Merchants of labour, the recruiters between workers seeking jobs and employers seeking workers, have a long and chequered history. They are often associated with trickery or coercion to fill undesirable jobs, from finding soldiers in ancient Rome and sailors in the 18th and 19th centuries to moving low-skilled workers over borders today to fill 3-D jobs, dirty, dangerous and difficult.
All types of workers move over national borders, from doctors and nurses to construction and domestic workers. Employers generally pay migration costs for high-skilled workers because they are relatively scarce. There are often more low-skilled workers than foreign jobs, and some employers and recruiters charge migrants for jobs that pay three to eight times more than they would earn at home.
The "unfairness" of low-skilled workers paying up to a year's foreign earnings for foreign jobs has prompted concerns from UN agencies, governments, and non-government organisations (NGOs). If migrant workers could pay less for foreign jobs, they could remit more of their earnings to families at home, reducing poverty and sparking development in often poor areas. If migration costs were lower, migrants would incur fewer debts before departure, and would be less vulnerable abroad because they would not be as fearful about returning to face migration debts that can mount due to high interest rates.
Moving low-skilled workers over national borders is a big business. Perhaps 10 million workers a year leave one country to work in another. If migrants pay an average $1,000 each, international labour migration is a $10 billion a year business that benefits employers who sell job offers, recruiters who find and screen workers, government agencies that check job offers, and a shadowy world of agents, subagents and others.
There are three usual reactions to high worker-paid migration costs. First are calls to ratify and implement ILO conventions that call for no-fee labour exchanges and prohibit private recruiters from charging workers for jobs; ILO conventions call for employers to pay all costs involved in recruiting migrant workers. Second are calls to educate workers so they do not overpay and to step-up enforcement against recruiters who charge workers excessive fees. Third are experiments with bilateral labour agreement and government-to-government arrangements that eliminate private recruiters.
Conventions, enforcement, and bilateral agreements are good, but they do not prevent tens of thousands of recruiters from charging millions of migrants high fees for foreign jobs. The best protection against high worker-paid fees is opportunities at home: workers who can find decent jobs at home are less likely to pay high fees to work abroad. It is exactly the lack of decent work at home that encourages migrants to seek foreign jobs and makes them vulnerable during recruitment. Some migrants return with savings that enable them to build nicer homes and to buy land, providing a constant reminder that the fastest way to get ahead for many workers in poorer countries is to work abroad.
What can governments do to reduce worker-paid migration costs? Regulating recruiters is necessary, including setting limits on the fees charged to migrants, but there is unlikely to be sufficient enforcement to prevent overcharging. After all, if migrants get what they want from recruiters, foreign jobs that offer higher wages, will they complain even if they paid too much?
A supplement to the stick of enforcement is the carrot of incentives to recruiters to abide by regulations that protect migrants. These incentives can be micro, focused on individual recruiters, or macro, aimed at shaping the structure and operation of the recruiting industry.
Micro incentives offer lower fees and faster processing to A-rated recruiters, making them preferred by employers and workers. Even more valuable would be tax incentives. If A-rated recruiters stimulate economic development by allowing workers to acquire skills abroad and send home remittances, governments could exempt them from taxes or even subsidise them, just as they exempt and subsidise foreign investors. Finally, good recruiters can be invited to accompany government leaders abroad and introduced to good employers, much as business people accompany leaders abroad to sell their products.
There are also macro incentives to make the recruiting industry operate more efficiently and be more protective of workers. Governments could promote the consolidation of recruiters into fewer and larger entities that achieve economies of scale and develop reputations to protect. Allowing foreign employers to recruit workers directly could remove a layer in the recruitment process that often adds to worker-paid costs, and could result in home-country workers with experience abroad evaluating the credentials of potential migrants. Finally, favouring long-term partnerships between particular recruiters and foreign employers can encourage investments that are recouped over time with multiple placements, as with seafarers.
The alternatives to economic incentives are less likely to help most migrants. Codes of conduct generally work best where they are needed least, such as with employer-recruiter partnerships where employers already pay recruitment costs. Bilateral labour agreements that eliminate private recruiters are promising, but the most successful programmes, including those of Korea and New Zealand, are relatively small and are subsidised from the foreign aid budgets of receiving countries.
Every day over 25,000 migrant workers, the equivalent of 60 jumbo jets, set off on a journey of hope and fear. Migrant workers hope to earn higher wages and perhaps learn new skills during their two to three years away. They also have a great fear of the unknown. Will the job they are asked to do be the one that was described to them, and can they perform it satisfactorily? Will they achieve savings and remittance targets and pay off any debts incurred to go abroad?
Regulating the merchants of labour who move workers over borders is necessary but not sufficient to protect migrants. There are unlikely to be sufficient inspectors to enforce regulations when two or more workers seek each foreign jobs. Enforcement is necessary, but economic incentives for recruiters to comply with regulations may offer more protections to more migrants.
The writer is Professor Emeritus of Agricultural and Resource Economics, University of California, Davis, USA.
plmartin@ucdavis.edu
Managing merchants of labour: Incentives to improve recruitment
Philip Martin | Published: October 29, 2016 00:00:00 | Updated: February 01, 2018 00:00:00
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