Worker-paid recruitment costs - World...
Transcript of Worker-paid recruitment costs - World...
Worker-paid recruitment costs
Ganesh Seshan
Senior Economist
Jobs and Migration Core Course, May
2018
Sustainable Development Goal 10.7
• SDG 10.7: Facilitate safe, orderly and responsible
migration through planned and well-managed
migration policies
• SDG indicator 10.7.1: Recruitment cost borne by
employees as a % of yearly income earned in the
destination country
$4,000
$4 Billionfor every 1 million migrants
Reduce recruitment costs
$0
What are worker’s paid recruitment costs?• Definition: Monetary costs involved in each step of securing
regular employment by a migrant worker
• Components:
o Recruitment service fees paid to recruitment
agent/agency/broker
o Document cost: Passport, visa, medical certificate,
security clearance, language test
o Transportation cost
o Informal payments
Recruitment cost indicator (RCI)
Bilateral RCI for each origin-destination (OD) country corridor is a function of recruitment costs paid as a multiple of monthly foreign earnings received (on arrival)
Bilateral RCI: 𝑅𝐶𝐼𝑂𝐷 = 𝑓𝑐𝑖
𝑦𝑖
𝑐𝑖 : the total recruitment costs paid by worker 𝑖
𝑦𝑖 : monthly foreign wage, including overtime, after deducting
taxes and social-security contributions
Various functional forms, 𝑓: mean, median, 4th quintile
Can be calculated for sub-categories such as employment sector, or year of arrival
5
Survey waves and migration corridors
2015Ethiopia-KSAIndia-QatarNepal-QatarPhilippines-QatarVietnam-Malaysia Pakistan
To: Saudi Arabia, UAEMexico From: El Salvador, Guatemala, Honduras
2016India-Saudi ArabiaPhilippines-Saudi ArabiaNepal
To: Saudi Arabia, Malaysia, QatarItaly (2016)
From: Egypt, Senegal, West Africa CFA, West Africa
Russia
From: Kyrgyzstan, Tajikistan, Uzbekistan
2014 (pilots)Kuwait
From: Bangladesh, India, Sri Lanka, Egypt
South KoreaFrom: Vietnam, Thailand, Indonesia
SpainFrom: Morocco, Ecuador, Bulgaria, Poland, Romania
KNOMAD-ILO Migration Costs Surveys
Covers 19 bilateral corridors with a total of 5,603 interviewed migrants in 2015 and 2016
2016 dataset:India to Saudi Arabia; Philippines to Saudi Arabia
Nepal to Malaysia, Qatar and Saudi Arabia
Kyrgyzstan, Tajikistan, Uzbekistan to Russia (non-recruited workers)
West African countries to Italy (non-recruited workers)
2015 dataset:Pakistan to Saudi Arabia and United Arab Emirates; Ethiopia to Saudi Arabia
India to Qatar; Nepal to Qatar; Philippines to Qatar
Vietnam to Malaysia
Guatemala, Honduras and El-Salvador to Mexico (non-recruited workers)
Publicly available at www.knomad.org
Pop Quiz!!
Which bilateral-corridor has the most expensive recruitment costs paid by workers (2015-2016)?
A. India to Kingdom of Saudi Arabia
B. Pakistan to Saudi Arabia
C. Philippines to Saudi Arabia
D. Ethiopia to Saudi Arabia
Pop Quiz!!
Which bilateral-corridor has the most expensive recruitment costs paid by workers (2015-2016)?
A. India to Kingdom of Saudi Arabia: $1507
B. Pakistan to Saudi Arabia: $5637
C. Philippines to Saudi Arabia: $372
D. Ethiopia to Saudi Arabia: $1068
Recruitment cost in various corridors
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Number of months2016$, 4th quintile
Costs (2016 $) (left axis) RCI - costs in months of foreign earnings (right axis)
Source: KNOMAD-ILO Migration Cost Surveys
Recruitment cost in various corridors
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Number of months2016$, 4th quintile
Costs (2016 $) (left axis) RCI - costs in months of foreign earnings (right axis)
Source: KNOMAD-ILO Migration Cost Surveys
Recruitment costs can be highly regressive
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0 200 400 600 800 1000 1200
REC
RU
ITM
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CO
ST IN
DIC
ATO
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RC
I)
PAKISTAN-KSA: AVERAGE MONTHLY FOREIGN EARNINGS (CONSTANT 2016 $)
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819467 592 463
257176 256
167
3545
344
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1000
1500
2000
2500
3000
3500
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Itemized Costs in 2016 USD: Corridors with KSA as a destination countryPolice/security clearance
Others
Language training
Informal payments
Exit clearance from the home government
Contract approval from the home government
Overseas migrant welfare fund
Visa/Work permit
Skills certificates/testing
Health/life insurance/social security
Pre-departue training/briefing
Passport
Domestic transportation
Medical exam
International transportation
Fees for brokers/recruitment and manpower agencies
Source: KNOMAD-ILO Migration Cost Surveys
The components of recruitment costs varies considerably by corridors
Recruitment costs may vary over time in response to destination country policies
2011
2014
2011
20142011
2016
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
0 50,000 100,000 150,000 200,000 250,000 300,000
Lagged annual emigration outflows
Pakistan-Saudi Arabia Pakistan-U.A.E.
Nepal-Qatar Linear (Pakistan-Saudi Arabia)
Linear (Pakistan-U.A.E.) Linear (Nepal-Qatar)
Recruitment costs (2016 $, 4th quintile)
Source: KNOMAD-ILO Migration Cost Surveys
18%
15%
18%
10% 10%
3%2%
3% 3% 3%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
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200
300
400
500
600
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800
900
N=32 N=14 N=27 N=52 N=56 N=257 N=108 N=118 N=76 N=59
PAK-SAU PAK-UAE ETH-SAU PHL-SAU PHL-QAT NPL-QAT IND-SAU NPL-MYS IND-QAT(2016)
NPL-SAU
Loan cost Annualized interest rate
Adding loan costs would further increase the costs to workers in some corridors
Source: KNOMAD-ILO Migration Cost Surveys
What factors are associated with recruitment costs
Females tend to pay less (about 40% lower)
Workers who use brokers and agencies tend to pay more (28 to 37 % higher)
Workers who are promised higher earnings tend to pay more
All else equal, we see a 2% increase in costs for every 10% in promised monthly earnings
A double penalty? Higher costs are associated with poorer working conditions abroad
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Yes No
recr
uit
men
t co
sts
(USD
)
Paid promised salary
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500
1000
1500
2000
2500
Yes No
recr
uit
me
nt
cost
s (U
SD)
Paid regularly
Source: KNOMAD-ILO Migration Cost Surveys
How can worker-paid costs be reduced?
Bilateral labor agreements/ public recruitment services
Korea’s EPS: From $3700 (under ITS) to $1100
Address information asymmetries/gapsPublish itemized data on migrant costs
Publish ranking of reputable recruitment agencies (Singapore, Indonesia)
Tap in migrant networks: Kerala example
In Kerala (India), migration cost are lower in localities with high prevalence of overseas migration
Source: Kerala Migration Surveys, various waves