Recession and Migration: A New Era for Labor Migration?

Recession and Migration: A New Erafor Labor Migration?Philip MartinUniversity of California, Davis

The current recession, the worst in a half century, is likely to affectinternational migration differently than past recessions. In 1973–1974and 1981–1982, rising oil prices led to recessions in oil-importingcountries and economic booms in oil-exporting countries, enablingsome migrants to shift from bust to boom areas, as from Europe tothe Middle East. The 1997–1998 Asian financial crisis did not spreadglobally, and was followed by a relatively quick resumption ofeconomic and job growth that attracted migrant workers. The 2008–2009 recession is most severe in countries that had the most severedebt excesses, including the U.S., Spain, and Eastern Europe, and incountries most dependent on trade, including many Asian countries.New deployments of migrants are likely to slow, but what is not yetclear is how many migrants who lose jobs will remain abroad.

INTRODUCTION

Recession and Migration

The 2008–2009 recession began in the U.S. financial sector and spreadglobally.1 A credit-fueled spending boom linked to rising home prices inthe U.S. and many other countries supported an expansion of the globaleconomy; real global economic growth averaged almost four percentbetween 2003 and 2007. Housing prices fell amid tightening credit, asfinancial institutions were unable to make accurate determinations of thevalue of financial assets that had been repackaged and held as assets.Tightened credit reduced consumer spending, which led to layoffs and, ina downward spiral, even less credit as business risk increased. Global tradefell sharply, and unemployment rose.

1There is no commonly accepted definition of ‘‘global recession.’’ Rogoff (2002) suggestedthat global per capita output growth of 1.2 percent in 2001 was almost a global recession.The usual U.S. definition of a recession is at least two quarters of falling GDP; the current

U.S. recession began in December 2007.

� 2009 by the Center for Migration Studies of New York. All rights reserved.DOI: 10.1111/j.1747-7379.2009.00781.x

IMR Volume 43 Number 3 (Fall 2009):671–691 671

Between 2000 and 2005, real global GDP expanded from $39 tril-lion to $45 trillion, about 14 percent in 2005 dollars. Remittances todeveloping countries are more sensitive to global GDP growth than is themigrant stock – remittances rose much faster and migration much slowerthan GDP in recent years. For example, when real GDP rose 3.4 percent,remittances rose five times faster and the stock of global migrants rose halfas fast.2

Global GDP is expected to shrink at least one percent in 2009.Remittances are expected to fall at least five percent, but there are no cur-rent estimates of the stock of international migrants, which had beenincreasing by 2.8 million a year. The number of people involved in inter-national migration is much larger than the stock at any point in time,since many migrants remain abroad 2 or 3 years and return (Table 1).Some countries, including Indonesia and the Philippines, reported recordoutflows of migrant workers in 2008 (Abella and Ducanes, 2009:2).

The most recent projections from the International Monetary Fundexpect the global GDP to shrink by one percent in 2009 and expand bytwo percent in 2010. If correct, global GDP would be almost $51 trillionby 2010, remittances to developing countries almost $300 billion, and theglobal stock of migrants 205 million. In such a scenario, real GDP wouldhave risen by 13 percent between 2005 and 2010, remittances by 53 per-cent, and the stock of migrants by seven percent, continuing the patternof remittances to developing countries rising faster than global GDP andthe stock of migrants rising slower than global GDP growth.

TABLE 1GLOBAL GROWTH, MIGRANTS, AND REMITTANCES, 2000–2010

2000 2005 2010

Real GDP (tril $2005) 39.2 (4.2) 44.8 (3.4) 50.5 (1.0)Nominal Remittances to ldcs ($ bil) 84.2 194.2 (19) 297.0 (6)Migrant Stock (Mils) 177 191 (1.6) 205 (1.5)

Notes: Values in parentheses denote annual growth in percent. 2010 data are projected and assume migrant stockrises by 2.8 million a year, as between 2000 and 2005.

Sources: <http://www.ers.usda.gov/Data/Macroeconomics/>Ratha, Mohapatra, and Xu, 2008.<http://www.un.org/esa/population/unpop.htm>

2Growth data are from the USDA’s global database (<http://www.ers.usda.gov/data/macroeconomics/#BaselineMacroTables>); migration data are from the UN (<http://www.

unmigration.org>).

672 International Migration Review

World GDP and stocks of international migrants are distributedsimilarly. The U.S., the EU-15, and Japan had 66 percent of theworld’s GDP and 63 percent of the world’s migrants in 2005. The fourfast-growing BRIC countries – Brazil, Russia, India, and China – hadabout 11 percent of the world’s GDP and 10 percent of the world’smigrants, although these migrants were concentrated in Russia andIndia.

A comparison of the major industrial countries and the BRICssuggests: 1) an uneven relationship between economic growth andgrowth in migrant stocks; and 2) a substitution of internal for interna-tional migrants in rapidly growing developing countries such as China(Table 2).

