Thinking through free labour movement

Written by YRK Reddy | Updated: Dec 23 2006, 06:12am hrs
Professor Joseph Stiglitz, while recently in India, has called for liberalisation in the movement of labour as it can increase global efficiencies far more than by movement of capital. He had maintained the same in April this year in an interview with the Carnegie Council. He is not alone in this argument. Many development economists and social activists believe that restrictive immigration policies by the developed world are both inefficient as well as inappropriate to the cause of human rights that globalisation has been unfortunately restricted to promoting movement of capital and goods than labour.

It is well known that there were hardly any restrictions to movement of people prior to World War I. The wave of globalisation from about 1870 to 1910 was actually led by movement of people, mostly unskilled and from labour-surplus regions. Not only Asians and Africans, but also about 16 million Europeans had reportedly migrated to the New World between 1820 and 1920. The restrictive policies were adopted in later years.

Thus, we now see a variety of schemes and programmes announced by various countries to carefully select the kind of skills they want to import and with varied categories of rights. In the process, while the earlier wave of globalisation was marked by ad hoc migration of unskilled workers, the later process has been by managed migration of skilled labour. The idea of brain drain that started in the 1960s has got altered lately to co-exist with work-drain, if one may call it that, through outsourcing. Brain or skill drain has been making well-endowed economies even better endowed while imposing educational costs on supplying countries. Countries such as India have little to fear from this process of skill drain because of unending manpower supply, good remittances and other positive externalities. However, some countries in Africa find their scarce pool of doctors, nurses, pharmacists and engineers getting quickly depleted. There is an understandable fear that their fragile health care system may collapse any time.

Further, movement of labour in the context of globalisation is being argued as if the issue is between the developed and developing countries or between the North and South. Liberalisation of labour movement will create regional dynamics that may hurt some of the developing countries in other ways. Migration would be instantaneous to neighboring countries with higher GDP or PPP. Even without formal removal of barriers countries such as India, have been victims of constant flow of unskilled labour from the neighbouring countries.

Given that the dynamics of movement of labour are not yet fully understood, it may be risky to take up its advocacy as a policy
United Nations estimates that 2.5% of the world population in the year 2000 accounts for migrants both legal and illegal. However, the majority of such migrants are actually in the developing countries themselves migrating to neighbouring countries in the region than moving across continents. Only 10% of the stock of migrants is estimated to have moved from Asian countries to Europe and the Americas.

In the context of globalisation, movement of labour needs much more research and understanding than assertions. For example, how far can product flows substitute factor/labour flows, as implied in many models of trade theory How much and to what better consequence will movement of primary produce without subsidy/price distortions reduce the need for capital/labour flows With the advent of information and communication technology (ICT), how much of work has become mobile without need for movement of skills or labour as such Are there ways of redefining labour/work flows without necessarily resorting to semi-permanent or permanent skill flows

Whether it is due to the impact of the ICT, outsourcing or otherwise, an ILO document estimates that migrant population has declined during 1990-2000 despite increased globalisation. This declining trend is not limited to legal immigration alone.

Given that the dynamics of movement of labour are not yet fully understood, it may be risky to take up its advocacy as a policy. Instead, melting the butter mountains and drying up rivers of milk may indeed hold immediate promise of improved employment and livelihood in the developing countries.

Any agenda for the freer movement of labour, despite its logical and intuitive appeal, may prove to be diversionary at this point.