How free movement of labour makes the rich richer and the poor poorer

... can I ask a favour: please consider purging the word “migration” from our vocabulary when we are talking about labour mobility.

David Dodwell

Back to Business, February 27

David’s frustration is that when he and his colleagues in the Apec Business Advisory Council talk of encouraging contract labourers to go abroad, work, learn new skills and go home again, immigration officials discourage them with talk of illegal immigration and national security.

International labour mobility across the region is a good thing, says David, and is no threat to national security.

I agree. It is no threat to national security. But I am not entirely convinced it is a good thing. I see some downsides, too.

What comes to mind, for instance, is a recent trip to Negros Occidental, the heartland of the Philippine sugar industry. The land’s fertile vastness is green with plantation cane and cane alone, no other crop in sight, right up to the high volcanic slopes.

Come harvest the labourers cut it by hand, take it to the mill and, for their share of the returns, get warehouse receipts that they sell, fingers crossed, to discounters in the ragged villages that line the main road and, in Philippine style, are all called “city”. What should be a wealthy land is a poor one.

The people know it and so do the garrisons of the military outposts nestled among the cane. There is a reason that insurrection is a constant threat in this country.

But there is also a palliative – remittances of US$27 billion a year, up fourfold over the last 15 years, from a probably understated 2.5 million overseas contract workers. It helps keep the unrest in check and the Philippine economy ticking over.

Now here is my question. If Apec is so enthusiastic about this palliative, what has it done about the underlying ailment that thus forces millions of Philippine women to abandon their children to extended family members in order to tend the children of strangers and return years later with no skills of much practical use at home?

I have more in mind. I am thinking not of a poor but of a rich society that is similarly characterised by income disparity. It is a place where the rich can keep their costs of living in check by employment of low cost foreign labourers and the poor find their wages suppressed by this introduced competition.

I am thinking obviously of Hong Kong. In this town it does not take you long to find employers who complain about the cost of, for instance, kitchen help and tell you what wonders of employment they are willing to offer the Philippines if only our authorities would open the border gates a little wider.

Opening the gates a little wider will help keep down the cost of eating out.

But what of the Hong Kong permanent ID card holders in this workplace, who are then told they had better restrain their wage hopes because waiting Filipinos can be paid much less?

Here you have Hong Kong people who have worked hard to make the Hong Kong economy a success but, when at last the time comes to collect the rewards, the rich cash in and the poor are told not to be so greedy.

If the Philippine economy is such a mismanaged mess that so many of its working people cannot make enough money at home to live decently, why must Hong Kong working people pay the price? Why doesn’t the Philippines sort itself out? I fully understand the objection.

What is more, no matter how rich some countries can become, if they are built on income disparity, theirs or others, they remain Third World, however much glass and steel they erect. Hello, Dubai.

Income equality and the opportunity it creates for a much greater number of people in any society to become all they can be rather than just struggle all their lives to make ends meet is how societies achieve real First World status.

And I think that labour mobility, if not kept well in check to serve limited needs rather than wage suppression, easily comes to detract from this goal rather than contribute to it.