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EXPANDING JOB OPPORTUNITIES FOR PACIFIC ISLANDERS THROUGH LABOUR MOBILITY

The World Bank

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The Pacific Islands

• Small populations, atolls, diverse

• Very remote (rank = 197)

• Natural resources

• High aid per capita

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How does Migration fit into the Regional Assistance Strategy ?

Regional strategy is two pronged:

1. Bring jobs to the people by improving the business environments in the PICs

2. Take people to the jobs by removing obstacles in the creation of a regional labour market

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How important is Labor Mobility to the Pacific island economies ?

1. Job creation is urgently needed in PICs due to young populations

2. Small remote islands face big cost disadvantages- trade preferences are eroding, aid cannot help

overcome cost wedges

3. Export development and diversification needed - in goods, services, and labour

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Importance to Pacific, continued…

4. Income convergence is fastest when ‘border costs’. Volatility of growth is also lower in integrated economies.

5. Skilled migrate permanently, leaving larger masses “trapped” not conducive to economic or social stability.

6. Failed states, LICUS, ‘arc of instability’…

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Too difficult to implement ?

• Most people surveyed are against free trade and import competition

• In the last few decades politics has been catching up with the economics - despite costs

• The same is needed with labour market liberalization hence the need for sound economic analysis and practical advice now

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Key Questions Shaping “at Home and Away”

• What are the demographic and economic pressures facing the region today that warrant greater mobility ?

• What has been the development impact of (limited) labor mobility in the Pacific thus far ?

• How can movement of unskilled labor be designed as a win-win for recipient and sending countries?

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Structure of the Study

I. Estimating demographic profiles and job creation in PICs

II. Estimating the impact of remittances on recipient households

III. Key global lessons for the design of bilateral schemes for temporary movement of semi/unskilled labor in this region

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These three questions approached within a conceptual framework

• Production function framework

• Migration framed as having an :– allocation effect– efficiency effect– externality effect

in receiving and sending countries

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• Now to quickly answer the three main questions

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CHAPTER TWO

The Young and the Restless: the challenge of population growth

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Question 1: Population forecasts?• Population growth estimated under revised fertility,

mortality, migration rates

• Employment growth also estimated in the islands

• Results show that employment creation unlikely to keep up with population growth, esp. Melanesia (less than 10% of workforce to find employment in 2015)

• Converse true in neighbouring developed markets

• Excess demand and excess supply exist in the region

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Cents and Sensibility:the economic benefits of remittances

CHAPTER THREE

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Q2: Impact of remittances at household level?

• Household level surveys conducted in Tonga and Fiji (about 1000 in all)

• Results show that remittances have significantly:– Reduced poverty in communities– Improved income distribution– Increased investment in education– Spurred business activity (in Tonga)

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Neighbours:making bilateral worker schemes a win-win

CHAPTER FOUR

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Q3: Can temporary movements work?

• Studied Canada-Caribbean experience, surveyed regional Australia

• Design of scheme is key to addressing receiving country (fiscal, social) concerns

• Suggest attention to the 4-Cs:– Cost sharing– Circular flows– Choice of worker qualifications– Commercial viability (6 months+)

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But sending countries also have concerns that need addressing…

• Workers R’s (recruitment, rights, return) – Capacity to regulate – Ability to design incentives & penalties

• Financial obligations– Travel costs, taxation– Remittance flows, transaction costs are high

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Broad World Bank role (as seen at the time of writing the report)

• Keep economic analysis sound – politics may take time to catch up

• Be an ‘honest broker’ in this dialogue in a politically neutral manner – undertake policy advocacy on behalf of small countries

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A lot has happened since the report

We are seen as the “face” of labour mobility in the region

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Main milestones

• Regional Australia and NZ come out with strong support

• Senate Inquiry in Australia invites WB view• PIC leaders request briefing notes for bilateral

meetings • Forum strategy meeting on regional approach• NZ accepts key messages and agrees to pilot, OZ

cautious • PIC countries request capacity building assistance

to manage labour export

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Where are we now?

• Our role has evolved quickly from Policy Advocacy to Implementation

• Working closely with NZ and Pacific

• Undoing our “deliver and run” image

• We are responsible for 5 main tasks – see next five slides

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# 1: Trade Facilitation type of work

• Translate market access into market entry: behind-the-border agenda in goods where WB has numerous analytical/operational roles (logistics, certification, training needs)

• What is the right public-private balance ?

• Long term institutional development and coordination assistance needed to manage outflow

• Australia & others more likely to open up if sending country capacity to manage rises

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# 2: Match making

• Piloted the first community-driven seasonal worker program, risk-sharing for fragile states (Melanesia)

• Strong monetary benefits and skills development. Two way partnerships emerged

• Positive media attention and govt. interest in replicating

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# 3: Global knowledge-sharing

• Regional workshop to bring other labour exporting experiences to the region (Feb 2008)– Pacific governments to identify twinning

arrangements with them– Prevent re-inventing the wheel

• Inputs have already been sought and incorporated into the design of bilateral arrangements

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#4: Monitoring and Evaluation

• Design M&E framework for new regime (DECRG)

• High-level interest in ensuring sound techniques are deployed

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#5: Lower Cost of Remittances

• These are one of the highest cost corridors in the world

• Expertise from Philippines and India being sought

• Dialogue between private providers and regulators being brokered

• New entrants showing interest in offering products