Aruba: Causes and effects of excessive immigration Experiences and lessons from the recent past, and policy options for the future

Transcription

1 JR_01_06 Aruba: Causes and effects of excessive immigration Experiences and lessons from the recent past, and policy options for the future Drs. Jorge R. Ridderstaat This paper reviews the demographic, economic, social, political, and cultural effects of the immigration process that resulted from the expansive growth of Aruba s economy shortly after the closure of the Lago Refinery. It also provides some recommendations for future immigration policy. July 2002 The views expressed in this paper are those of the author and do not necessarily coincide with those of the Centrale Bank van Aruba.

2 Contents 1. Introduction Migration: Some theoretical concepts Causes of migration Effects of migration Causes and effects of excessive immigration in Aruba Adequate statistics Factors causing migration influx in Aruba: Pull and push factors Pull factors Push factors Networking and linkages Iron law of migration Effects of migration Demographic effects Economic effects Social effects Political effects Cultural effects Lessons Economic growth and supply of labor Migration flow out of proportion The iron law of migration Persistency of foreign labor Policy recommendations Sustainable economic development Immigration policy Immigration and labor market statistics Labor immigration and the Aruban national interest A quota on foreign labor Foreign labor deposit and length of stay Integration of immigrants Family reunions and citizenship Control of undesired visitors Illegality does not pay in Aruba Institutions working on immigration issues...28 Annex 1: Foreign-born population by age and period of most recent settlement in Aruba, Annex 2: L.A.R. notices of objection, Annex 3: Number of illegal persons caught and sent back to their countries of origin, Annex 4: Marital status of Arubans and non-arubans, 1991 and Annex 5: Labor force, employed population, unemployed population by sex and nationality, 1991 and Annex 6: Gross monthly wage distribution between Arubans and Non-Arubans, 1994 and References...32

3 1. Introduction The Lago Oil & Transport Company Limited (Lago), a refinery owned by the Exxon Corporation, was from the late 1920s the major source of income and employment for the Aruban economy. The economic prosperity that followed its establishment brought a huge shortage of labor, not only in the oil sector, but also in the trade and public sectors. The resulting import of labor initiated Aruba s first period of mass immigration. Between 1927 and 1952, 27,949 persons migrated to Aruba, accounting for 63.5 percent of the population increase during that period. Initially, more Americans migrated to Aruba (usually on a contractual basis) primarily to work in the refinery. Subsequently, more and more persons, particularly from the Caribbean region, e.g., Anguilla, British Guyana, Jamaica, St. Kitts & Nevis, St. Vincent, Surinam, Trinidad & Tobago, migrated to Aruba to work on a contractual basis in the refinery. Others from St. Martin, Guadeloupe, and Martinique went to work in the construction sector and supply companies associated with the Lago. People from China, Portugal, and Lebanon also migrated to Aruba. The majority of the migrants established themselves close to the refinery in San Nicolas, while others lived in Oranjestad. When the Lago first started to layoff its employees in the early 1950s because of automatization and market adjustments, many of the migrants left Aruba. However, a significant group stayed behind and became new citizens of the island. The cultural enrichment these migrants provided is still in evidence today. At the beginning of the eighties, the refinery contributed about 25 percent of Aruba s GDP. It also provided about 50 percent of Aruba s foreign exchange earnings and directly employed about 8 percent of the total labor force, contributing about 30 percent of tax revenues. Nonetheless, in 1982, the long-term contract between the Lago and the Venezuelan government expired. This contract permitted the import of 290,000 oil barrels per day and was very lucrative for the Lago. Only one year later, the Venezuelan stateowned company Petroleos de Venezuela Sociedad Anónima (PdVSA) increased its selling price and reduced the total barrels per day to 180,000. Intense negotiations between the Lago/Exxon and the Venezuelan government on price and quantity of oil deliveries were unsuccessful, and the Exxon Corporation was forced to shut down its operation in March The economic impact of this closure was immense: 1,300 direct jobs, were lost, as well as an estimated 6,000-7,000 indirect jobs. As a consequence, the unemployment rate surged to approximately 20 percent that year, while real GDP fell by an estimated 15 percent. Aruba also suffered a loss in foreign exchange reserves of about AFL 140 million (1984 estimate) as a result of this closure. In addition, the closure meant a notable loss of tax revenue to the government and led to the departure of 4,238 persons (about 6.9 percent of the 1985 population) particularly to the Netherlands. Consequently, the total population decreased by 3.5 percent in 1985 (see table 1).

