The International Migration Review

Recession and Migration: A New Era for Labor Migration?
Author(s): Philip Martin

Source: The International Migration Review, Vol. 43, No. 3 (Fall 2009), pp. 671-691
Published by: Sage Publications, Inc. on behalf of the Center for Migration Studies of New
York, Inc.
Stable URL: http://www.jstor.org/stable/20681725
Accessed: 25-02-2018 01:56 UTC
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide
range of content in a trusted digital archive. We use information technology and tools to increase productivity and
facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
http://about.jstor.org/terms
Center for Migration Studies of New York, Inc., Sage Publications, Inc. are collaborating
with JSTOR to digitize, preserve and extend access to The International Migration Review
This content downloaded from 177.245.198.196 on Sun, 25 Feb 2018 01:56:46 UTC
All use subject to http://about.jstor.org/terms
Recession and Migration: A New Era
for Labor Migration?
Philip Martin
University of California, Davis
The current recession, the worst in a half century, is likely to affect

international migration differently than past recessions. In 1973-1974
and 1981-1982, rising oil prices led to recessions in oil-importing
countries and economic booms in oil-exporting countries, enabling
some migrants to shift from bust to boom areas, as from Europe to
the Middle East. The 1997-1998 Asian financial crisis did not spread
globally, and was followed by a relatively quick resumption of
economic and job growth that attracted migrant workers. The 2008
2009 recession is most severe in countries that had the most severe
debt excesses, including the U.S., Spain, and Eastern Europe, and in
countries most dependent on trade, including many Asian countries.
New deployments of migrants are likely to slow, but what is not yet
clear 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 spread
globally.1 A credit-fueled spending boom linked to rising home prices in
the U.S. and many other countries supported an expansion of the global
economy; real global economic growth averaged almost four percent
between 2003 and 2007. Housing prices fell amid tightening credit, as
financial institutions were unable to make accurate determinations of the
value of financial assets that had been repackaged and held as assets.
Tightened credit reduced consumer spending, which led to layoffs and, in
a downward spiral, even less credit as business risk increased. Global trade
fell sharply, and unemployment rose.
^here is no commonly accepted definition of "global recession." Rogoff (2002) suggested

that 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.l 747-7379.2009.00781 .x
IMR Volume 43 Number 3 (Fall 2009):671-691
672 International Migration Review
TABLE 1
Global Growth, Migrants, and Remittances, 2000-2010
___
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 stock
rises 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>
Between 2000 and 2005, real global GDP expanded from $39 tril
lion to $45 trillion, about 14 percent in 2005 dollars. Remittances to
developing countries are more sensitive to global GDP growth than is the
migrant stock - remittances rose much faster and migration much slower
than 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 half
as 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 been
increasing 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 record
outflows of migrant workers in 2008 (Abella and Ducanes, 2009:2).
The most recent projections from the International Monetary Fund
expect the global GDP to shrink by one percent in 2009 and expand by
two percent in 2010. If correct, global GDP would be almost $51 trillion
by 2010, remittances to developing countries almost $300 billion, and the
global stock of migrants 205 million. In such a scenario, real GDP would
have risen by 13 percent between 2005 and 2010, remittances by 53 per
cent, and the stock of migrants by seven percent, continuing the pattern
of remittances to developing countries rising faster than global GDP and
the stock of migrants rising slower than global GDP growth.
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>).
Recession and Migration 673
TABLE 2
World GDP and GDP Growth, by Region, 2000-2005-2008 (2005 dollars)
Change Change
2000 2005 2008 2000-2005 (%) 2005-2008 (%)
World 39,208 44,772 49,511 14 11
U.S. 11,093 12,433 13,220 12 6
EU-15 11,828 12,795 13,649 8 7
Japan 4,018 4,284 4,486 7 5
Brazil 856 980 1,126 14 15
China 1,456 2,300 3,126 58 36
India 550 758 974 38 29
Russia 590 794 950 35 20
U.S., EU-15, Japan 26,939 (69) 29,513 (66) 31,355 (63) 10 6
BRICs 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/>
World GDP and stocks of international migrants are distributed

