Sharp drop in global migration threatens economic recovery – 02/10/2021 – Market

Countries that have endured the pandemic face an economic drag caused by the global collapse in the migration of skilled workers, which will hamper the growth of their working-age populations, economists have warned.

The coronavirus crisis has ended a decade of steady growth in migrant flows across the world, according to data collected by the OECD (Organization for Economic Co-operation and Development).

Although few countries have released figures for 2020 as a whole, Jean-Christophe Dumont, who leads migration research at the Paris-based organization, said the year-over-year drop in The influx of immigrants to wealthy countries ranges from 30% up to 70% or up to 80% in places like Australia and New Zealand, which have almost completely closed their borders.

With many countries now tightening their border controls, migration in 2021 will be “far from normal,” he said, and “may well be similar to 2020, if things don’t improve quickly. “.

The consequences will fall mainly on migrants, from workers who will be unable to hold a job to families who will have to be separated, including students who will have to postpone their classes and refugees trapped in the camps.

The effects will also be long-lasting for countries which, in recent years, have been able to count on a constant flow of newcomers to take up jobs, support the growth of their workforce, stimulate the education sector and offset the tax burden generated. by the aging of their population. indigenous populations, according to economists.

For example, in Australia and New Zealand, GDP (gross domestic product) growth has been fueled by population expansion, which is largely due to the high level of immigration.

But even if the net influx of immigrants returns to pre-pandemic levels by 2024, the working-age populations of the two countries will be 2% and 2.8% smaller respectively in the medium term, according to the reports. IMF estimates. International Monetary Fund) – equivalent to a production loss of between 1.2% and 1.7%.

Marcel Thielant, of Capital Economics, said declining immigration was the main reason Australia’s economy is unlikely to return to the path it had before the pandemic, defining this consequence as “the price that they are paying for their very successful handling of the virus. “

Philip Lowe, chairman of Australia’s central bank, said in a recent speech that population growth has shaped the country’s economy – propelling GDP growth, offsetting the natural aging of the population, boosting the information sector and putting pressure on infrastructure and housing.

But in 2020-2021, population growth will be the lowest since 1916, “when many Australians left the country to fight in World War I.”

“If population growth is significantly slower in the post-Covid world, the trajectory of our economy will also be different,” he said.

Meanwhile, Canada – which has long pursued a policy of population growth similar to Australia’s – has raised its net inflow targets. The country previously sought to attract a million people between 2020 and 2022. Now, to fill the gap, it plans to allow 400,000 permanent residents to enter in the next three years – which would be the net immigration level on highest in its history.

Other governments do not see the drop in migration as an immediate problem, as general unemployment levels are increasing in most countries. An exception occurs in important areas such as health services and agriculture; last year, some countries imported seasonal agricultural workers even during periods of lockdown.

“In the long term, with few exceptions, there is no ideal population size for any country … In the short to medium term, it can be positive that fewer people are arriving now,” said Madeleine Sumption, member of the Migration Advisory Board, advising the UK government.

Immigrants who arrive during recessions are more likely to compete directly with Indigenous citizens for jobs and struggle to gain a foothold in the labor market, she said.

But a lasting decline in transnational mobility can harm countries in which migration has helped offset the fiscal pressure generated by population aging.

Without the net influx of immigrants, the natural rate of decline of the German population was 150,000 people per year, before the pandemic, while in Italy, the native population had declined by 200,000 people per year.

The combination generated by the pandemic between a drop in immigration, an increase in the death rate and a reduction in the number of births meant that in 2020 the German population fell, for the first time in a decade.

“If there are years when the net influx of immigrants is very limited …, there will be no way to recover the lost numbers,” Dumont said.

International migration is expected to recover as soon as borders reopen, but economists do not expect it to return to pre-pandemic levels for some time. Employers are not hiring yet and students may seek to avoid the risk of signing up for courses this year; people who have already immigrated can postpone their plans to bring family members to join them.

The pandemic experience has enabled governments to understand the value of low-skilled immigration in sectors such as personal services, transportation and food, where many workers are born outside the countries in which they live. .

“Some immigrant groups have become even larger than before,” said Carlos Vargas Silva, professor of migration studies at the University of Oxford.

But he also argued that lockdowns have sped up automation and that technology could erode demand for low-skilled labor: for example, people who employed janitors now use robots that clean and wax the floors. , and the elderly can use devices to help. they manage their daily tasks or to call for help in an emergency.

At the same time, the demand for highly skilled immigrant workers can be greatly reduced. Multinational companies see less of the need to send workers for short periods of work abroad, when they can use video conferencing or to pay transfer fees, now that the rise of remote working has made it easier. hiring of workers from outside the country.

Such a long-term change could reduce the working-age population – and therefore the tax base – of some developed countries, said Vargas Silva. But it can also create opportunities for skilled workers in developing countries, who previously had to leave their land to seek careers.

Thus, in the future, remote working may make labor shortages less likely in developed countries and alleviate the brain drain from developing countries. “All is not negative,” he said. “The impact of less migration may be less than what people would have predicted two years ago.”

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