4 Table 1: Population and net migration, Population 60,996 61,965 63,190 63,604 61,361 Population density Net migration, ,057 of which: men, n.a. n.a. n.a ,357 of which: foreigners 1] n.a. n.a. n.a of which: women, n.a. n.a. n.a ,736 of which: foreigners 1] n.a. n.a. n.a Source: CBS 1] Total number of foreigners for both groups: 1981: : : 394 Only a few months after the closure of the refinery, i.e., on January 1, 1986, Aruba obtained its separate status within the Kingdom of the Netherlands. The new and promising constitutional beginning now was shadowed by economic uncertainty. However, with the acquisition of an autonomous position within the Kingdom, the local government gained the ability to conduct its own internal policies. This served the country well, since it provided the freedom to act quickly to tackle the problems. With the assistance of the International Monetary Fund, the government formulated a policy to restructure the economy from refinery-dependent to tourism-oriented. To cope with the increase in the demand for tourism services, supply-side adjustments also were necessary. Soon, new hotels, shopping malls, and other commercial buildings were erected. The number of hotel rooms more than doubled from 2,078 in 1986 to 4,789 at the end of The efforts paid off. The number of stay-over visitors grew from 181,211 in 1986 to 432,762 in 1990, equivalent to a growth of 139 percent. Cruise tourism also was stimulated: the number of cruise visitors grew by 77 percent to 129,969 in The fast-growing economy soon showed signs of overheating. After a negative growth in 1986, the economy grew by double digits in the next 3 years (see table 2). The unemployment rate declined from 19.7 percent in 1986 to 6.6 percent in Despite the relatively high unemployment figure, in 1987 signs of a labor shortage were noted in the construction sector, where the process of hotel room expansion was taking place. 3

5 Table 2: Economic indicators for Aruba, Real GDP (in %) Unemployment (in %) 1) n.a. 6.1 n.a n.a 6.4 n.a n.a 7.4 n.a. n.a. 6.9 n.a. Inflation (in %) Source: CBA, CBS 1] Data for 1986, 1987, and 1988 are IMF estimates. Data for 1989 is derived from the Annual Report 1989 of the Centrale Bank van Aruba. Data for 1991, 1994, and 1997 are derived from the Census 1991 of the Central Bureau of Statistics, and the labor force surveys of 1994 and 1997 of the Central Bureau of Statistics, respectively. Unemployment for 2000 is derived from the Census Soon this shortage also expanded to other sectors, e.g., hotels and restaurants. By 1988, the Centrale Bank van Aruba (the Bank) announced that 5,000 to 6,000 foreign workers were needed to alleviate the huge shortage of labor to curtail the effects on inflationary pressures 1. However, the Bank s call for foreign labor was intended merely as a temporal measure, i.e., until the positions could be filled by Arubans. At the time, the admission policy for foreign labourers was very restrictive, causing increasing tensions in the labour market. Total employment rose by 12 percent to over 25,000, while the percentage of unemployed Arubans reached 1.5 percent in The tensions were reflected in the upward pressures on wages. And although wise constraint by the labor unions helped to limit the increase in wages to only 5 percent in large parts of the Aruban economy, labor costs in the hotel and retail sectors rose by 10 percent up to and including The labor market shortage also was reflected in the rise of inflation, which reached 5.8 percent by Table 3: Population and net migration, Population 60,361 59,995 61,045 62,497 65,939 Population density Net migration, -1,418-1, ,710 of which: men, ,639 of which: foreigners ,273 of which: women, ,071 of which: foreigners Source: CBS The tension in the labor market was lessened somewhat by the admittance of some 2,000 foreign workers in 1990 when the government shifted to a less stringent admittance policy (see table 3). Only about 1,000 foreign workers had been admitted in the two previous years. Nonetheless, the excess in the labor demand further intensified as of July 1991, when the Coastal Corporation, a company based in Houston (U.S.A.), re-activated the operations of the refinery. In the following years, more migrant workers were attracted. The policy of attracting migrants to lessen the excessive labor demand worked well, since it permitted the economy to continue to grow at real rates between 4.0 percent and 8.2 4

6 percent during After 1994, economic growth decelerated to a more sustainable pace, averaging 3.7 percent in real terms. 3 In addition, a less tight labor market had a positive effect on the inflation rate. However, the full containment of inflationary pressures was delayed because of the increased demand for housing and nontradable services, fueled by the large influx of foreigners. Consequently, the inflation rate continued to vary between 3.4 percent and 6.3 percent during After 1995, inflation subsided to rates between 1.9 percent and 4.0 percent, while the immigration continued, albeit at a lower pace, but other signs of unsustainability were becoming apparent. The economic growth that started after 1986 was not possible without a strong input of foreign labor in the construction sector and, subsequently, in the tourism sector. Research in other countries has shown that labor productivity in the services sector does not increase significantly, despite developments in automation and telecommunication. 4 Thus, the economic growth was possible only with a large influx of labor. Two types of labor were imported, i.e., high-skilled labor (e.g., managers of hotels, and teachers at the university) and low-skilled labor (e.g., hotel and construction personnel, etc.). The latter was the largest group. The immigration process that started around 1988 already was presenting its bill at the beginning of the 1990s, mainly in the housing market and in the inflation rate. Moreover, in time other elements were added to this bill. The immigration problem has been wellrecognized for many years, but research on this topic in Aruba is scarce. 5 The analysis that follows is aimed at improving the knowledge about this problem. However, because immigration conveys effects that can last longer than one generation, research on this topic should be continued. After a general introduction in chapter 1, some theoretical concepts of migration will be discussed in chapter 2. Building on this theoretical framework, the practical experiences of Aruba with its latest immigration flow will be discussed in chapter 3. Based on these experiences, some main lessons learned will be presented in chapter 4, and while some policy recommendations will be made in chapter 5. 5