The 2008–2009 recession is unusual because it began in the U.S.rather than in a developing country and spread from the U.S. to otherindustrial and developing countries with a lag. There is considerabledebate over whether the recovery will have a V-shape, with a quickrebound due in part to government stimulus programs, a U-shape, with alonger period until recovery, a W-shape, as rebounds fade and growthslows or shrinks several times, or an L-shape, with a deferred recovery. Itis also unclear whether recovery from the recession will be global or beginin particular regions and spread to others.

Remittances to developing countries depend more on the stock ofmigrants abroad than the flow, so remittances should be less sensitive torecession than deployments. Remittances to all developing countries rosenine percent between 2007 and 2008 to $305 billion. The fastest growthwas in South Asia, where remittances rose 27 percent between 2007 and

TABLE 2WORLD GDP AND GDP GROWTH, BY REGION, 2000–2005–2008 (2005 DOLLARS)

2000 2005 2008Change

2000–2005 (%)Change

2005–2008 (%)

World 39,208 44,772 49,511 14 11U.S. 11,093 12,433 13,220 12 6EU-15 11,828 12,795 13,649 8 7Japan 4,018 4,284 4,486 7 5Brazil 856 980 1,126 14 15China 1,456 2,300 3,126 58 36India 550 758 974 38 29Russia 590 794 950 35 20U.S., EU-15, Japan 26,939 (69) 29,513 (66) 31,355 (63) 10 6BRICs 3,452 (9) 4,833 (11) 6,176 (12) 40 28

Note: Values in parentheses denote share in percent.Source: USDA, International Macro Data. <http://www.ers.usda.gov/Data/Macroeconomics/>

Recession and Migration 673

2008 to $66 billion, and East Asia, where they rose seven percent to $70billion. Asia, with about 30 percent of the global stock of migrants, receivedabout 45 percent of global remittances, reflecting the fact that many Asiansleave the region and send remittances from industrial countries (Table 3).

Remittances to developing countries are expected to decline by upto eight percent in 2009, reducing them to 2007 levels, before rising in2010 and surpassing 2008 levels in 2011 to reach $317 billion (the low-case scenario has remittances falling to $280 billion in 2009 and 2010).The 2009 decline in remittances is expected to occur in all regions, butbe sharpest in Europe, where a 10 percent decline is expected. In Asia, bycontrast, remittances are expected to decline only four percent (WorldBank, 2009).3

Job losses during the 2008–2009 recession have so far been concen-trated in four major sectors–construction, manufacturing, and financialand travel-related services. Migrants are employed in all these sectors, buttheir characteristics differ by sector. Migrants in construction and travel-related services are often employed in low-skill jobs, those in manufactur-ing tend to hold semi-skilled jobs, and migrants employed in financialservices usually hold high-skill jobs. This means that migrants laid off inboom areas such as Dubai and Singapore include both financial specialistsand construction laborers.

The ILO in November 2008 projected an increase in global unem-ployment from 190 million in 2007 to 210 million by the end of 2009(including 160 million in developing countries).4 The jump in unemploy-ment in the OECD countries was projected to be greater, up from 34

3The World Bank cited five reasons for remittances falling less than other capital flows in

recession. First, many remittances are from migrants who have settled abroad, such as Fili-pinos living in Canada and the U.S., rather than newly deployed migrants whose numbersmay shrink. Second, remittances are a relatively small share of migrant earnings, and thuscan be continued even if earnings shrink. Third, unauthorized migrants abroad may stay

longer because of increased difficulty returning if recession-impacted countries step upborder controls. Fourth, migrants who return are likely to bring with them accumulatedsavings, which temporarily increases remittances. Fifth, stimulus spending in migration-

receiving countries is likely to create jobs for migrants directly and indirectly. The Instituteof International Finance reported that net private-capital inflows into emerging economiesfell from $929 billion in 2007 to $466 billion in 2008, and projected them to be only

$165 billion in 2009. ‘‘Trickle-down economics,’’ The Economist, February 19, 2009.4Statement released October 20, 2008. ILO says global financial crisis to increase unem-ployment by 20 million <http://www.ilo.org/global/About_the_ILO/Media_and_public_

information/Press_releases/lang–en/WCMS_099529/index.htm>


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million in 2008, six percent, to 42 million in 2010, seven percent, withlittle or no net new job creation in the world’s major industrial econo-mies.5 Revised projections in spring 2009 anticipated global unemploy-ment rising by 50 million and the unemployment rate in OECDcountries reaching 10 percent.

This paper provides snapshots of the recession’s impacts on migrantworkers in several regions and sectors. The recession’s impacts are amoving target, so the summaries and analyses that follow are necessarilytentative. They suggest that the 2008–2009 recession could mark a pauseafter a period of rapid globalization that included rising migration andremittances.

