In US mainstream media, there is not much differentiation made between legal and illegal migrants or skilled and unskilled migrants. Worse, these perceptions are generally coloured by xenophobic projections on others who are out to "steal our jobs" or who are "illegals." Possessing little political clout of their own, immigrants have been time-honoured scapegoats accused of destroying "our way of life" or "our unique values." Think of the British National Party. However, these scaremongering tactics do not really reflect the diversity of migrants' skills, talents, and drive but the search for scapegoats for self-inflicted woes. More often than not, migrants are not scroungers but the most motivated of persons since it takes some courage to uproot oneself and stake one's place in faraway lands.I bring this up because what we have here is a tale of two contrasting fortunes in the realm of workers' remittances in the post-subprime crisis era: the Philippines and Mexico. On paper, Mexico is by far the more advanced nation. Not only is Mexico an OECD member, but it also ranks as a high human development nation (ranking 53rd in the world), while the Philippines is merely a medium development nation (ranking 105th). Now, just as American mainstream media tends to portray all migrants the same, it is no surprise that many in the development community also thought all nations would be negatively affected by the subprime crisis. As economic activity slowed in destination countries, migrant workers would, as a consequence, have diminished jobs and wages to send back home.
However, in a post I made last year, I pooh-poohed naysayer economists who predicted massive falls in remittances to the Philippines. The chart at the top shows that in not a single month did recorded remittances fall year-on-year from 2008 to 2009. (As a disclaimer, I must disclose that I am a consultant to the Philippine government on matters of skilled migration.) Lo and behold, we now have full-year 2009 data suggesting that those who predicted declines in remittances were wide of the mark. From ABS-CBN News:
Money sent home by overseas Filipinos grew 5.6% last year, stronger than what the Bangko Sentral ng Pilipinas (BSP) expected. Data from the BSP showed that remittances reached a record $1.6 billion in December, an 11.4% growth from the same month in 2008. This was the highest growth recorded for 2009 and the highest year-on-year expansion since October 2008 The December figure brought the country's total remittance inflows for 2009 to $17.3 billion, exceeding the BSP's forecast of $17.1 billion or a 4% growth for the year. For 2010, the BSP is looking at a 6% growth...Now $17.3 billion might not seem much; it's probably how much debt the US racks up every 1.5 seconds or so. Still, for an LDC, it's a major source of foreign exchange. What held true for the Philippines last year did not hold true for others. Unfortunately, remittances fell rather than rose in Mexico for a second consecutive year--and to pretty dramatic effect. From the Associated Press:
The BSP attributed the steady growth in remittances to the continued deployment of skilled Filipino workers and increased access of OFWs [overseas Filipino workers] and their families to formal money transfer channels. Specifically, the bank said there was high demand for engineers, medical practitioners, and teachers in 2009.
"The geographical diversification of OFWs has also contributed to the resilience of remittance flows. Since not all host countries were severely affected by the global financial crisis, Middle East countries continue to absorb a significant number of deployed OFWs, including those that have been displaced elsewhere," the BSP said in a statement released Monday.
Money sent home by Mexicans abroad plunged a record 15.7 percent in 2009 as migrants worldwide struggled to find work during the global economic slowdown, the central bank [Banco de Mexico] reported Wednesday. Remittances - Mexico's No. 2 source of foreign income after oil exports - totaled $21.2 billion in 2009, compared with $25.1 billion in 2008, the bank said. Since the bank began tracking remittances in 1996, it has recorded just one other annual decline - a 3.6 percent decrease in 2008, as the world financial crisis exploded.In line with my erstwhile job, I have to rethink the causes of this divergence. While migration data is quite spotty in that there is no "World Migration Organization" to compile and analyze statistics the way the IMF does for finance or the WTO does for trade, there are insights here that I will pursue in greater depth once I get home. Meanwhile, let me update my list of where economist's blind spots may arise which can make them think migrant-sending countries are all alike as they've done before. 1-4 are as before; 5 and 6 are new:
Central bank president Agustin Carstens attributed the latest drop to the weak economy in the United States and the increased difficulty Mexicans are having securing employment there. More than 11.8 million Mexicans live in the U.S.Carstens said a 1.3 percent uptick in remittances in December, compared to the previous month, gave some hope for a recovery. "It is just one figure, but it could indicate the beginning of a relative stabilization in the drop in remittances, and it would be congruent with the fact that economic activity in the United States is about to go from negative to positive," Carstens said.
An analyst was less optimistic, saying that employment levels in the United States "remain very bad" and remittances to Mexico will probably continue to decline through the first half of 2010 when compared to the same period of 2009. "It is important to remember that many Mexicans are employed in very volatile sectors that remain depressed, like construction, manufacturing, restaurants," said Hector Rodriguez, a researcher at the Graduate School of Public Policy and Administration in the northern Mexico city of Monterrey...
- How do countercyclical flows affect remittances to LDCs? There is a fairly large literature on remittances to LDCs increasing in times of difficulty. That is, emigres send back more money to their relatives when times are tough. That none of the models used by the various pundits make use of this literature is regrettable;
- What skill level do migrants from a particularly country have? The Philippines has made it a national policy objective to upskill its migrants to, among other things, help ensure that they aren't gotten rid of in the first instance in highly cyclical trades like basic construction;
- How adaptable are migrants to changing situations? Emigres who have a broad skill set may be more valued in being able to shift their tasks based on prevailing economic conditions;
- Related to the (2) and (3), what industries are migrants working in? The Philippines sends a lot of nurses, doctors, and other health workers. With the imminent geezerization of any number of Western countries due to demographic trends, poor economic times do not stop the aging process that drives demand for these health workers;
- What kind of geographic dispersion does the migrant-sending country have? Just as portfolio theory warns about putting all your egg's in one basket--think about Mexico and the US--countries sending migrants to more destinations will likely fare better when global economic downturns hit due to the uneven nature of crises affecting different regions and nations;
- How are remittances being channelled? Recorded remittances may increase as countries gradually adopt more convenient, low-cost remittance-sending options. For more on these technologies, see my FT/World Bank article.
In my line of work exploring how education can help improve migrants' prospects, I definitely think Filipinos stand to benefit from demographic trends in the developed world despite facing protectionist and, let's face it, often racist sentiment. In a world where labour and not goods will be increasingly scarce due to massive overcapacity in any number of industries, the Philippines stands to benefit. So, I eagerly anticipate the coming of this newer international economic order! Make no mistake: education helps migrants too, and I want to ensure the Philippines can send the best of the lot for their own well-being