7 2. Migration: Some theoretical concepts 6 For a more structured analysis, the subject of immigration will be divided into causes and effects. The causes component relates to the factors that induce emigration from the sending country, while the effects component conveys the aftermath of the migration for the receiving country. 2.1 Causes of migration In general, five factors lead to international migration: 1. Political and economic conditions of the receiving country Politicians will establish the criteria for (legal) entry into a country. These criteria can have a pull effect on migration, e.g., the countries from which migration is accepted, the required entry documents, the length of stay, the possibility of family reunions, etc. On the other hand, the economy will determine, for example, the number of immigrants that can be absorbed, the labor skills needed, etc. This factor can be categorized as a pull factor because it denotes the demand for immigrants in the receiving country. 2. Conditions in the countries from which people migrate Conditions in the countries from which the migration originates, the so-called sending countries, will have a push effect on migration. Examples of these conditions are low wages, high unemployment, job insecurity, high crime rates, widespread poverty, and political instability. This factor is categorized as a push factor since it affects the interest and willingness of people to migrate. 3. Relative deprivation in the sending countries This concept refers to the feeling of deprivation in the sending countries arising from racial, social, and economic inequalities within the society. Relative deprivation increases the number of people willing to migrate, and can be termed a push factor. 4. Networking and linkages The components of this factor provide the connection between the push and the pull factors. Without them, there will be no migration. An example of networking is those families and friends already working abroad who supply information on jobs, opportunities, possibilities to get there, housing, and wages. Furthermore, improvements in communication (telephone, postal links, television, and internet) and transport (lower traveling costs and more air connections) also act as catalysts in the process by which potential migrants become actual migrants. 5. Iron law of labor immigration Nothing is more permanent than temporary workers. People usually migrate for the better, and most often want a permanent stay in the receiving country. They are aware that if they cannot get through the front door legally, then entry through the side or back door will provide them with an entry to a better future. 6

8 2.2 Effects of migration The major effects of immigration are concentrated in the demographic, economic, social, political, and cultural areas. 1. Demographic effects Immigration will lead to a growth in the population of the receiving country. An increase in the population most certainly will have an effect on its density, i.e., how many people live in a squared kilometer area. Furthermore, immigration can influence the sex and age composition of the population as well as the fertility rate of the receiving country. The number of marriages and their composition (e.g., foreigners marrying locals) also can undergo changes. And last but not least, immigration can affect the size and skills of the labor force in a country. 2. Economic effects Empirical studies 7 suggest that immigrants tend to: exert positive effects on the growth of wages and employment opportunities of the local population. In other words, the general notion that immigrants depress wages or take away jobs from the locals does not appear to hold in most practical cases; have a high propensity to save. Immigrants tend to save more than locals, partly because of their potential temporary status in the receiving country; they try to save as much as possible for their own (uncertain) future or for their families abroad; have a higher proportion of self-employment than the native population. The proportion of immigrants with their own businesses is in general larger than that of the local population; work harder and are more willing to follow instructions. Moreover, immigrants usually become targets during periods of increasing unemployment or are blamed for problems the receiving country is confronting, e.g., increasing crime, shortage in affordable housing, overcrowding, increasing poverty, infrastructural decay, environmental deterioration, etc. Furthermore, cheap labor imported from abroad reduces the incentive for businesses to become more competitive, which keeps low-productivity companies in business. It also is suggested that the immigrant-receiving country has to spend money on housing, education, health and social welfare services for the immigrants, which reduces the available funds for the overall improvement and development of the society. 3. Social effects As mentioned, immigration most certainly will have an impact on housing, public education, and health services. Immigrants usually concentrate in poor housing areas, sometimes even creating slums or shanty towns, much to the dislike of the locals. In reaction, the locals usually try to leave the immediate neighborhood, further 7

9 stimulating the creation of enclaves. In the end, the government must straighten up the problem by destroying slums, improving the infrastructure, and developing housing programs for the immigrants. Educating the immigrants or their children also becomes a serious and costly problem, usually entailing the creation of additional schools, the attraction of more teachers, and the acquisition of more books and other learning materials. An additional social cost includes the immigrants students lack of knowledge of the instructional language. Health care costs in the receiving country most certainly will increase with the arrival of immigrants, and these costs are usually carried by the government. 4. Political effects In the past, immigrants were excluded from participating in the political procedures of the receiving countries. However, for the last 3 decades, immigrants gradually have been provided access to this process. When ethnic groups become proportionally large, they can have a significant influence on the voting results or even democratically take over the government of a country. 5. Cultural effects Immigrants usually not only bring their labor skills, but also their culture to the receiving countries. Examples are music, food, religions, and traditions. These most certainly will have an impact on the local culture. 8