U.S.: CONSTRUCTION, MANUFACTURING AND FINANCIALSERVICES

The U.S. employment peaked at 146.7 million in Fall 2007 and fell to140.9 million by Spring 2009. The number of jobless workers rose from7.5 million to 13.2 million in the same time period. The U.S. labor forceincluded 24 million foreign-born workers; a third are believed to be unau-thorized. Most of these foreign-born workers are immigrants admitted tojoin family members settled in the U.S., and are not likely to leave the U.S.because of the recession. Instead, the impacts of the recession in the U.S.are expected to be felt first among the unauthorized and legal guest work-ers, especially those employed in impacted industries such as construction.

Globally, the construction industry plays a large role in migrantemployment. Perhaps 15 percent of the 100 million migrant workersaround the world are employed in construction, which employs seven per-cent of the world’s workers. Low interest rates in the U.S. and othercountries attracted migrant workers for building projects in the U.S., UK,and Spain as well as in Gulf oil exporters. Migrant construction workers,most of whom are men, were among the first to lose jobs in the currentrecession.

In the U.S., the construction slowdown resulted in especially largeemployment losses among foreign-born Hispanics. Housing prices in the

5The labor force of the 30 OECD-member countries was 564 million in 2007. Statementreleased with the OECD Economic Outlook November 25, 2008. Economic Outlookforecasts sharp rise in unemployment as recession takes hold across OECD. <http://

www.oecd.org/document/35/0,3343,en_2649_201185_41721827_1_1_1_1,00.html>


U.S. peaked in 2005–2006 and began falling in 2007–2008, slowing whathad been a rapidly expanding residential construction sector. For example,U.S. construction employment peaked at 7.7 million in January 2007,and then shrank by a million to 6.7 million in January 2009 (<http://www.bls.gov>); the unemployment rate for persons employed in construc-tion occupations rose from nine percent to 22 percent during the sameperiod. About two-thirds of the three million Hispanic workers employedin U.S. construction in 2007 were foreign born, and almost all of theHispanic construction workers who lost jobs were foreign born.

Traditionally, the unemployment rate of African Americans has beentwice the White rate, and the rate for Hispanic workers 1.5 times theWhite rate. The Hispanic White unemployment rate difference narrowedas the overall unemployment rate fell toward four percent in 2006(Kochhar, 2008). As unemployment rose, the Hispanic rate rose fasterthan the Black rate, so that in March 2009, 7.9 percent of White workerswere jobless, 12.2 percent of Hispanic workers, and 13.3 percent of Blackworkers.6

U.S. manufacturing employment fell 14.2 million in spring 2007 to12.2 million in spring 2009.7 Although the percentage drop in manufac-turing employment was less than in construction, twice as many manufac-turing as construction workers lost their jobs because manufacturingemploys more workers. Employment in the manufacturing of durableproducts such as cars fell faster than employment in nondurables manu-facturing, where migrants are concentrated. For example, employment inmotor vehicles (NAICS code 3361-3), where there are few migrants, fellfrom a million in spring 2007 to 700,000 in spring 2009. Employmentin nondurables manufacturing fell only slightly, while in food manufac-turing (NAICS code 311) employment was stable at 1.5 million between2007 and 2009.

The financial services firms that receive much of the blame for therecession have relatively few employees. Employment in securities, com-modity contracts, and investments (NAICS code 523) was 850,000 inspring 2007 and 800,000 in spring 2009, reflecting a smaller shrinkingof employment than may have been expected by the closure of major

6BLS. Employment status of the civilian population by race, sex, and age. Tables A-2 andA-3 (<http://www.bls.gov/news.release/empsit.toc.htm>).7These industry data are from BLS. Employees on nonfarm payrolls by industry sector.

Table B-1. <http://www.bls.gov/webapps/legacy/cesbtab1.htm>


investment banks. Similarly, U.S. employment in accommodation andfood services (NAICS code 72) was 11.4 million in spring 2007 and 11.3million in spring 2009, another industry in which closures of some hotelsand restaurants were apparently offset by openings of others.

Many migrant workers employed in construction lost their jobs, butfewer migrants employed in nondurables manufacturing and hotels andrestaurants became jobless. In these sectors, employers often reduce hoursof work before laying workers off, hoping that demand rebounds quickly.

The recession increased speculation about whether the estimated 8.3million unauthorized foreign workers in the U.S. would leave if they losttheir jobs. With a sixth of construction workers believed to be unautho-rized (Passel and Cohn, 2009), and with little prospect of a quickrebound in the residential building sector where many had beenemployed, jobless construction workers would be expected to be amongthe first to leave the U.S. The Current Population Survey data collectedfrom households in spring 2008 suggested that the number of unautho-rized workers stopped increasing, but did not detect a significant decline.8

EUROPE: CONSTRUCTION

Spain has been Europe’s major country of immigration over the past dec-ade, adding about five million foreign residents, 90 percent since 2000.The overwhelming majority of newcomers to Spain arrived to work, andmost found jobs in agriculture, construction, and services from hotels andrestaurants to domestic helper. Between 1997 and 2007, Spain’s employ-ment expanded by 4.3 percent a year, almost four times the 1.2 percentannual growth of U.S. employment (BLS Chartbook 2009:12).