similarly. The U.S., the EU-15, and Japan had 66 percent of the
world's GDP and 63 percent of the world's migrants in 2005. The four
fast-growing BRIC countries - Brazil, Russia, India, and China - had
about 11 percent of the world's GDP and 10 percent of the world's
migrants, although these migrants were concentrated in Russia and
India.
A comparison of the major industrial countries and the BRICs
suggests: 1) an uneven relationship between economic growth and
growth 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 other
industrial and developing countries with a lag. There is considerable
debate over whether the recovery will have a V-shape, with a quick
rebound due in part to government stimulus programs, a U-shape, with a
longer period until recovery, a W-shape, as rebounds fade and growth
slows or shrinks several times, or an L-shape, with a deferred recovery. It
is also unclear whether recovery from the recession will be global or begin
in particular regions and spread to others.
Remittances to developing countries depend more on the stock of
migrants abroad than the flow, so remittances should be less sensitive to
recession than deployments. Remittances to all developing countries rose
nine percent between 2007 and 2008 to $305 billion. The fastest growth
was in South Asia, where remittances rose 27 percent between 2007 and
2008 to $66 billion, and East Asia, where they rose seven percent to $70
billion. Asia, with about 30 percent of the global stock of migrants, received
about 45 percent of global remittances, reflecting the fact that many Asians
leave the region and send remittances from industrial countries (Table 3).
Remittances to developing countries are expected to decline by up
to eight percent in 2009, reducing them to 2007 levels, before rising in
2010 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, but
be sharpest in Europe, where a 10 percent decline is expected. In Asia, by
contrast, remittances are expected to decline only four percent (World
Bank, 2009).3
Job losses during the 2008-2009 recession have so far been concen
trated in four major sectors-construction, manufacturing, and financial
and travel-related services. Migrants are employed in all these sectors, but
their 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 financial
services usually hold high-skill jobs. This means that migrants laid off in
boom areas such as Dubai and Singapore include both financial specialists
and 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 numbers
may shrink. Second, remittances are a relatively small share of migrant earnings, and thus
can be continued even if earnings shrink. Third, unauthorized migrants abroad may stay
longer because of increased difficulty returning if recession-impacted countries step up
border controls. Fourth, migrants who return are likely to bring with them accumulated
savings, which temporarily increases remittances. Fifth, stimulus spending in migration
receiving countries is likely to create jobs for migrants directly and indirectly. The Institute
of International Finance reported that net private-capital inflows into emerging economies
fell 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.
Statement 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>
G\ m O OO (N
^ h m (N rn ( )
oo m on vo \o oo vr\
(N < \ ( C\ r-v
C\ ON ^
( ) O 00 00 00
fO
00 ffl 00
o co
o> co ( r\ ^
oo m
a oo
m m
c\ a\ ri
(
CN 00 (
\d c\ r-H (SI 0> 00
( ( O fO
"I* O fO 00 tfi
_ r-i Ntf r-H r-l | CT}
o r\ ^ n^1 r-H
H H O \ O
m m c\ - O
lANf O O >il
( ^ VTN v CO en CN
v \ co o
^ rH fO (fi
\ / r\ c\ CN o
CN fO \ ^ >
( * ( r CN
^ ON m CO
ON (S
( ff) ( V0 ^
( ^ ON ^
od _
'S -
tJ
g ri 2
O 3 3 cK
million in 2008, six percent, to 42 million in 2010, seven percent, with

little 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 OECD
countries reaching 10 percent.
This paper provides snapshots of the recession's impacts on migrant
workers in several regions and sectors. The recession's impacts are a
moving target, so the summaries and analyses that follow are necessarily
tentative. They suggest that the 2008-2009 recession could mark a pause
after a period of rapid globalization that included rising migration and
remittances.
U.S.: CONSTRUCTION, MANUFACTURING AND FINANCIAL