10 3. Causes and effects of excessive immigration in Aruba 3.1 Adequate statistics Prior to starling with the empirical analysis, some words on the available statistics in Aruba are necessary. Statistics can be useful in understanding, assessing, and controlling the operations of a society. The lack of adequate statistics in Aruba has been a problem for a number of decades. Despite significant improvements over the years, some major statistics, especially on the Aruban economy and labor market, still are missing and/or are becoming available only in an unsystematic and/or untimely mode. This deficiency also hampers an optimal analysis of the latest migration influx in Aruba. Nonetheless, some significant causes and effects can be quantified and or described in a general sense. 3.2 Factors causing migration influx in Aruba: Pull and push factors Pull factors The (overheated) economy and lenient immigration procedures The mass immigration to Aruba mainly was the result of pressures caused by the overheated economy following extensive investments in the hotel and other related sectors, such as restaurants and retail shops. To counteract the tensions in the labor market, the government announced more lenient procedures in the early 1990s aimed at accelerating the processing of requests for work permits by foreign workers. Family reunions, obscured labor market, lack of controls, and the geographical structure Additional pull factors contributed to more than the necessary immigration. Due to the relatively lenient family reunion rules, immigrants were permitted to bring their families to Aruba after a relatively short time. Children under the age of 15 accounted for nearly 18 percent of the immigration since 1990 (see annex 1). In addition, the labor market was too obscure to implement a flexible immigration policy. Lack of statistical data on the labor market obstructed the availability of early warning systems to make timely adjustments in the immigration policy. Furthermore, a lack of necessary controls, e.g., of the employers of the immigrants, made malafide actions by these employers or the many consultants that offered their services in the process of attracting immigrant workers possible. 8 Also, the open sea surrounding the island was poorly controlled, making illegal arrival by sea quite easy. Since 1995, the economy has started to cool down, growing at a slower pace than in the previous years. The effect also was noted in the inflation rate. Partly as a result of these developments, and also because the number of foreigners remaining on the island kept increasing, a general halt was called as of January 1, 1997, 9 on all new requests for work as well as residence permits. But the general halt was made only by an announcement instead of a law. Consequently, its effect was diluted since the government, assuming that the labor market was still tight in certain areas, made exceptions for certain job types, such as: 9

11 live-in maids; nurses and other caring persons; employees for special projects; experts; teachers; apprentices; bar girls; certain employees for the refinery; 10 family reunions; and members of the judiciary commission. In addition, the State Ordinance Administration of Justice or the L.A.R. 11 made it possible for permit requestants to appeal decisions of the D.O.O.V. causing a reversal of a number of the previously denied requests (see annex 2). Consequently, about 10 percent of all L.A.R. appeals were reversed between Last but not least, the government could not deny entry to certain types of immigrants for humanitarian reasons, since the latter would conflict with existing international treaties. In short, despite the initial actions to mitigate immigration, the effects on the pull factors were minimal, due to several impediments that arose Push factors Re-immigration and economic and social conditions In 1991, the major countries of origin of migration were the Netherlands, the Dominican Republic, and Colombia. 12 However, the migration from the Netherlands consisted mainly of Arubans who lived and worked in that country and then returned to their country of birth. 13 These should be considered re-immigration cases. The remaining two countries should be considered as providing most of the new immigration. During the 1990s, the immigration from Colombia and the Dominican Republic remained significant, while Venezuela also became an important sending country. Some economic indicators of these three countries during the period show that, with a few years of exception, all three countries were showing positive economic growth (see table 4). However, general price increases were significantly high, particularly in Venezuela. The inflation rate in Colombia showed a decreasing pattern, while that of the Dominican Republic improved considerably. However, all three countries showed double-digit unemployment rates. 10

12 Table 4: Economic indicators of the three major sending countries, Real GDP Growth Colombia Domincan Republic Venezuela Inflation Colombia Domincan Republic Venezuela Unemployment Colombia n.a. n.a. Dominican Republic n.a n.a. n.a. n.a. n.a. Venezuela n.a. n.a. Source: IMF Besides these economic criteria, two other indicators were analyzed, i.e., the poverty line 14 and the Gini Index of income inequality. The Gini values range between zero (perfect equality) and 100 (perfect inequality). The United Nations 15 sets the limit at 43 percent, i.e., an index below this percentage will be regarded as a low-income inequality country, and vice-versa. However, data on these two indicators were available only for a limited number of years 16 and they indicate high levels of poverty as well as high levels of inequality in the distribution of income. Clearly, despite acceptable levels of economic growth, some degree of economic and social push factors were present, that worked in favor of migration. Furthermore, although the data are very scarce, the economic and social factors do not appear to have diminished very significantly over time. Additional data to corroborate the latter belief is the number of applications received for work or residence permit in Aruba (see table 5). 17 Despite the announced halt to first-time applications as of January 1, 1997, the number indicates a steady flow of more than 5,000 first-time applications between (except for 1998). The number of first-time petitions surpassed 6,000 in Since 1996, the number of applications for extensions has reached well over 10,000 on an annual basis, indicative of the continued presence of the push factors on immigration. A further look at the data in this table indicates that the total number of permits granted also remained high, surpassing 15,000 since 1999, the majority of which are still on a temporary basis. 11

