Impact of the financial crisis on migration: IOM Report

There are good reasons to suppose that the current financial crisis will have a more significant impact on migrants and migration than previous crises. However, time is needed to allow for a more accurate analysis of the situation so that knee-jerk migration policies are avoided, says a new IOM report. In the latest of its Migration Research Series, "The Impact of Financial Crises on International Migration: Lessons Learned", the report draws upon five previous financial crises in the 20th century - the Great Depression of the 1930s, the Oil Crisis of 1973, the Asian crisis of 1997-1999, the crisis in Russia at end of 1998 and the Latin American crisis of 1998-2002.

The report argues that the impact of the current crisis on human movement will matter more today than ever before because, while previous crises had global ramifications, their impacts were felt mostly at the regional level. Migrants would shift to alternative destinations as one region would benefit economically at the expense of another. Today, however, the current crisis takes place in a world that is more interconnected than ever before, and no region is unaffected.

Another difference is that while the crises of the 1990s came at the end of a decade of substantial economic growth and poverty reduction in affected regions, the current crisis compounded the effects of rising food prices and unstable commodity exports for developing countries.

Migration policy, it stresses, is also being devised in a very different context than before. The global economy is more dependent on migrant labour than ever before, especially in certain sectors. Similarly, there is a greater dependence on remittances, both on the part of individuals and national economies.

Acknowledging a systematic lack of evidence on migration in the financial crisis, the report nevertheless states that some impacts of the current crisis are apparent, such as a reported reduction in migration flows and a slow down in the rate of remittances, albeit with important variations.

It argues that the evolution of the current crisis, however, makes it difficult to gauge a true picture unlike, say the 1973 Oil Crisis, which was an overnight shock to the economic system with enormous consequences for global migration patterns.

It led to the end of "guest-worker" migration in Europe due to rising unemployment and recession, the start of family reunification and permanent settlement rather than large-scale returns, the shift of production processes by large corporations from developed countries to developing countries in Asia and Latin America as they exported capital, and the introduction of guest-workers in the Middle East as governments used much higher oil revenues to build infrastructure, housing and economic expansion.

The report also argues that severe restrictions on labour migration triggered by the Oil Crisis, which continued in the following decades, was believed by many analysts to be behind the growth in bogus asylum claims in developed countries, and later in the growth of irregular migration.

Other consequences of previous crises highlighted in the report and which are echoed to varying degrees today, include an impact on internal migration following the Asian crisis as the contraction in jobs in cities such as Bangkok led to a return to rural areas; a recognition among some Asian destination countries of the economic importance of migrants doing jobs that nationals didn't want to do; the brain drain that resulted from both the Russian and Latin American crises, and the short-term decline in the growth of remittances.

From many of the previous crises, it has been clear that returns and deportations have not been as large as predicted and that migrant stocks largely remain intact. Where possible, migrants stay on and work in the informal sector. For example, employment in Indonesia's informal sector increased by six million in the years after the Asian crisis.

However, where returns have been substantial to individual countries, the report highlights the importance of ensuring that policies and planning are in place to absorb returning migrants back into the economy and society.

What all previous crises have shown is that even if migrants do manage to keep jobs, their working conditions suffer through lower wages, reduced benefits and longer working hours.

With many destination countries reacting to financial crises by "re-nationalizing" jobs while countries of origin respond by internationalizing their workforce as a way to counteract increases in unemployment, the report stresses the need to ensure migrants' rights are protected.

Ultimately, the report argues, migration is resilient in the face of financial crises. Even after the more severe events such as the Great Depression and the Oil Crisis, migration rebounded. It is the length and severity of the current crisis that will define its true impact on migration, the report finds. But the integral role that migrant labour plays in the global economy suggests that it will be hard for the global economy to recover without migrant labour. This, it says, is another reason why it is important not to ignore migration in the financial crisis response equation.

Governments, the report argues, should nevertheless resist succumbing to both political and popular pressure to respond to crises through migration policies that reduce competition with native workers or to make policy decisions that are not based on sound economic evidence in the labour market. Impacts are complex and unpredictable and it can take time for a clear picture of labour markets to emerge. Consequently short-term and restrictive policies can be counter-productive.


- "Migration Research Series N°37" - "Responding to the Impact of the Global Financial Crises on International Migration: Lessons Learned" is available at IOM's Online Bookstore.


- For more information, please contact:
Chris Lom, Tel: + 41 22 717 9361, E-mail: clom@iom.int