SERVICES
The U.S. employment peaked at 146.7 million in Fall 2007 and fell to
140.9 million by Spring 2009. The number of jobless workers rose from
7.5 million to 13.2 million in the same time period. The U.S. labor force
included 24 million foreign-born workers; a third are believed to be unau
thorized. Most of these foreign-born workers are immigrants admitted to
join 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 migrant
employment. Perhaps 15 percent of the 100 million migrant workers
around the world are employed in construction, which employs seven per
cent of the world's workers. Low interest rates in the U.S. and other
countries 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 current
recession.
In the U.S., the construction slowdown resulted in especially large
employment losses among foreign-born Hispanics. Housing prices in the
5The labor force of the 30 OECD-member countries was 564 million in 2007. Statement
released with the OECD Economic Outlook November 25, 2008. Economic Outlook
forecasts sharp rise in unemployment as recession takes hold across OECD. <http://
v^w.oecd.org/document/35/0,3343,en_2649_201185_4l721827_l_l_l_l,00.html>
U.S. peaked in 2005-2006 and began falling in 2007-2008, slowing what

had 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 same
period. About two-thirds of the three million Hispanic workers employed
in U.S. construction in 2007 were foreign born, and almost all of the
Hispanic construction workers who lost jobs were foreign born.
Traditionally, the unemployment rate of African Americans has been
twice the White rate, and the rate for Hispanic workers 1.5 times the
White rate. The Hispanic White unemployment rate difference narrowed
as the overall unemployment rate fell toward four percent in 2006
(Kochhar, 2008). As unemployment rose, the Hispanic rate rose faster
than the Black rate, so that in March 2009, 7.9 percent of White workers
were jobless, 12.2 percent of Hispanic workers, and 13.3 percent of Black
workers.6
U.S. manufacturing employment fell 14.2 million in spring 2007 to
12.2 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 manufacturing
employs more workers. Employment in the manufacturing of durable
products such as cars fell faster than employment in nondurables manu
facturing, where migrants are concentrated. For example, employment in
motor vehicles (NAICS code 3361-3), where there are few migrants, fell
from a million in spring 2007 to 700,000 in spring 2009. Employment
in nondurables manufacturing fell only slightly, while in food manufac
turing (NAICS code 311) employment was stable at 1.5 million between
2007 and 2009.
The financial services firms that receive much of the blame for the
recession have relatively few employees. Employment in securities, com
modity contracts, and investments (NAICS code 523) was 850,000 in
spring 2007 and 800,000 in spring 2009, reflecting a smaller shrinking
of 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 and
A-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-l. <http://www.bls.gov/webapps/legacy/cesbtabl.htm>
investment banks. Similarly, U.S. employment in accommodation and

food services (NAICS code 72) was 11.4 million in spring 2007 and 11.3
million in spring 2009, another industry in which closures of some hotels
and restaurants were apparently offset by openings of others.
Many migrant workers employed in construction lost their jobs, but
fewer migrants employed in nondurables manufacturing and hotels and
restaurants became jobless. In these sectors, employers often reduce hours
of work before laying workers off, hoping that demand rebounds quickly.
The recession increased speculation about whether the estimated 8.3
million unauthorized foreign workers in the U.S. would leave if they lost
their jobs. With a sixth of construction workers believed to be unautho
rized (Passel and Cohn, 2009), and with little prospect of a quick
rebound in the residential building sector where many had been
employed, jobless construction workers would be expected to be among
the first to leave the U.S. The Current Population Survey data collected
from 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, and
most found jobs in agriculture, construction, and services from hotels and
restaurants to domestic helper. Between 1997 and 2007, Spain's employ
ment expanded by 4.3 percent a year, almost four times the 1.2 percent
annual 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 were
20 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 rate
doubled 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 is
more 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 Fall