13 Table 5: Applications for work or residence permits in Aruba, First application 11,810 5,213 5,729 5,395 4,790 5,591 6, Application for extension 1,825 5,765 10,162 12,727 12,957 12,652 11, Total number of applications (1 + 2) 13,635 10,978 15,891 18,122 17,747 18,243 17, Total permits granted, 706 8,339 13,717 14,258 14,327 15,073 15,073 of which: a. Temporary 650 7,409 12,483 12,994 13,007 13,055 13,299 b. Permanent c. By legal right Total permits not admissible Total permits rejected ,314 1,373 1, Source: DOOV Networking and linkages Air link Geographically, Aruba s location makes it very close to two of the main migrationsending countries, i.e., Colombia and Venezuela. Despite the relatively larger distance between the Dominican Republic and Aruba, a flight between these two countries is (on average) still only about an hour. The increased tourism-based economy since 1986 went together with an increase in (regular) airlift. Many flights originated from Venezuela and Colombia. Furthermore, between 1988 and 2000, Aruba had its own national airline Air Aruba, that included Venezuela and Colombia in its flight schedule. A link with the European continent also was possible, e.g., via the Dutch Royal carrier. Clearly, the air link between Aruba and the sending countries was present even before Telecommunication Improvements in the telecommunication area (internet, fax, and telephone calling cards) in Aruba made communication between migrants and their relatives or acquaintances abroad much easier. The process was facilitated further by the erection of many shops offering cheaper international call services, the so-called Llamadas Internacionales, while money-transfer companies made the transfer of small amounts of money to relatives abroad easier and quicker. Part of the transferred money was probably used to finance the travel expenses of migrating relatives. Thus, the networking and linkage factors already were present in 1990 and have thrived ever since. 12

14 3.2.4 Iron law of migration The general belief in Aruba is that the majority of the people who migrated to Aruba since the latest migration boom are planning to remain permanently in the country. In 1991, most of the foreign-born population of the Dutch nationality had been living in Aruba for more than 10 years (see table 6), while the majority of those with a foreign nationality had been living here for fewer than 5 years. By 2000, the foreign-born population of Dutch nationality, living for more than 10 years on the island, was still the largest group. A remarkable number of foreign-born persons of Dutch nationality also can be found among those whose length of stay is 5-9 years. This fact also may indicate that a significant number of persons have acquired the Dutch nationality over the last 10 years. Available data 18 indicate that from 1991 up to and including 2001, 6,336 persons have acquired the Dutch nationality. Table 6: Length of stay of foreign-born population living in Aruba Dutch nationality Other nationality Dutch nationality Other nationality Males Females Total Males Females Total Males Females Total Males Females Total < 1 year , ,084 2, years ,705 1,425 1,552 2,976 1,022 1,005 2,027 2,403 2,973 5, years ,551 1,668 3,219 2,570 3,140 5, years 2,410 3,068 5, ,247 2,922 3,923 6, ,303 2,203 Unknown , Total 4,149 4,795 8,944 3,040 3,926 6,966 6,432 7,670 14,102 7,086 8,916 16,002 Source: CBS The increased length of the stay as well as the large number of persons acquiring the Dutch nationality provide clear signs that the iron law of migration also is effective in Aruba. This indication is strengthened further by the increasing number of illegal migrants who have been deported in recent years (see annex 3). Usually, when a migrant is admitted legally in Aruba, one or more members of his or her family will try to reside in the country illegally Effects of migration Demographic effects Population During the period 1991 up to and including 2001, the total population grew by percent (see table 7). Consequently, the density of the population increased from 374 per square kilometer in 1991 to 515 per square kilometer in 2001, a 37.7 percent increase. Immigration accounted for 93.2 percent of the population growth. Net migration peaked in 1993 and in 1996, and has been on a declining trend since then. In 2001, less than 800 persons migrated on a net basis to Aruba. Remarkably, since 1999 more persons with the Dutch nationality have left the island than have immigrated to Aruba. 13