Spain’s recent growth was fueled by low interest rates that encour-aged a building boom, so that construction and real estate combined were20 percent of Spanish GDP in 2007. The unemployment rate, tradition-ally among the highest in Europe, fell to eight percent in 2007. However,in summer 2008, Spain went into recession, and the unemployment ratedoubled to 17 percent by summer 2009.

8The U.S. debate focuses on the peak number of unauthorized foreigners, exactly how fast

the number is dropping, and whether the slowing economy or stepped-up enforcement ismore responsible for the apparent decline. See Migration News, 2008. Unauthorized Pop-ulation, States and Cities. October. Volume 14 Number 4. <http://migration.ucdavis.edu/

mn/more.php?id=3433_0_2_0>


The unemployment rate for foreigners topped 20 percent in Fall2008, prompting the Spanish government to offer jobless foreigners whohad earned unemployment insurance (UI) benefits a lump sum, reflectingthe UI benefits to which they were entitled for their work in Spain if theyreturned to their country of origin. The return bonus program,announced in September 2008, was open to jobless migrants from the 19countries that have bilateral social security agreements with Spain and arenot EU members. Migrants accepting the bonus must agree not to returnto Spain for 3 years, a requirement that the Spanish government cannotenforce for EU nationals.9

Unemployment insurance benefits in Spain are 70 percent of usualearnings for the first 6 months of joblessness, and 60 percent for the next18 months. Migrants who agree to leave Spain receive 40 percent of theUI benefits to which they are entitled when they agree to depart, and 60percent in their country of origin after surrendering Spanish work andresidence cards at the Spanish consulate or embassy.

There were about 300,000 unemployed legal foreigners in Spain asthe program got under way in November 2008, but only 200 a weekapplied for the return bonus. The largest group of foreign workers,687,000 Romanians, are EU nationals and not eligible. Moroccans, thenumber two group at 673,000, are eligible, but many migrant advocacygroups advised them to reject the return bonus offer, pointing out thatthe migrants could be refused reentry to Spain in 3 years even if theiremployers wanted to rehire them.

Most employers and unions opposed return bonuses – employersbecause they wanted to continue to recruit workers abroad and unionsbecause they believe that migrants who contributed to the Spanish econ-omy during the boom should receive integration assistance rather thandeparture bonuses (Plewa, 2009). After 6 months, it appears that theSpanish return bonus program will be unable to limit unemploymentamong foreigners in Spain by encouraging them to return to their coun-tries of origin.

There was a similar downturn in construction that left manymigrants unemployed in Greece and Ireland. However, data are sparse onhow many migrants lost their jobs and whether they stayed in the hopesof finding another job or returned to their country of origin. Ireland, the

9To be eligible, foreigners who lost their jobs in Spain also had to register with UI author-

ities within 15 days.


Celtic tiger, grew rapidly over the past decade, keeping the unemploymentrate below five percent between 2000 and 2007. Construction accountedfor a third of Ireland’s employment growth, and many of the constructionworkers were nationals of the eight countries that joined the EU in 2004.Ireland (and the UK and Sweden) allowed Poles and other East Europe-ans to come and work. Some 840,000 arrived in Ireland between 2002and 2007, when 15 percent of Irish workers were foreigners.10

Ireland went into recession in 2008, and unemployment doubledbetween spring 2008 and spring 2009 to over 11 percent. Many of themigrants who migrated to Ireland to work during the boom yearsreturned to Poland and other Eastern European countries. However, non-EU foreigners were less likely to leave Ireland, even if they lost their jobs,because they are not guaranteed reentry rights. The Irish governmentimposed new restrictions on non-EU foreign workers in summer 2009,requiring them to earn at least E30,000 to receive work permits.Some Irish occupations, including truck drivers, were closed to non-EUforeigners.

Most major European countries were in recession in spring 2009,but joblessness did not rise as fast in France and Germany, countries withfewer part-time workers than Spain and with construction industries thatare a smaller share of the economy. Unemployment is also rising at aslower rate because of the cost to employers of laying off workers and theavailability of short-time pay. The German government, for example, pro-vides 60 percent of the difference between full- and part-time pay toworkers whose employers have reduced their hours of work, and in 2009raised the period during which workers can receive short-time pay from 6to 18 months.

ASIA: MANUFACTURING

Asian nations such as China and Japan have been called the world’s fac-tory to reflect their importance producing goods for consumers in othernations. In many Asian nations, components are imported and finishedgoods exported, making trade a far higher share of GDP than in the U.S.The global recession and the accompanying sharp drop in trade reduced

10Paul Cullen, ‘‘State admitted 840,000 migrants in 2002–2007,’’ Irish Times, January 9,

2009.


manufacturing employment, which affected internal migrants in countriessuch as China and international migrants in other Asian nations.