2008, prompting the Spanish government to offer jobless foreigners who
had earned unemployment insurance (UI) benefits a lump sum, reflecting
the UI benefits to which they were entitled for their work in Spain if they
returned to their country of origin. The return bonus program,
announced in September 2008, was open to jobless migrants from the 19
countries that have bilateral social security agreements with Spain and are
not EU members. Migrants accepting the bonus must agree not to return
to Spain for 3 years, a requirement that the Spanish government cannot
enforce for EU nationals.9
Unemployment insurance benefits in Spain are 70 percent of usual
earnings for the first 6 months of joblessness, and 60 percent for the next
18 months. Migrants who agree to leave Spain receive 40 percent of the
UI benefits to which they are entitled when they agree to depart, and 60
percent in their country of origin after surrendering Spanish work and
residence cards at the Spanish consulate or embassy.
There were about 300,000 unemployed legal foreigners in Spain as
the program got under way in November 2008, but only 200 a week
applied for the return bonus. The largest group of foreign workers,
687,000 Romanians, are EU nationals and not eligible. Moroccans, the
number two group at 673,000, are eligible, but many migrant advocacy
groups advised them to reject the return bonus offer, pointing out that
the migrants could be refused reentry to Spain in 3 years even if their
employers wanted to rehire them.
Most employers and unions opposed return bonuses - employers
because they wanted to continue to recruit workers abroad and unions
because they believe that migrants who contributed to the Spanish econ
omy during the boom should receive integration assistance rather than
departure bonuses (Plewa, 2009). After 6 months, it appears that the
Spanish return bonus program will be unable to limit unemployment
among foreigners in Spain by encouraging them to return to their coun
tries of origin.
There was a similar downturn in construction that left many
migrants unemployed in Greece and Ireland. However, data are sparse on
how many migrants lost their jobs and whether they stayed in the hopes
of 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 unemployment
rate below five percent between 2000 and 2007. Construction accounted
for a third of Ireland's employment growth, and many of the construction
workers 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 2002
and 2007, when 15 percent of Irish workers were foreigners.10
Ireland went into recession in 2008, and unemployment doubled
between spring 2008 and spring 2009 to over 11 percent. Many of the
migrants who migrated to Ireland to work during the boom years
returned 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 government
imposed 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-EU
foreigners.
Most major European countries were in recession in spring 2009,
but joblessness did not rise as fast in France and Germany, countries with
fewer part-time workers than Spain and with construction industries that
are a smaller share of the economy. Unemployment is also rising at a
slower rate because of the cost to employers of laying off workers and the
availability of short-time pay. The German government, for example, pro
vides 60 percent of the difference between full- and part-time pay to
workers whose employers have reduced their hours of work, and in 2009
raised the period during which workers can receive short-time pay from 6
to 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 other
nations. In many Asian nations, components are imported and finished
goods 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 countries