15 Sex composition and fertility rate In 1991, the division between the sexes over the relevant period was nearly even (men: 49.2 percent; women: 50.8 percent), but the proportion female rose faster than that of males over time. In 2001, 52.1 percent of the population was of females because of slightly higher net migration of women than men. When comparing the annual net migration data of males and females, there appears to be an initial dominance of men in the net migrating population up to and including Since 1995, however, the female sex has dominated the net migrating population. In general, one-sex dominance indicates the types of jobs being filled. More males suggest heavier work, e.g., construction, while more females indicate light hotel, restaurant, and domestic service jobs. This pattern reflects the economic development in Aruba, where many hotels were still under construction in the beginning of the 1990s. The opening of the hotels meant that more people were needed to work in the services business, i.e., the relatively lighter types of jobs. Furthermore, the predominance of one sex also might suggest that the immigrants were not settling with their spouses or families, thus creating the possibility that the unmarried migrants would marry within the native population. Besides the dominance of women in the net migration data, a decreasing trend in the male birth rate also contributed to the increase in the proportion of women in the population. Table 7: Population and migration, Population 70,62 76,74 78,45 81,16 84,88 87,72 89,18 90,13 91,06 92,63 67, Men 33,157 34,759 37,901 38,663 39,853 41,538 42,811 43,243 43,480 43,710 44,35 2 % of pop Women 34,225 35,870 38,840 39,786 41,307 43,344 44,909 45,940 46,655 47,355 48,28 6 % of pop Population density Net migration, 2,371 2,932 5,734 1,476 2,404 3,325 2,441 1,385 1, of which: men, 1,267 1,579 3, ,164 1,635 1, Foreigners 1,174 1,262 2, , n.a Dutch Nat n.a of which: women, 1,104 1,353 2, ,240 1,690 1, Foreigners 1,073 1,121 2, ,392 1,045 n.a Dutch Nat n.a Source: CBS Nationality The influence of migration also is visible in the different nationalities and their proportion in the total population. Between 1991 and 2000, the significance of the Dutch nationality decreased by 8.1 percentage points to 81.1 percent (see table 8). In other words, while in 1990 about 10 percent of the population had a different nationality than Dutch, this percentage nearly doubled in the following 10-year period. Furthermore, 6.4 percent of 14

16 the population has the Colombian nationality, i.e., 4.4 percentage points more than in The influence of other nationalities (e.g., Haitian, Jamaican, Chinese, etc.) increased by 2.6 percentage points in the period under review. Table 8: Nationality of the population (in percentage of total population), 1991 and Dutch American Colombian Venezuelan Dominican Portuguese Other Total Source: CBS Age structure When looking at the age structure of the population (see table 9), the population appears to have grown slightly older over time. The number of persons under the age of 15 grew by 27.6 percent, i.e., less than the growth in ages 15 to 60 ( percent) and over 60 years ( percent). Consequently, the proportion of persons younger than 15 years decreased by 1.8 percentage point to 22.9 percent, while the proportions of the two remaining age categories increased by 0.5 and 0.3 percentage point to 65.7 percent and 11.4 percent, respectively. The median age for the total population rose from 30.5 years in 1991 to 33.5 years in Table 9 Population by age category, 1991 and Males Females Total Males Females Total Age category Children (ages 0 14) 8,645 8,009 16,654 10,746 10,503 21,249 Prime-age adults (ages 15 64) 21,500 22,444 43,944 29,069 31,767 60,836 Older adults (ages 65 and older) 3,012 3,772 6,784 4,539 6,015 10,554 Age category In percentage of the total population (by sex) Children (ages 0 14) Prime-age adults (ages 15 64) Older adults (ages 65 and older) Median age Source: CBS; CBA 15

17 Marital status The number of marriages has increased slightly since 1990 (504), peaking at 643 in 1993 and has since been fluctuating between 564 and 616. However, the number of divorces has, in general, been rising, with exceptions in 1994 and The number of divorces per 100 marriages rose from 36 in 1990 to a record 61 in Further analysis of the available data indicate that (see Annex 4): 1. The percentage proportion of married Arubans is slightly smaller than that of non- Arubans. However, relatively more Aruban males than females are married, while in the case of non-arubans, the opposite is true, suggesting that interracial marriages between Aruban males and non-aruban females are taking place. Data show that this has been happening since 1991 and increased significantly in Relatively more Arubans (males as well as females) are getting divorced, contrary to their non-aruban counterparts. Relatively more females (Arubans as well as non- Arubans) are divorced. The difference already existed in The proportion of Arubans and non-arubans legally divorced remained virtually unchanged in the period under review. However, the proportion of non-aruban females legally separated increased between 1991 and 2000, while that of Aruban females shrank. Together with the increased interracial marriages between Aruban males and non-aruban females, this may indicate an increase in convenience marriages. 22 Labor force and education skills The total labor force in Aruba grew from 29,914 in 1991 to 45,036 in 2000, or by 50.6 percent in 2000 (see Annex 5). This growth was attributed mainly to the growth in the non-aruban labor force, i.e., from 7,786 in 1991 to 18,447 in 2000 (a percent increase). The degree of skills of the labor force, as indicated by the decree of education (see table 10), improved slightly since However, since 1986 more native Arubans were going abroad to study and then returning to the island to work. Thus, the relative improvement in the skills of the labor force appears largely influenced by the reimmigration of Arubans after their study abroad. Table 10: Education characteristics of the labor force (in percentages), 1991 and Basic level (primary education or lower, first level of secondary education, second level of secondary education) Intermediate level (higher education but not university degree) High level ( university degree, post graduate university degree) Total Source: CBS 16