China had an official 83 million and an estimated 109 millionworkers employed in manufacturing at the end of 2002.11 About 20 per-cent of Chinese workers employed in urban manufacturing are rural-urban migrants,12 meaning they are persons working away from the placein which they are registered to live; many of the 71 million Chineseworkers employed in town and village enterprise manufacturing zones arealso migrants.13 Most migrant workers employed in Chinese manufactur-ing moved from rural areas in the center and western parts of China tocities and coastal provinces in the east.14

The global recession led to the closure of coastal factories employingrural-urban migrants as export orders dried up, sometimes drawing pro-tests from workers who did not receive back wages and severance pay.The Labor Contract Law has since January 1, 2008, required employersto pay terminated workers one month’s salary for each year of employ-ment, but some factory owners simply disappear to avoid making sever-ance payments.15

Most factories and work sites close for several weeks for the ChineseNew Year that began in 2009 on January 26. The National StatisticsBureau reported that 140 million Chinese rural residents had moved tocities.16 Half of the 140 million migrants in cities returned to theirvillages for the New Year in 2009. By March 2009, the NSB estimatedthat 56 million migrants had left their villages again to return to cities in

11The 109 million figure includes 38 million workers classified as employed in urbanmanufacturing by the Ministry of Labor and 71 million reported by the Ministry of

Agriculture as employed in town and village enterprises (Banister, 2005:13).12Some rural-urban migrants may not be included in the 38 million estimate of urbanmanufacturing employees.13Some foreign investors prefer to set up factories in TVEs to take advantage of lower

wages.14About 20 percent of those classified as employed in urban manufacturing in 2003 werealso ‘‘workers whose population registration is in rural areas’’ (Banister, 2005:23).15For example, Some 15,000 workers left Gaoshibei, Hubei a town of 40,000 about 500miles west of Guangdong, to work in urban areas. Returning migrants reported that sev-eral owners of garment factories disappeared to avoid providing severance pay. Don Lee,

‘‘Migrant factory workers at a loss as China’s economy slumps,’’ Los Angeles Times,January 23, 2009.16Another 85 million people left the place where they were registered but remained within

the same county.


their home county or further afield and 45 million had jobs, suggestingthat 14 million remained in villages and 11 million who returned to citiesare jobless.

The NSB’s suggestion that up to 25 million Chinese migrants mayhave lost their jobs due to the recession and drop in demand for manufac-turing goods understates the job creation challenge. An average five mil-lion rural residents migrate for the first time each year, and many facedifficulty finding urban jobs in 2009. Even the 6.1 million universitygraduates in 2009 are having difficulty finding jobs – only 25 percent ofthose expecting to graduate in June 2009 had job offers in March 2009,down from the usual 75 percent. The Chinese government, worried aboutstability amid rising joblessness, used its ample savings to launch anaggressive stimulus package to create jobs.

A similar story of recession, falling trade and factory layoffs is play-ing out in Japan, with part-time Japanese workers and ethnic Japanesefrom Latin America bearing the brunt of job losses. To stimulate an eco-nomic recovery, the Japanese government relaxed labor laws in the 1990sto allow employers to hire part-time workers, who are not guaranteed life-time employment. Employers quickly turned to part-time workers, andtoday a third of Japan’s 55 million wage and salary workers, some 18 mil-lion, are part-timers who can be laid off with little notice. Many areyoung Japanese who could not find the lifetime jobs they sought, andmany live in company-provided housing, so that layoffs mean loss ofearnings and loss of housing.

There are two types of foreigners among Japan’s 12 million manufac-turing workers. About 40,000 mostly Chinese trainees a year arrive inJapan to work and learn for wages that are often less than the minimumwage of $55 a day in the Tokyo area in 2009. Because trainees have 3-yearcontracts and low wages, most have kept their jobs during the recession.

However, the descendents of Japanese emigrants to Brazil and Perua century ago, the nikkeijin, are regular workers earning normal wages inJapan, making them vulnerable to layoffs. The government developedcontradictory policies toward laid-off nikkeijin. With the Japanese popula-tion shrinking, a billion yen ($10 million) was provided to teach Japaneseand provide vocational training to laid-off ethnic Japanese, encouragingsome to stay.17 On the other hand, the government offered return

17Blaine Harden, ‘‘Japan Works Hard to Help Immigrants Find Jobs,’’ Washington Post,

January 23, 2009.


bonuses of 300,000 yen ($3,000) for each nikkeijin adult who returnedto Brazil or Peru, and another 200,000 yen for each dependent, suggest-ing more concern about keeping unemployment in Japan low than retain-ing ethnic Japanese immigrants.

In China and Japan, migrants in manufacturing have been a decade-long phenomenon. In Korea, by contrast, there has been a recent switchfrom a trainee system to a migrant worker system that aimed to improvewages and working conditions for foreign workers in manufacturing. TheKorean government signed MOUs with 15 Asian countries18 to admitforeign workers for up to 3 years to fill jobs in small and medium manu-facturing firms.

About 100,000 migrant workers were admitted to Korea in 2008.However, in response to the recession, the government reduced theirnumber to 34,000 for 2009, prompting protests in Asian labor-sendingcountries, where thousands of young people incurred significant costs tolearn enough Korean to pass the test required to get on the lists fromwhich Korean employers select migrants. There were protests outsideKorean embassies in Nepal when the migrant worker quota was reduced;some 7,000 Nepalese had passed the Korean language test and hoped tofind jobs in Korea that paid the minimum wage of 840,000 won ($570)a month or a million won a month with overtime.