such as China and international migrants in other Asian nations.
China had an official 83 million and an estimated 109 million
workers 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 place
in which they are registered to live; many of the 71 million Chinese
workers employed in town and village enterprise manufacturing zones are
also migrants.13 Most migrant workers employed in Chinese manufactur
ing moved from rural areas in the center and western parts of China to
cities and coastal provinces in the east.14
The global recession led to the closure of coastal factories employing
rural-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 employers
to 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 Chinese
New Year that began in 2009 on January 26. The National Statistics
Bureau reported that 140 million Chinese rural residents had moved to
cities.16 Half of the 140 million migrants in cities returned to their
villages for the New Year in 2009. By March 2009, the NSB estimated
that 56 million migrants had left their villages again to return to cities in
nThe 109 million figure includes 38 million workers classified as employed in urban
manufacturing 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 urban
manufacturing 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 were
also "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 500
miles 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, suggesting
that 14 million remained in villages and 11 million who returned to cities
are jobless.
The NSB's suggestion that up to 25 million Chinese migrants may
have 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 face
difficulty finding urban jobs in 2009. Even the 6.1 million university
graduates in 2009 are having difficulty finding jobs - only 25 percent of
those expecting to graduate in June 2009 had job offers in March 2009,
down from the usual 75 percent. The Chinese government, worried about
stability amid rising joblessness, used its ample savings to launch an
aggressive 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 Japanese
from Latin America bearing the brunt of job losses. To stimulate an eco
nomic recovery, the Japanese government relaxed labor laws in the 1990s
to allow employers to hire part-time workers, who are not guaranteed life
time employment. Employers quickly turned to part-time workers, and
today 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 are
young Japanese who could not find the lifetime jobs they sought, and
many live in company-provided housing, so that layoffs mean loss of
earnings 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 in
Japan to work and learn for wages that are often less than the minimum
wage of $55 a day in the Tokyo area in 2009. Because trainees have 3-year
contracts and low wages, most have kept their jobs during the recession.
However, the descendents of Japanese emigrants to Brazil and Peru
a century ago, the nikkeijin, are regular workers earning normal wages in
Japan, making them vulnerable to layoffs. The government developed
contradictory policies toward laid-off nikkeijin. With the Japanese popula
tion shrinking, a billion yen ($10 million) was provided to teach Japanese
and provide vocational training to laid-off ethnic Japanese, encouraging
some 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 returned
to 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 switch
from a trainee system to a migrant worker system that aimed to improve
wages and working conditions for foreign workers in manufacturing. The
Korean government signed MOUs with 15 Asian countries18 to admit
foreign 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 their
number to 34,000 for 2009, prompting protests in Asian labor-sending
countries, where thousands of young people incurred significant costs to
learn enough Korean to pass the test required to get on the lists from
which Korean employers select migrants. There were protests outside
Korean embassies in Nepal when the migrant worker quota was reduced;
some 7,000 Nepalese had passed the Korean language test and hoped to
find jobs in Korea that paid the minimum wage of 840,000 won ($570)
a month or a million won a month with overtime.
Taiwan, another important destination for migrant workers
employed in manufacturing, experienced a sharp fall in the demand for
the electronic products that female migrants from the Philippines helped
assemble in the country. About 60 percent of the peak 370,000 migrant
workers in Taiwan in summer 2008 were female.
By spring 2009, the number of migrant workers dropped to less
than 350,000, as factories laid off workers and they returned to their
countries of origin.19 The number of migrant workers employed in Tai
wanese manufacturing, 175,000 in summer 2008, is expected to continue
dropping as low-skill jobs are eliminated as assembly jobs are shifted to
lower wage countries. The Taiwanese minimum wage, which must be
paid to foreign workers, has been NT$ 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/monehidxl2.htm>).
Southeast Asian nations are both major senders and receivers of

migrant workers. Migrant workers employed in manufacturing jobs in
Singapore 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 the
world's most trade-dependent nations, and with trade falling sharply in
2009, the Singapore economy may shrink by 10 percent. Migrant workers
were 36 percent of the three million strong labor force in 2008, but there
were few reported layoffs of local or migrant workers - only 14,000 in
2008.20
About 20 percent of the 12 million workers in Malaysia are migrants
from Indonesia, Bangladesh, and other Asian countries. Deputy Home
Minister 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 early
2009 as the demand for electronics goods plunged. Jobless migrant workers
are to promptly leave the county, a policy that NGOs want the government
to modify because of the often high costs incurred by migrants in their
countries 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 first
to open jobs for Malays, the so-called "foreign workers first out (FWFO)"
policy.22 NGOs protested the FWFO policy, asserting that Malaysian
employers who signed 3-year employment agreements with migrants should
provide 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>).
2'The 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 want
industries 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 the
worker 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 Bangladeshi

