Making the most of migration through smart policies is essential for global development and a prosperous future. Image: REUTERS/Lam Yik
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- The working-age population in high-income and many middle-income countries is shrinking.
- This unprecedented demographic shift will see more countries turning to migrants to fill labour shortages.
- The private sector will have an important role to play in ensuring the skills these migrants bring match those needed in destination countries.
It is time to rethink migration. Over much of the world, birth rates are plunging and populations are ageing. This means that there will be fewer workers to support older people and growth. And this means that most countries will increasingly need to rely on migration. Making the most of migration through smart policies is essential for global development and a prosperous future. And the private sector will play an important role in designing and supporting these smart policies.
An unprecedented demographic shift
The demographic shift outlined in the World Bank’s World Development Report 2023: Migrants, Refugees, and Societies paints a stark picture. High-income countries are ageing quickly. The share of people over 65 — already at a record high of 19% in 2022 — is expected to reach 29% by midcentury. In Korea, the most rapidly ageing country, the share of people over 80 will quadruple by 2050, from the current 4.1% to 15.7%. Spain’s population of 47 million is projected to shrink by more than one-third by 2100, with those over 65 increasing from 20% to 39% of the population.
Populations are expected to continue growing in low-income countries, but often overlooked is the fact that population growth is falling sharply in many middle-income countries, such as India and Mexico. Between 1950 and 2022, Mexico’s fertility rate dropped from 6.7 to 1.8, well below the 2.1 needed for population replacement. Many middle-income countries — traditionally a source of migrants — will need to seek out immigrants to sustain their economies. We will see more and more competition for migrants, and many countries will be both a source and a destination.
Reframing the debate on migration
Faced with this reality, the question is not whether migration is right or wrong. The question is how can we make it work best to support prosperity and development for countries of destination, countries of origin, and the migrants themselves. This is where the debate often becomes confused because we use a single word — migration — to refer to distinct types of movements that have different impacts, and call for different policy responses.
Labour economics shows that we all gain when migrants bring skills that are a strong match with the needs of the destination economy, and the policy goal should be to maximize such gains. International law obliges host countries to offer international protection to refugees, but when refugees do not have in-demand skills, there is a cost to doing this — and the challenge is to manage this cost, to reduce it and to share it.
How is the World Economic Forum supporting refugees?
The most difficult challenges arise when people move seeking opportunities but do not bring skills that are in demand in their destination countries. These migrants often suffer and political backlash is common. The need for such movements should be reduced, including through development.
Bring in the private sector
Smart migration policies are about strengthening the match of migrants’ skills and attributes with the needs of the destination societies, so that everyone gains. The private sector can play an important role in ensuring a tight match and allowing migrants to contribute their full potential to the economy. Decent jobs generally lead to a smooth integration into the labour force and society.
Employers can help policy-makers identify and define labour needs. They often know best where shortages are, where skills will be needed, and what kind of high- and low-skilled workers are most sought after. Several countries have put in place consultative bodies in which employers — as well as labour unions or local authorities — help identify strong skills matches.
The private sector can also play a key role in making migration work for countries of origin. More competition and technological innovations can reduce the costs of sending remittances. That reduces poverty by allowing workers to send more of their incomes to families and communities at home.
The private sector is also best placed to facilitate knowledge transfers. Migrants often build trade and investment connections with their countries of origin. They often return to their countries of origin and establish companies. For example, a large auto part industry was developed in Bosnia and Herzegovina by people who were returning from Germany — with trading benefits for German companies. The growth of India’s massive information technology sector was in large part spearheaded by Indian migrants returning from Silicon Valley.
And we can go one step further. As most countries age, there will be an increased competition for talents and workers. The challenge for many countries — and for many businesses — is to attract people with the skills they need. The private sector can play an important role in that respect.
For example, global skills partnership schemes involve governments and the private sector in higher-income destination countries financing skill-building programmes in origin countries, with graduates offered the opportunity of a work visa. This smooths the movement of skilled labour across countries and their inclusion in the labour market. Well managed, it can also reduce the risks of “brain drain” by building skills that benefit the domestic labour market. For example, the Philippines rapidly expanded its nursing education programmes in private institutions to meet strong demand in destination countries. For every nurse that emigrated, nine new nurses were licensed and stayed, ultimately boosting the net number of nurses in the country. It is of course key to involve the private sector in such schemes so that they remain demand- and market-driven.
As we look ahead to a future where migration will play an increasingly important role in supporting global growth and development, we need to rethink how we understand and manage it. If done right, migration has the potential to be a force for prosperity and greater opportunities for all.
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The views expressed in this article are those of the author alone and not the World Economic Forum.
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