Taiwan, another important destination for migrant workersemployed in manufacturing, experienced a sharp fall in the demand forthe electronic products that female migrants from the Philippines helpedassemble in the country. About 60 percent of the peak 370,000 migrantworkers in Taiwan in summer 2008 were female.

By spring 2009, the number of migrant workers dropped to lessthan 350,000, as factories laid off workers and they returned to theircountries of origin.19 The number of migrant workers employed in Tai-wanese manufacturing, 175,000 in summer 2008, is expected to continuedropping as low-skill jobs are eliminated as assembly jobs are shifted tolower wage countries. The Taiwanese minimum wage, which must bepaid to foreign workers, has been NT$17,280 ($510) a month or about$3 an hour since 2008.

18Foreign worker admissions under the Employment Permit System (<http://www.eps.go.kr/wem/en/index.jsp>).19Migrant worker employment data are from CLA Monthbook of Labor Statistics. Table

12–5 (<http://statdb.cla.gov.tw/html/mon/monehidx12.htm>).


Southeast Asian nations are both major senders and receivers ofmigrant workers. Migrant workers employed in manufacturing jobs inSingapore and Malaysia lost their jobs as trade fell sharply in 2008–2009,but data on laid-off migrant workers are elusive. Singapore is one of theworld’s most trade-dependent nations, and with trade falling sharply in2009, the Singapore economy may shrink by 10 percent. Migrant workerswere 36 percent of the three million strong labor force in 2008, but therewere few reported layoffs of local or migrant workers – only 14,000 in2008.20

About 20 percent of the 12 million workers in Malaysia are migrantsfrom Indonesia, Bangladesh, and other Asian countries. Deputy HomeMinister Datuk Chor Chee Heung reported 2.1 million legal foreign work-ers in Malaysia in December 2008, including 749,200 in manufacturing;347,700 in the plantation sector; 307,800 in construction; 296,300 domes-tic helpers; 211,100 in services; and 184,600 in agriculture.21

Manufacturing employment shrank sharply in late 2008 and early2009 as the demand for electronics goods plunged. Jobless migrant workersare to promptly leave the county, a policy that NGOs want the governmentto modify because of the often high costs incurred by migrants in theircountries of origin to obtain contracts to work in Malaysia. On January 21,2009, the government halted entries of migrant workers to fill jobs in manu-facturing and services and urged employers to lay off foreign workers firstto open jobs for Malays, the so-called ‘‘foreign workers first out (FWFO)’’policy.22 NGOs protested the FWFO policy, asserting that Malaysianemployers who signed 3-year employment agreements with migrants shouldprovide unpaid wages to migrants if they terminate them early.23

20Singapore Ministry of Manpower (<http://www.mom.gov.sg/publish/momportal/en/communities/others/mrsd/statistics/Retrenchment_and_Redundancy.html>).21The migrants included 1.2 million Indonesians, 200,000 Nepalese, 130,800 Indians,

96,900 Vietnamese, and 64,200 Bangladeshis.22Minister Datuk Dr S. Subramaniam said in a letter to the Home Ministry, ‘‘We wantindustries to stop recruiting foreign workers and offer jobs to Malaysians instead.’’ <http://

www.mohr.gov.my/pemberhentian/index.php?option=com_content&task=view&id=37&Itemid=43>.23Anil Netto, ‘‘Hit Foreign Workers First, Govt Tells Employers,’’ IPS, March 23, 2009.

A coalition of NGOs released a statement on March 15, 2009, that included the state-ment, ‘‘If there is going to be early termination of employment agreements…then theworker must be paid adequate compensation, at the very least basic wages for the remain-

ing duration of their employment agreement.’’


The government response to a case involving 55,000 Bangladeshimigrants drew widespread comment. A Bangladeshi official, seeking tocounter talk of layoffs, noted that 55,000 Bangladeshi migrants werescheduled to arrive in spring 2009. This prompted an inquiry by theMalaysian Trades Union Congress, asking the government why moremigrants were being admitted at a time of rising unemployment. Thegovernment responded by canceling the Bangladeshis’ work visas andoffering refunds of their visa fees. However, the visa fees were only a smallfraction of the $2,500 typically paid by Bangladeshis to secure 3-yearwork contracts in Malaysia, prompting complaints from the Bangladeshigovernment on behalf of the migrants.24

Malaysian government policy on migrants has tolerated unauthorizedmigration, followed by legalization and stepped-up enforcement; such alegalization and enforcement package increased the number of registeredmigrants between 2004 and 2005. Despite the rising number of migrants,the government’s National Action Plan for Employment (NAPE), whichanticipates the creation of 190,000 to 270,000 jobs in 2009–2010, fore-sees a reduction in the employment of foreign workers from 2.1 millionto 1.6 million by the end of 2010, and a further reduction to 1.5 millionby 2015 (Jomo and Wee, 2009:74).