migrants drew widespread comment. A Bangladeshi official, seeking to
counter talk of layoffs, noted that 55,000 Bangladeshi migrants were
scheduled to arrive in spring 2009. This prompted an inquiry by the
Malaysian Trades Union Congress, asking the government why more
migrants were being admitted at a time of rising unemployment. The
government responded by canceling the Bangladeshis' work visas and
offering refunds of their visa fees. However, the visa fees were only a small
fraction of the $2,500 typically paid by Bangladeshis to secure 3-year
work contracts in Malaysia, prompting complaints from the Bangladeshi
government on behalf of the migrants.24
Malaysian government policy on migrants has tolerated unauthorized
migration, followed by legalization and stepped-up enforcement; such a
legalization and enforcement package increased the number of registered
migrants between 2004 and 2005. Despite the rising number of migrants,
the government's National Action Plan for Employment (NAPE), which
anticipates 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 million
to 1.6 million by the end of 2010, and a further reduction to 1.5 million
by 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 a
recession in industrial countries, as manufacturing-based economies
adjusted to higher energy prices. Food prices rose sharply in the mid
1970s, and high inflation limited the ability of governments to borrow
and stimulate their economies with job-creating policies.
The major migration effects of the mid-1970s oil-linked recession
were felt in Western Europe and the Middle East. Countries such as
France and Germany halted guest worker recruitment as joblessness rose
sharply. However, migrants who had been employed at least a year were
not forced to depart even if they lost their jobs. Most did not, largely
because their countries of origin were also suffering from oil-price linked
recessions 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 era
was 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 between
1975 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 in
the Middle East, as governments there used sharply higher oil revenue to
build infrastructure, housing, and expand the economy (Seccombe, 1985).
Most first-wave activities between 1975 and 1980 involved construction
projects 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 recruited
for major construction projects to female migrants to fill jobs in private
households, stores, and other services. Instead of construction employers
covering recruitment and travel costs, private agents in both oil-exporting
and migrant-sending countries charged fees to migrants and sometimes
employers.
In the U.S. and Canada, immigration was at historically low levels
in the 1970s. As the economy adjusted to higher energy prices, there were
widespread layoffs and internal migration, as from depressed Michigan to
booming Texas. Farm wages in states such as California climbed at histor
ically unprecedented rates, reflecting new legal rights to organize unions
and the absence of newcomer migrants, which gave unions new bargain
ing power (Martin, 2003a). Meanwhile, Mexico's discovery of significant
oil reserves in 1978 led to a government spending boom that discouraged
out-migration.
The second oil shock associated with the 1979 Iranian revolution
effected another recession in the industrial countries and a new windfall
in the oil-exporting states. However, this global recession quickly reduced
the demand for and price of oil, which led to economic crises in
oil-exporters such as Mexico that anticipated continued high prices.
Manufacturing firms continued to restructure in ways that reduced
employment, often automating at home and investing in factories in
lower-wage countries. U.S. farm wages, which had been pushed higher
during the 1970s, fell as Mexicans realized they could earn far more in
the 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 1986