18 3.3.2 Economic effects Labor displacement Displacement of the local population by immigrants is one of the most feared effects of immigration. The perception that immigrants will take jobs from natives is increasingly a topic of discussion in Aruba. Empirical evidence, 23 predominantly from the U.S. suggests, however, that immigration causes little or no unemployment due to labor displacement in the long run, even among low-income groups, the most likely replaced by immigrants. Evidence from the Aruban context indicates that the non-aruban labor force was the fastest-growing segment between 1991 and 2000, particularly women (see Annex 5). The number of jobs created for the non-aruban labor force was more than twice that of the Aruban labor force, while the increase in the number of unemployed non-arubans showed almost the same pattern. The decrease in the proportion of Arubans in the unemployment pool suggests that in general the displacement factor was absent in the Aruban labor force between Wage suppression and income inequality Concerns about wages being driven down due to cheap non-aruban labor also is a concern frequently heard in Aruba. In a general sense, cheap labor reduces the incentive of businesses to be more competitive, and, thus, maintains low-productivity companies in business. 24 However, empirical studies 25 suggest that immigration has no significant effect on wages of the native population of the receiving countries. In the case of Aruba, comparative data for the period between 1991 and 2001 is not reliable or scarcely available. The only reliable data on income development are available for 1994 and (see annex 6). This table provides an indication of the average salary earned by different proportions of the population (indicated in percentiles). In general, Arubans were earning relatively more than non-arubans in 1994 (with the exception of the 95 th percentile) and in 1997 (with the exception of the 90 th percentile and above). However, non-arubans (95 th percentile) were earning relatively more than the Arubans. Obviously, high positions, e.g., management of hotels and other institutions, still are held by non-arubans. The data refer only to a four-year period, i.e., a weak coverage of the period under analysis. Nonetheless, the data suggest that, in general, wage suppression for Aruban workers is not the case. Still, the results may indicate the presence of cheap labor in Aruba, since the Arubans generally are earning more than the non-arubans. As previously indicated, the presence of cheap labor may reduce the incentives of Aruban businesses to be more competitive. Table 11: Wage gaps between Arubans and non-arubans, 1994 and Males Females Total Males Females Total 5 th percentile th percentile st quartile Median rd quartile th percentile th percentile , Source: CBA; CBS 17

19 An analysis of the wage gaps (see table 11) reveals that in general these widened for nearly all categories of wage earners in the period , perhaps indicating an increased inequality in income between Arubans and non-arubans. Whether this income inequality is significant can be tested using the measure of income inequality previously defined, i.e., the Gini index. The available indices indicate a slight degree of income inequality in Aruba in 1981, with Aruba s position since 1991 slightly below the cut-off between equality/inequality (see table 12). This situation remained virtually unchanged between 1991 and 1998, the latest year available. Obviously, the degree of income inequality between Arubans and non-arubans does not seem significant enough to cause a general income inequality. Table 12: Gini indices for Aruba (in percentages) Gini index Source: CBS; Kristòf Self-employment In general, immigrants have a higher propensity of being self-employed than the navive population 27. The available data on work status in 2000 indicate that 9.7 percent of working Arubans were self-employed, while the percentage for non-arubans is 6.2. Furthermore, the proportions for both Aruban and non-aruban females are marginal, but the discrepancy between Aruban and non-aruban males is much larger (see table 13). Table 13: Work status of Arubans and non-arubans, 2000 (in percentages) Arubans Non-Arubans Male Female Total Male Female Total Self-employed Other Source: CBA; CBS Financial cost and economic benefits The huge population increase in the last decade most certainly has put a strain on the financial costs with regard to immigration. These costs include education, health care and social welfare services, and infrastructure. Also, the administrative costs of handling immigration papers, and the control on illegality are part of the financial burden for the goverment. Furthermore, the introduction of the L.A.R., which makes it possible for permit requestants to appeal decisions of the D.O.O.V., further increased the costs. Unfortunately, no reliable data on the development of these expenses are currently available, except that health care costs grew from AFL million in 1991 to about million in 2000, i.e., a 98 percent increase. 18

