ne doctrine reiterated by US President Donald Trump as well as advocates of Brexit is that there is a need to protect employment in a country that is being progressively impacted by a rising immigrant population. This has become a political issue, which has evidently been supported by the public in concerned countries, judged by the way they voted. In this context, it is useful to look at how immigrant stocks exist in the world today. There are several countries that are underpopulated and do require immigrants, especially at the lower-skill levels, as local population would be less willing to take up such jobs given the remuneration involved as well as social status considerations. There are also skilled jobs that are taken on by immigrants in host countries, which come at a lower cost for employers and hence work both ways.
In 2012—the latest year for which World Bank data is available on immigrant flows—India led the group of immigrants with an outflow of 2.6 million people. The country was followed by China with 1.8 million, Columbia with 1.45 million, Lebanon with 1.25 million and Pakistan with 1.08 million. The host country that took in the highest quantum was the US, with 5 million. Clearly, there are strong push factors operating where migration is invariably to developed nations that offer not just employment but also a better life. This can be a reason why Trump had taken up this issue at the time of elections.
The accompanying table provides the share of immigrant population to total population in various countries, along with unemployment rates. This is important because the distribution is interesting as countries have different ideologies to immigrant population with similar structures. Also, while the argument put forward often is that jobs are lost to immigrants, actual unemployment rates may not be that serious or out of line with those in other nations. Broadly, there are three sets of countries that witness high immigrant flows. The first set comprises those that are underpopulated and depend on external labour—this holds true for Gulf Cooperation Council countries where over 70% of the population consists of immigrants.
The second set, which includes countries such as Switzerland, Canada, Australia and New Zealand, are in a different league, where there is thin local population but high non-natural resource-based activity which requires a different kind of skill-sets. These countries typically have immigrant population in the range of 20-30%. A number of European countries and the US fall in the third category, where there is more of a push factor than pull force. The desire to work in these countries is high for the migrating population as these are the most sophisticated economies with developed economic structures and, more importantly, offer a plethora of education facilities which, in turn, provide a corridor for jobs. Further, with the US and the UK having the advantage of the widespread use of English language, it becomes easier for skilled migrants to communicate as well as find work.
In between are the refugees from West Asian countries, who would move to whichever country that does not close doors to them, and given their proximity to developed European nations, they tend to go there; this has been aided by the decision taken by some of these nations to take in a fixed number of immigrants over a period of time. Now, how have unemployment rates behaved across these nations? There is a natural rate of employment that Milton Friedman has spoken of, which will vary across countries. This is the minimum level that has to be tolerated by the concerned countries even when growth is high, and is fixed for various countries based on their own standards. Normally, a rate of 4-5% would be accepted as the median level, which goes with the structures of developed economies, and can go higher for developing countries at 5-6%. Those with a very high ratio, as France and Italy, would be outliers for the present as they seek to move out of the low equilibrium trap that has been brought about due to the adherence to the euro doctrine where there is an emphasis on government spending which has affected growth ever since the advent of the Greek crisis.
The unemployment rate in the US and the UK at 4.7% is close to the natural rate, and hence does not really display a scary picture. Germany has a lower rate, but then it has been a better performing economy right since the financial crisis started. The immigrant population stock is significant, but it does not appear to be seriously coming in the way of provision of jobs. Therefore, it is possible to argue that while countries would like to protect their own jobs, the issue of immigrant population becomes serious only in times of a downturn in the economy. A fast growing economy would definitely need labour force to expand in a similar proportion in order to keep the system moving. The euro region has an average stock of 12.2% and the US number is not much away from this median rate.
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