MIGRANTS IN THE 2008–2009 RECESSION

The 1973 Middle East war led to a sharp increase in oil prices and arecession in industrial countries, as manufacturing-based economiesadjusted to higher energy prices. Food prices rose sharply in the mid-1970s, and high inflation limited the ability of governments to borrowand stimulate their economies with job-creating policies.

The major migration effects of the mid-1970s oil-linked recessionwere felt in Western Europe and the Middle East. Countries such asFrance and Germany halted guest worker recruitment as joblessness rosesharply. However, migrants who had been employed at least a year werenot forced to depart even if they lost their jobs. Most did not, largelybecause their countries of origin were also suffering from oil-price linkedrecessions and the social safety net was stronger abroad than at home(Miller and Martin, 1982).

24‘‘Malaysia assures Bangladesh of all cooperation,’’ Daily Star, March 28, 2009. <http://

www.thedailystar.net/newDesign/news-details.php?nid=81815>.


When it became clear in the late 1970s that the guest worker erawas over (Castles, 1986), many migrants unified their families in Wes-tern Europe. Return-bonus programs in the early 1980s failed to per-suade significant numbers of migrants to depart. The years between1975 and 1985 are often considered the decade in which many Euro-pean countries became reluctant countries of immigration (Martin,2004).

The mid-1970s marked the beginning of a new guest worker era inthe Middle East, as governments there used sharply higher oil revenue tobuild infrastructure, housing, and expand the economy (Seccombe, 1985).Most first-wave activities between 1975 and 1980 involved constructionprojects managed by multinationals that brought workers from home(Korea) or recruited migrant workers from Arab and Asian countries.Over time, the demand for labor shifted from hundreds of men recruitedfor major construction projects to female migrants to fill jobs in privatehouseholds, stores, and other services. Instead of construction employerscovering recruitment and travel costs, private agents in both oil-exportingand migrant-sending countries charged fees to migrants and sometimesemployers.

In the U.S. and Canada, immigration was at historically low levelsin the 1970s. As the economy adjusted to higher energy prices, there werewidespread layoffs and internal migration, as from depressed Michigan tobooming Texas. Farm wages in states such as California climbed at histor-ically unprecedented rates, reflecting new legal rights to organize unionsand the absence of newcomer migrants, which gave unions new bargain-ing power (Martin, 2003a). Meanwhile, Mexico’s discovery of significantoil reserves in 1978 led to a government spending boom that discouragedout-migration.

The second oil shock associated with the 1979 Iranian revolutioneffected another recession in the industrial countries and a new windfallin the oil-exporting states. However, this global recession quickly reducedthe demand for and price of oil, which led to economic crises inoil-exporters such as Mexico that anticipated continued high prices.Manufacturing firms continued to restructure in ways that reducedemployment, often automating at home and investing in factories inlower-wage countries. U.S. farm wages, which had been pushed higherduring the 1970s, fell as Mexicans realized they could earn far more inthe U.S., especially as the value of the peso plummeted, setting in motion


the era of mass Mexico–U.S. migration that immigration reforms in 1986unintentionally accelerated (Martin, 2003a).

The industrial countries recovered from the recession. By the late1980s, there was an economic boom under way in Japan, Europe, andthe U.S. Immigration increased, as a loosening of restrictions on emigra-tion from Eastern Europe allowed Poles and others to filter into Europeanlabor markets that governments believed were regulated tightly enough toprevent widespread unauthorized migration. In the United States, thelegalization of 2.7 million foreigners in 1987–1988 combined with inef-fective enforcement of employer sanctions laws to allow unauthorizedmigration to rise rapidly.

The fall of the Berlin Wall in 1989 stimulated more migration andeconomic growth in Europe, while the shrinking of the defense budgetled to recession in the U.S. Germany launched new guest worker pro-grams to ensure that ‘‘inevitable migration’’ from Poland and EasternEurope would be legal. There was an upsurge in asylum seekers in mostEuropean countries that was eventually dealt with by making it harder forforeigners seeking asylum to apply in their country of choice (Castles andMiller, 2009:chapter 4).

By the mid-1990s, economic and job growth had resumed in theU.S. and Europe, although Japan continued to wallow in the aftermathof the crash of its bubble economy in the early 1990s. Unemploymentfell sharply in the U.S., as job growth accelerated to almost three mil-lion a year, equivalent to 10,000 net new jobs each workday. Thebelief that the world had entered a new era with a ‘‘new economy’’based on the falling price of computing power and no longer subjectto business cycles became common in North America and WesternEurope.25

During the 1990s, investors sought higher returns in emerging econ-omies such as Russia and the Asian tigers. This foreign investment led tobubbles that, when they burst in 1997–1998, caused recessions and sharpincreases in unemployment in Korea, Malaysia, and Thailand. In coun-tries such as Thailand, internal rural-urban migrants returned to ruralhomes, and the Thai government tried to ban the employment of migrantworkers to open up jobs for nationals. However, the effort to substitute