20 Increased demand, new business types, increased receipts in several types of taxes Immigration also seems to have a number of economic benefits for Aruba. Although difficult to quantify, it is believed that immigration has created additional demand for goods and services. One indication is the establishment of some large supermarkets in the last decade. 30 Furthermore, some new types of businesses such as transfer companies and international call providers ( llamadas internacionales ) were established. Also, an increase in the labor force meant an increase in receipts from several types of taxes, such as the wage tax and motor vehicle tax. Wage taxes grew from AFL 92.5 million in 1990 to AFL million in 2001 (+127 percent). Taxes on motor vehicles grew from AFL 6 million to AFL 13 million in 2001 (+105 percent). Dependency ratio Earlier it was observed that the fastest-growing segment was the group of persons older than 60 years of age ( percent), followed by those between 15 and 60 years ( percent), and the group younger than 15 years (27.8 percent). The population between the ages of contributes through taxes and social premiums to the care of the other two groups. The economic dependency ratio, defined here as the ratio of the population not in the labor force to the population in the labor force, i.e., how many people not participating in the labor force are being supported by that labor force, decreased from 126 persons depending on every 100 persons in the labor force in 1991 to only 101 persons depending on every 100 persons in the labor force in 2001 (see table 14). In other words, immigration has helped reduce the dependency ratio significantly during the period Nevertheless, the growing population of 60 and older presents some serious problems for, e.g., the old-age pension fund 31 in the future. Table: 14: Economic dependency ratio, 1981, 1991, 2000 and Population 60,996 67,504 90,506 92,638 a. Population in the labor force 26,031 29,914 45,036 46,097 b. Population not in the labor force 34,965 37,590 45,470 46,541 Economic dependency ratio (b / a) x Source: CBA; CBS Social effects It is important that the integration of the (existing) immigrant labor force be adequately dealt with, particularly their housing and education. Housing The arrival of immigrants brought a huge shortage in housing. Over the years, many new houses and apartments were built to meet the increasing demand (see table 15). The number of houses grew by 40 percent between 1990 and 2000, while the number of apartments/rooms more than tripled. Overall, the total number of living quarters increased by 60 percent. Despite these increases in the supply, the shortage in housing quarters continued over time, a situation that persisted until recently. The current overall impression is a slowdown in the demand in the housing market, judging by the many 19

21 houses currently for sale. Contrary to past migration flows, the most recent migration influx does not appear to have created any significant concentration of migrants in poor housing areas, presumably because of the increased housing construction activities in the recent past. The latest available statistics indicate that the largest concentration (36.9 percent) of the foreign-born population currently lives in the capital Oranjestad, presumably because these people want to be close to their center of economic activity 32 or to adequate transportation (e.g., the central bus station). Table 15: Households by type of living quarters, 1991 and House 16,156 22,658 Apartment/Room 1,572 5,248 Trailer/Container Cuarto Other Unreported Total 18,265 29,246 Source: CBS Education More immigrants also have impacted the education system in Aruba. The number of students grew from 12,343 in 1991 to 20,170 at the end of 2001, i.e., a 63.4 percent increase (see table 16). While in 1995, 76.7 percent of the students spoke Papiamento as the main language at home, by 2001 this proportion decreased by 6.7 percent to Spanish is the second most widely spoken language by students at home (13.4 percent, nearly a redoubling compared to 1995). Table 16: Education statistics, 1991 and Number of students 12,343 20,170 Number of teachers 603 1,140 Number of teachers per 1,000 students Number of schools Main language spoken by students at home (in percentages of total students) Papiamento ] 69.9 Dutch 7.5 1] 7.0 Spanish 7.2 1] 13.4 English 7.4 1] 7.7 Other 1.2 1] 2.0 Source: CBS; Directie Onderwijs 1] 1995 data. 20

22 The number of teachers grew by 89.1 percent to 1,140 in the corresponding period. The number of teachers per 1,000 students rose by 16 percent, while the number of schools increased by 14 percent. Nonetheless, some capacity constraints (e.g., rooms and educational material) were apparent recently at certain types of schools, mainly in secondary education, correlating with the 30 percent increase in the population aged 19 and younger. Public health With regard to the effects of immigration on public health, slight decreases are noticeable in the average number of available hospital as well as elderly home beds per 1,000 inhabitants (see table 17). The number of physicians and specialists per 1,000 inhabitants remained virtually unchanged in 2001, compared to The average number of nursing personnel (including personnel for elderly care) per 1,000 inhabitants was reduced by almost half to only 3.9 in Table 17: Public health statistics, 1991 and Number of hospital beds per 1,000 inhabitants Number of elderly home beds per 1,000 inhabitants Number of general physicians per 1,000 inhabitants Number of specialists per 1,000 inhabitants Number of nursing personnel per 1,000 inhabitants Source: CBS Political effects In Aruba, the voting right is in principle granted to all citizens with the Dutch nationality, who are 18 years or older. The Dutch nationality can be acquired by birthright or can be granted on the basis of a nomination by the Minister of Justice. According to the law, one should have been living uninterrupted for at least 5 years in the Kingdom of the Netherlands to be eligible for this nomination. If a migrant marries a person with the Dutch nationality, he/she can request this nationality after 3 years of marriage. Since 1991, an estimated more than 5,000 persons of voting age were granted the Dutch nationality on the basis of a nomination. Until now, no political party has been founded based on an ethnic group. As far as the most recent migration flow is concerned, no political candidate has emerged from this group either. However, the influence of the new voters was well-recognized by many political parties during the most recent Parliamentary elections of September 2001, when special political get-togethers and radio and television programs were organized for these voters. 21