unintentionally accelerated (Martin, 2003a).
The industrial countries recovered from the recession. By the late
1980s, there was an economic boom under way in Japan, Europe, and
the U.S. Immigration increased, as a loosening of restrictions on emigra
tion from Eastern Europe allowed Poles and others to filter into European
labor markets that governments believed were regulated tightly enough to
prevent widespread unauthorized migration. In the United States, the
legalization of 2.7 million foreigners in 1987-1988 combined with inef
fective enforcement of employer sanctions laws to allow unauthorized
migration to rise rapidly.
The fall of the Berlin Wall in 1989 stimulated more migration and
economic growth in Europe, while the shrinking of the defense budget
led to recession in the U.S. Germany launched new guest worker pro
grams to ensure that "inevitable migration" from Poland and Eastern
Europe would be legal. There was an upsurge in asylum seekers in most
European countries that was eventually dealt with by making it harder for
foreigners seeking asylum to apply in their country of choice (Castles and
Miller, 2009:chapter 4).
By the mid-1990s, economic and job growth had resumed in the
U.S. and Europe, although Japan continued to wallow in the aftermath
of the crash of its bubble economy in the early 1990s. Unemployment
fell 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. The
belief that the world had entered a new era with a "new economy"
based on the falling price of computing power and no longer subject
to business cycles became common in North America and Western
Europe.25
During the 1990s, investors sought higher returns in emerging econ
omies such as Russia and the Asian tigers. This foreign investment led to
bubbles that, when they burst in 1997-1998, caused recessions and sharp
increases in unemployment in Korea, Malaysia, and Thailand. In coun
tries such as Thailand, internal rural-urban migrants returned to rural
homes, and the Thai government tried to ban the employment of migrant
workers 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 not
become a global recession. The fact that economic and job growth soon
resumed made it unnecessary to deal with the question of what would
have 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 that
economic 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 having
its origins in the U.S. financial sector, spreading globally, and leading to a
sharp drop in global trade and an increase in unemployment. International
labor migration has slowed, and in some countries more migrants are leav
ing than arriving. However, it is not yet clear whether the 2008-2009
recession will be remembered for tougher regulation of financial institu
tions aimed at avoiding future bubbles, the likely outcome of a relatively
short recession, or whether the legacy of this recession will be slower glob
alization. If the march toward freer flows of goods, capital, and services
over national borders is slowed by this recession, there may be less growth
in 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 the
recession spread around the world in 2008, the number of migrants and
remittances were at record levels, and many analysts expected this growth
to continue. Flows of labor from poorer to richer countries have slowed
and in some cases reversed due to the recession, and it is not clear that
migration and remittances will resume their upward trajectory during the
economic 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, gas
stations, 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, as
they could when high oil prices attracted migrants to the Gulf countries
while doors closed to Western Europe. Second, the effects of recession are
most severe in cyclically and trade-sensitive sectors such as construction to
manufacturing that hire large numbers of migrant workers and may not
recover quickly. Some of the "migrant jobs" in manufacturing may not
return in the recovery.
Third, most migrant-sending governments and development institu
tions27 have urged migrant-receiving governments to minimize disruptions
to labor migration by stopping recruitment or forcing migrants to
leave. Before the recession, it was widely assumed that migration and
remittances would continue to increase. Current projections anticipate
that remittances to developing countries will decline, but far less than
foreign direct investment, which is expected to fall sharply (Ratha and
Mohapatra, 2009). Some migrant-sending governments have appealed to
migrant-receivers to continue accepting migrants to avoid political unrest
among citizens unable to find foreign jobs (Chamie, 2009).
The fourth issue is immigration, the issuance of about 1.5 million
visas a year to people allowed to settle and eventually naturalize in the
traditional 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 on
the basis of a point system that favors the admission of those most
likely 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 than
economically motivated migration to countries that select newcomers
based primarily on economic criteria (Papademetriou and Terrazas,
2009).
27ILO DG Juan Somavia's December 18, 2008, International Migrants Day message asked
migrant-receiving countries to "assess their labor market needs before resorting to general
layoffs of migrant workers." (<http://www.ilo.org/public/english/bureau/dgo/speeches/
somavia/2008/migrants.pdf>). Employers rather than governments usually make hiring
and layoff decisions; the message presumably argues against policies such as that adopted
by the Malaysian government, which ordered migrants to be laid off before Malaysian
workers.
The current recession may slow globalization, including international

migration. The key questions are how migrant-receiving governments deal
with the migrants who are now inside their borders and the migration
policies they adopt during recovery. A key challenge is to encourage
migrant-receiving and migrant-sending governments to cooperate to pro
tect the rights of migrants, which also protects local workers by avoiding
competition based on exploitation.
REFERENCES
Abella, M., and J. Ducanes
2009 The Effect of the Global Economie Crisis on Asian Migrant Workers and Governments'
Responses. Bangkok: ILO Bangkok Regional Office. Mimeo. February 18.
Banister, J.
2005 Manufacturing Employment in China. Monthly Labor Review. July 11-19. <http.7/
www. bis. gov/ op ub/mlr/20051071art2full. pdf>.
BLS (Bureau of Labor Statistics)
2009 A Chartbook of International Labor Comparisons. March, <http://www.bls.gov/fls/
chartbook2009/home.htm>.
Castles, S.
1986 "The Guest Worker in Western Europe - An Obituary." International Migration
Review 20(4) .761-778.
-, and M. J. Miller
2009 The Age of Migration. New York: Guilford/Palgrave-Macmillan.
Chamie, J.
2009 Exporting People. Yale Global. <http://yaleglobal.yale.edu/display.article?id=l 1843>.
Gordon, R.
1998 "Foundations of the Goldilocks Economy: Supply Shocks and the Time-Varying
NAIRU." Brookings Papers on Economic Activity 29(2):297-346.
Jomo, . S., and C. H. Wee
2009 Policy Coherence Initiative on Growth, Investment and Employment. The Case of
MaUysia. Bangkok: ILO Bangkok Regional Office. Mimeo. <http://www.ilo.org/
wcmsp5/groups/public/ asia/ ro-bangkok/documents/meetingdocument/wcms_
101733.pdf>.
Kochhar, R.
2008 Latino Labor Report, 2008: Construction Reverses Job Growth for Latinos. Washington,
DC: Pew Hispanic Center. <http://pewhispanic.org/reports/report.php?ReportID=88>.
Martin, P.
2003a Promise Unfulfilled: Unions, Immigration, and Farm Workers. Ithaca, NY: Cornell
University Press.
2003b Thaihnd: Improving the Management of Foreign Workers. Bangkok: ILO and IOM
(English and Thai). http://www.ilo.org/asia/whatwedo/publications/lang-en/
docName-WCMS_BK_PB_197_EN/index.htm
2004 "Germany: Managing Migration in the 21st Century." In Controlling Immigration.