25Newsweek coined the term ‘‘new economy’’ in 1995 to refer to steady economic growth,low unemployment, and the end of macroeconomic cycles; economist Robert Gordon

(1998) called the late 1990s the Goldilocks Economy.


jobless native workers for migrants largely failed in Thailand, Malaysia,and other Asian tiger economies.26

The Asian financial crisis had a relatively short V-shape and did notbecome a global recession. The fact that economic and job growth soonresumed made it unnecessary to deal with the question of what wouldhave happened to migrant worker employment if the recession had per-sisted. Some analysts concluded that Asian tiger economies were structur-ally dependent on foreign workers before the crisis, but the fact thateconomic growth and migration resumed quickly meant that this hypoth-esis was not tested (Martin, 2003b).

The 2008–2009 recession is different from past recessions in havingits origins in the U.S. financial sector, spreading globally, and leading to asharp drop in global trade and an increase in unemployment. Internationallabor migration has slowed, and in some countries more migrants are leav-ing than arriving. However, it is not yet clear whether the 2008–2009recession will be remembered for tougher regulation of financial institu-tions aimed at avoiding future bubbles, the likely outcome of a relativelyshort recession, or whether the legacy of this recession will be slower glob-alization. If the march toward freer flows of goods, capital, and servicesover national borders is slowed by this recession, there may be less growthin international migration and remittances than has been anticipated.

CONCLUSIONS

The world is in the midst of the most severe recession in half a century,marked by shrinking economies and rising unemployment. Just before therecession spread around the world in 2008, the number of migrants andremittances were at record levels, and many analysts expected this growthto continue. Flows of labor from poorer to richer countries have slowedand in some cases reversed due to the recession, and it is not clear thatmigration and remittances will resume their upward trajectory during theeconomic recovery.

26The Malaysian government announced in July 1998 that 100,000 foreigners employed‘‘in jobs shunned by Malaysians’’ could stay, including those employed in restaurants, gasstations, cemeteries, golf courses, vegetable gardens, food manufacturing, orphanages and

senior homes, laundry shops, janitorial jobs, male barber shops, tailor shops, and cargo ser-vices. However, foreigners employed as golf caddies, supermarket helpers, in medical cen-ters or private clinics, beauty salons, karaoke lounges, or courier services did not have their

work permits renewed.


The current recession could affect migration patterns quite differ-ently than past recessions for four major reasons. First, this global reces-sion began in industrial countries and spread to almost all countries,limiting the ability of migrants to shift from lagging to boom areas, asthey could when high oil prices attracted migrants to the Gulf countrieswhile doors closed to Western Europe. Second, the effects of recession aremost severe in cyclically and trade-sensitive sectors such as construction tomanufacturing that hire large numbers of migrant workers and may notrecover quickly. Some of the ‘‘migrant jobs’’ in manufacturing may notreturn in the recovery.

Third, most migrant-sending governments and development institu-tions27 have urged migrant-receiving governments to minimize disruptionsto labor migration by stopping recruitment or forcing migrants toleave. Before the recession, it was widely assumed that migration andremittances would continue to increase. Current projections anticipatethat remittances to developing countries will decline, but far less thanforeign direct investment, which is expected to fall sharply (Ratha andMohapatra, 2009). Some migrant-sending governments have appealed tomigrant-receivers to continue accepting migrants to avoid political unrestamong citizens unable to find foreign jobs (Chamie, 2009).

The fourth issue is immigration, the issuance of about 1.5 millionvisas a year to people allowed to settle and eventually naturalize in thetraditional immigration countries of Australia, Canada, New Zealand,and the U.S. (the U.S. accepts about three-fourths of these immigrants).Australia, Canada, and New Zealand select most of their immigrants onthe basis of a point system that favors the admission of those mostlikely to be successful finding jobs, while the U.S. admits mostly for-eigners who are joining settled family members. Family-based immigra-tion to the U.S. is expected to be less sensitive to recession thaneconomically motivated migration to countries that select newcomersbased primarily on economic criteria (Papademetriou and Terrazas,2009).

27ILO DG Juan Somavia’s December 18, 2008, International Migrants Day message askedmigrant-receiving countries to ‘‘assess their labor market needs before resorting to generallayoffs of migrant workers.’’ (<http://www.ilo.org/public/english/bureau/dgo/speeches/

somavia/2008/migrants.pdf>). Employers rather than governments usually make hiringand layoff decisions; the message presumably argues against policies such as that adoptedby the Malaysian government, which ordered migrants to be laid off before Malaysian

workers.


The current recession may slow globalization, including internationalmigration. The key questions are how migrant-receiving governments dealwith the migrants who are now inside their borders and the migrationpolicies they adopt during recovery. A key challenge is to encouragemigrant-receiving and migrant-sending governments to cooperate to pro-tect the rights of migrants, which also protects local workers by avoidingcompetition based on exploitation.

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Recession and Migration: A New Era for Labor Migration?

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