Part 3 – Greying populations: where is the demographic dividend?

Quite simply the west is getting old. The post-World War II social welfare state that appeared all across Europe was created at a moment when the baby boom was still on and as life expectancy increased, fertility declined.

Let me now go back to what I began with in part 1 of this three-part article. The issue of Europe’s greying population.   That population pyramid now finds itself being inverted — and in some countries, that is causing the entire economy to topple.

Not so long ago, the conventional wisdom was neo-Malthusian — for individuals, for families and for societies, one of the keys to prosperity was having fewer children.

Now, that thinking has been turned upside down. Even China, which for decades has followed the one-child policy of population control, now fears it may get old before it gets rich. Meanwhile, India, whose fertility was once seen as its national curse, is touted as a rising investment prospect thanks to its “demographic dividend.”

So what can Europe do? There are only two options. Increase retirement age or allow in more migrants. The first option seems to be an obvious choice. Working longer has three great advantages. The employee gets more years of wages; the government receives more in taxes and pays out less in benefits; and the economy grows faster as more people work for longer.

Unfortunately this option is rather limited and countries and corporates using it are reporting several problems with it – including individual workers refusing to accept the voluntary option of extension of their working life. The second option too has both political and social ramifications. I do not need to remind you of the recent incident in Norway, perpetuated by an anti-immigrant madman.

There is little doubt that the most significant driver of migration will be the ageing population in Europe and in other developed countries. This will be the pull factor. The growing working population in the developing world will be the push factor.  I had earlier mentioned the case of ‘outsourcing’.

It is really a migration issue.

With high old age dependency ratios, the preference is to shift in favour of technology when it is obvious that social security schemes need the support of a working migrant population to shore them up. Developed countries have the Hobson’s choice of either accepting immigration or losing jobs to developing economies with a growing working population.

Whatever the decision, it will require exceptional political will to implement.

The phenomenon of population ageing in Organisation for Economic Co-operation and Development (OECD) countries will not go away. The International Migration Outlook brought out by the OECD proposes a road-map to manage labour migration that suggests better identification of labour market needs and adjusting flows accordingly.

Migration must be managed since ageing population and skill shortage is a reality especially in the context of the on-going economic crisis. Ultimately it’s all about competitiveness.

If the United States and European countries are to retain their competitive advantage, their universities, firms and industries will need a healthy flow of talent from abroad. Yet, many of them are coming up with walls to halt or severely curtail the mobility of talent.

In an already existing economic downturn the results can be even more disastrous. In fact a recent study in the UK estimated that the recently imposed cap on immigration will result in the UK economy losing some 1 percent of GDP growth.

It is also necessary to mention here the debate on ‘brain drain’ in the context of a globalizing economy and ageing societies. Today, the developed world is perceived as poaching the best and the brightest from the developing world, thus prejudicing those countries of their chance of development.

There are however two caveats to this premise: first, that any brain drain is as much internal within any country as it is among countries and, second, that the skilled migration system should not be seen in isolation from other types of migration.

There are two forms of discretionary labour migration. One is so-called “supply-driven” and reflects what Australia and Canada have generally done. These countries invite persons abroad interested in migrating to apply and then assess them on the basis of certain criteria (age, knowledge of the language, educational qualifications, occupation, work experience, presence of relatives in the country, etc.).

Points are awarded for each characteristic and persons having a certain minimum number of points are invited to immigrate with their immediate families, up to a pre-specified maximum per year.

Then there is the “demand- or employer-driven” migration, that is, employers make requests for workers to public authorities (generally they have specific persons in mind), which then allow the workers to come in if they deem that no workers in the country could satisfy the job requirements of the jobs for which the potential immigrants are being recruited.

This form of labour migration is the most common one and is the one prevalent in the United States, Europe and Japan. There is generally a “labour market test” to determine if workers in the country could take on the job.

Let me now turn to India. India’s experience as a major country of origin, transit and destination combined with its objective to forge a coherent and progressive migration policy that addresses the entire ‘virtuous cycle’ of human resource mobility, places us in a unique position.

Whilst we have an estimated overseas Indian workforce of over 7 million, what is less known is that India with its rapidly growing economy and its pluralistic society is also host to millions of migrants. They live and work in India and contribute to our economy.

The primary motivation for migration is economic and at the heart of migration management is the imperative to maximize the development impact of international migration for all. The scale and spread of the Indian experience of managing Migration as well as Development and the intimate interplay of these two complex processes is matchless.

With the second largest overseas population, its status as the country that receives the highest remittances, its experience in effectively addressing the problems of poverty, inequality and unemployment, India can provide the much needed impetus to meaningfully reinforce the symbiotic development-migration paradigm.

India exemplifies the strengths of a large, tolerant, secular, live democracy with a pluralistic society in which people of different faiths, languages, ethnicities and political persuasions co-exist and thrive.

Indeed, this milieu is the ‘sine qua non’ of any society that can create conditions for positive migratory movements and labour mobility for the benefit of all.

This places India in a position to help contribute in the international community’s efforts to develop an appropriate world migration strategy.

India is also one of the pioneers in recognizing the importance of its overseas population and establishing an institutional framework for sustainable and mutually beneficial engagement with its Diaspora.

By creating an independent and effective Ministry of Overseas Indian Affairs, India has given mainstream attention to its estimated 25 million strong overseas Indian community. This experience too has helped us develop appropriate and well calibrated institutional responses, through bilateral and multilateral engagement, to meet the challenges of capacity building for better migration management.

Estimated as the second largest Diaspora at over 25 million and spread across 189 countries, overseas Indians are today recognised as the ‘Knowledge Diaspora’.

Their ‘virtual presence’ across sectors and in most parts of the globe makes them a strategic resource. We recognise the need therefore, to bring a strategic dimension to India’s engagement with its overseas community.

We have taken a medium to long term view and are attempting to forge a partnership that will best serve India as a rapidly growing knowledge economy – to drive innovation and entrepreneurship – and meet the aspirations of the overseas Indian community as a significant constituency across the world.

We also recognize that there is no single, homogenous overseas Indian community. Indeed, there are communities within communities, each differentiated by their ability and willingness to engage with India and with distinct expectations. Our policy focus has therefore been on developing a mobility strategy that will provide for the wide range of roles and expectations and maximize collaborative engagement.

Let me conclude by raising a few questions.

The challenges in managing migration effectively at the international levels include finding and maintaining a balance between measures addressing various migration related issues, without creating improvement in one sphere to the detriment of another.

Should any or all migration policy issues be considered within an international comprehensive approach? Are some elements more important than others? Should the elements be common to all States or will each State develop its own package based on domestic priorities?

Any discussion on elements of a managed migration approach would need to take into consideration both what constitutes a comprehensive set of elements, and who the partners required to implement these elements are.

I am aware there are no easy answers but our endeavour should be to search for and find them, together, as partners of a common global destiny.

This is Part 3 of a three part article, written under the title of Migration in a Globalised World: Going and growing beyond Borders


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