2017/SOM1/HRDWG/WKSP/009 How Long Will We Let the Poor Pay the Most? Submitted by: World Bank Group Workshop on the Development of an APEC Labour Mobility Framework Nha Trang, Viet Nam 18-19 February 2017
How long will we let the poor pay the most? The poor stand to gain the most from mobility yet they are the ones that have it the least Chart Reference: Clemens 2014 1
Three Regressive Costs Migration Costs Remittance Costs Benefits foregone Migration Costs : pre-departure What are they? Costs borne by migrants for moving to another region Why are they high? Recruitment Costs Fees charged by intermediaries connecting migrants to jobs abroad Borrowing Costs Fees charged by lenders to migrants who borrow money to go abroad 2
Can t afford bus fare? No problem, just come up with first class airfare (in months of earnings in destination) 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Pakistan Ethiopia India Philippines Nepal Bangladesh India Sri Lanka Pakistan Bulgaria Ecuador Morocco Indonesia Thailand Vietnam Vietnam Source: Staff estimates based on KNOMAD survey data. Note: all surveyed Sri Lankan workers in Kuwait were females engaged in the domestic work segment. This can be solved 1. Better monitoring of intermediaries Identify existing regulation gaps Learning from best practice systems. E.g. The Case of Philippines: First labor sending country to come up with comprehensive framework for migration Migrant Workers and Overseas Filipinos Act of 1995 Imposing stiff penalties for illegal recruiters Free legal assistance and witness protection program for victims of illegal recruitment Migrant Workers and Overseas Filipinos Resource Centers in countries where there are many Filipinos Office of the Undersecretary of Migrant Workers Affairs and the Legal Assistance Fund 2. Lower borrowing costs Better financing mechanisms for migrants No Lean Season and BRAC work on migrant loans 3
Post Departure: Remittance Costs What are they? Fees paid by migrants to send money back home from abroad Are they high? Why? Underdeveloped financial infrastructure Limited competition Scarce transparency Regulatory obstacles Lack of access to banking sector for remittance senders/receivers Difficulty in obtaining necessary documentation to access formal services. Wide variation across corridors in APEC Source: The World Bank, Remittance Prices Worldwide, available at http://remittanceprices.worldbank.org 4
After return: Costs due to lack of portable benefits What are they? Cost borne by migrants and their families due to lack of social security benefits such as health insurance, life insurance or pensions Why is it important? In the absence of portable benefits such as pensions and health insurance, migrants and their families could potentially suffer devastating financial losses Predominantly North-North migrants who enjoy access to and portability of social security benefits Evidence gaps exist 23% of international migrants profit from BSSAs but their functioning has hardly been analyzed or assessed Better understanding is needed Why don t covered workers claim benefits in some cases despite BSSAs? Is it due to information failure? Burdensome bureaucracy? Broaden the information base: To cover South-North and North-North migrants Conduct in-depth empirical analysis Of the current health care corridors and their financing and reimbursement mechanisms Provide conceptual and empirical deepening of fiscal fairness Particularly for pension and health care programs Create a better analytical framework To determine which benefits should get priority in BSSAs across corridors and which should be dropped 5
Could a two-pronged approach work to expand coverage? High Skill Migrants More sophisticated products such as the one catering to North-North migrants Better integration in host countries social security systems Low Skill Migrants Use of migrant worker welfare funds to channel money towards emergency situations, health insurance, and pensions/ Mobility Savings funds Ratification of human rights conventions and legal remedies against exploitation Questions for discussion Migration costs Is the model of no cost recruitment feasible to achieve across all corridors? Are there discrepancies between national and international frameworks that unintentionally lead to misguided approaches and create opportunities for rent-seeking? How can we build a regional approach to gather more evidence around migration cost across corridors? What are some challenges in doing this? Remittance costs What innovations in the last decade have been able to reduce costs and how are they applicable to low volume corridors? How do we get more competition in low volume corridors? Are costs just about volume? Does geography matter? Costs due to lack of portable benefits What are relevant social security instruments for mobile workers? Can they be achieved through BSSAs? What are some good practices to follow from across the globe? 6