher for migrants. In Britain officials hunting for illegal workers have stepped up raids of factories, farms, restaurants and other workplaces. The names of those who run companies that employ illegal migrants will now be published on official websites, to “shame” those involved in the practice. In Italy Silvio Berlusconi fought his way back into office in April allied to the anti-immigrant Northern League and promising a crackdown on clandestine migrants. The first meeting of his new cabinet, on May 21st, approved a string of measures that made unauthorised entry into Italy a crime, introduced discriminatory sentencing for illegal aliens and imposed draconian penalties on Italians who provide accommodation to migrants without papers. The package also made it easier to expel EU citizens—a measure aimed at the 50,000 or so Romanian Gypsies, who are widely and sometimes unfairly blamed for a large share of crime in Italy. Similar rules have been imposed in other European countries.
Zloties and pounds
As economies slow, too, their attraction for migrants drops. Ireland and Spain are especially vulnerable to a painful downturn: in both countries construction and housing-related employment made up 13% of all private-sector jobs at the end of last year. As in America, these sectors, which have both seen a slump, are heavy employers of migrants. In Spain some 100,000 migrants were pushed out of their jobs in the year to May: migrants accounted for half of those who joined the Spanish unemployment register in that time. Although the country has not seen any Italian-style xenophobia, the government is now trying to persuade some 20,000 migrants to go home for at least three years, by offering lump-sum advances of unemployment benefits. Spanish officials are also looking for ways to restrict the number of relatives of migrants arriving in the country.
Beyond the euro zone there are also currency worries. In Britain the economy is slowing, and the sharp drop in the value of the pound has cut the attraction of the country to foreign workers. Every pound a Pole sent home in May 2004 earned him seven zloties; today he gets little more than four. Similarly, as the value of the dollar has tumbled, the attractions of moving to America to work have declined.
Some worry about a huge new wave of migration when Romania and Bulgaria at last get full membership and freedom of access within the European Union. But in fact people from these countries have already been working abroad in large numbers. Demetrios Papademetriou, head of the Migration Policy Institute (MPI) in Washington, DC, and a close observer of people movement in Europe, concludes that “Most of what will happen, has happened. We won’t see big new movements. The migration shock has ended.”
Nor is this only about illegal or low-skilled migrants. For the best educated ones, too, the attractions of working in Britain, for example, may be sliding, with the outflow of foreigners boosting emigration. Mr Sriskandarajah points to new research by the IPPR showing that a fifth of migrants from Britain to America, and nearly a tenth of those to Australia, are not British citizens. He adds that the country is finding it hard to keep foreign-born graduates who study in the country. In 2006 35% of EU graduates of British universities left for jobs abroad; just 25% of them stayed on in Britain to work. And three-quarters of all doctors who deregistered in Britain last year were foreign-born.
And supply, too
The global supply of migrants is not running short. Although rich-country labour forces are now at their peak (in Europe they will now decline for the foreseeable future) the worldwide labour force continues to grow rapidly; today’s stock of 200m migrants may easily become 300m in a few decades. But big migrant flows are mostly between nearby countries.
For America there is little prospect that the supply of workers from south of the border will dry up; Latin America remains relatively poor and young. In contrast, for western Europe, the supply of well-educated people from the east may now sputter as the immediate neighbours become the sort of middle-income and relatively elderly countries that need to import workers, not export them. Rates of migration westwards from the new members of the EU, in 2004 and since, far exceeded the expectations of most experts and officials. But the high rates need not continue, and may reverse. East European economies have grown relatively fast in recent years, their labour forces are shrinking fast (partly because of emigration, partly because of ageing populations) and unemployment has dropped quickly in the past half-decade. All this makes it more tempting to stay (or return) home.
Two Polish academics, Pawel Kaczmarczyk and Marek Okolski, have studied demographic changes in the region with a particular emphasis on migration. They note that remittances from migrants in western Europe have risen fast (although they are probably not responsible for more than a small share of the growth in the east). They also point out that wages are rising fast in the Baltic states—by an average of 9% a year in the three countries recently—and elsewhere. And in some sectors, such as the construction industry in Poland, a shortage of workers is becoming acute. Romania’s government, in January, started a recruitment drive in Italy for (Romanian) construction workers to return home to fill vacancies there.
Previous migration movements, such as that from southern to northern Europe, suggest that countries stop sending large numbers of migrants once they get to a certain level of wealth. Kathleen Newland, also of MPI, suggests that “based on the experience of countries like Spain, Portugal, Greece and South Korea, emigration usually slows when income per person approaches a threshold level in relation to income in the richer countries where the migrants are heading.” The tipping point, she says, is when the ratio of incomes reaches about 1:4 or 1:5, especially if the upward trend seems stable. “For migrants looking to go to western Europe and North America, this would imply a threshold level of $6,000-7,000.” Once average incomes pass this point, migration flows are most likely to tail off.
The richest country in eastern Europe, Slovenia, produced few migrants after its accession to the EU, perhaps because its wealthy citizens—with an average income approaching that of western Europe—saw least to gain from moving. As other parts of the region catch up, and as the novelty of heading west wears off, the heavy flows of recent years may be ending.
Slowing migration will probably affect the world’s poorest the most. A World Bank report in early June noted that $1 trillion of private money flowed to poor countries in 2007, but predicted that, as a result of the economic slowdown in rich countries, that figure will probably fall back to around $800 billion by 2009.
Some of that drop is explained by the expected decline in remittances. For some countries, notably in South Asia, where such funds account for a large part of national incomes (16% of GDP in Nepal in 2007, 9% in Bangladesh), the fall will be painful indeed when combined with higher fuel and food prices. The result will be more people falling back into poverty.
For richer economies a cyclical downturn in migration may not hurt. One of the great benefits of the easier movement of workers is that they help to keep labour markets flexible. When economies grow and need more labour, migrants step in. When they slow, migrants shift if they can, rather than hang around on welfare.
Silencing the xenophobes
Politically, too, a downturn in migration may be just what is needed to avoid a much nastier xenophobic backlash in some countries. One risk, however remote, is a return to the sort of hostility that followed record rates of immigration to America in the early part of the last century. Today in America the foreign-born share of the population is around 13%, not far off the peak of 15% just under a century ago. That peak was followed by much tougher legislation (aimed, in particular, at darker-skinned migrants and those from Asia) that all but choked off mass immigration for decades, coinciding with an upsurge in protectionism in America and beyond. If anti-foreigner politicians have less to grumble about, the pressure to impose laws that would do long-term damage to migration flows may also lessen.
But even rich countries might worry about a downturn in migration that is more than temporary. Their workforces are ageing and shrinking. A recent report from Goldman Sachs notes that as America’s labour force grows more slowly, overall economic output will also slow. It suggests that new migrants have typically added 0.5% to American GDP each year in the past decade, as the foreign-born population has grown to nearly 40m people.
When ready, America has a big pool of labour to dip into again. Its migration downturn is most likely to be a temporary one. For Europe, it may be a different story. To find people to do the jobs that Europeans dislike—such as working in care-homes for the elderly—governments and others are recruiting from farther and farther afield. Italy has recently signed a contract with Sri Lanka’s government to supply, on temporary contracts, guest-workers for old-people’s homes. Expect Britain to turn again to traditional sources of migrant labour in South Asia. Moldova is next in line to supply temporary migrants to the EU. If the supply of willing workers from neighbouring countries dries up, the rich world will need more such deals with more remote countries.