Ed. W. A. Cornelius, T. Tsuda, P. L. Martin and J. F. Hollifield. Stanford, CA:
Stanford University Press. Pp. 221-252. <http://www.sup.org/book.cgi?id=
4189>.
Miller, M. J., and P. L. Martin
1982 Administering Foreign-Worker Programs: Lessons from Europe. Lexington, MA:
Lexington Books; D.C. Heath and Company.
Papademetriou, D. G., and A. Terrazas
2009 Immigrants and the Current Economic Crisis. January. <http://www.migrationpolicy.
org/news/2009_l_l4.php>.
Passel, J., and D. Cohn
2009 A Portrait of Unauthorized Immigrants in the United States. Washington, DC: Pew
Hispanic Center, <http://pewhispanic.org/reports/report.php?ReportID= 107>.
Plewa, P.
2009 Voluntary Return Program. Pragmatic or Quixotic Response to the Economic Crisis in
Spain. Newark, DE: Mimeo. April.
Ratha, D., and S. Mohapatra
2009 Revised Outlook for Remittance Flows 2009-2011. March. <http://www.worldbank.
org/prospects/migrationandremittances>.
-,-, and
2008 Outlook for Remittance Flows 2008
prospects/migrationandremittances>.
Rogoff, Kenneth.
2002 IMF Press Conference on the World
org/external/np/tr/2002/tr020418.htm>.
Seccombe, I.
1985 "International Labor Migration in
Research, 1974-84." International Migr
World Bank
2009 World Development Report 2008. <w

The International Migration Review

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The International Migration Review

Uploaded by

Copyright:

Available Formats

Recession and Migration: A New Era for Labor Migration?

Author(s): Philip Martin

The current recession, the worst in a half century, is likely to affect

^here is no commonly accepted definition of "global recession." Rogoff (2002) suggested

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

2Growth data are from the USDA's global database (<http://www.ers.usda.gov/data/

World GDP and stocks of international migrants are distributed

million in 2008, six percent, to 42 million in 2010, seven percent, with

U.S.: CONSTRUCTION, MANUFACTURING AND FINANCIAL

U.S. peaked in 2005-2006 and began falling in 2007-2008, slowing what

investment banks. Similarly, U.S. employment in accommodation and

The unemployment rate for foreigners topped 20 percent in Fall

manufacturing employment, which affected internal migrants in countries

18Foreign worker admissions under the Employment Permit System (<http://www.eps.

Southeast Asian nations are both major senders and receivers of

20Singapore Ministry of Manpower (<http://www.mom.gov.sg/publish/momportal/en/

The government response to a case involving 55,000 Bangladeshi

MIGRANTS IN THE 2008-2009 RECESSION

the era of mass Mexico-U.S. migration that immigration reforms in 1986

jobless native workers for migrants largely failed in Thailand, Malaysia,

The current recession could affect migration patterns quite differ

The current recession may slow globalization, including international

2004 "Germany: Managing Migration in the 21st Century." In Controlling Immigration.

You might also like