Global worker migration patterns will inevitably shift

First, consider birth rates. These have been declining and are now plunging in the developed world. Birth rates for Portugal, Greece and Italy are now at 1.4 (number of births per woman) or below. They are even lower for Korea and Hong Kong, at 0.8 and China at 1.2 respectively. In the next three decades to 2050, a dozen different regions of the world will experience vastly different growth rates in their populations. Consequently, the regional distribution of people in 2050 will differ significantly from that of today. While headcounts in much of the world have peaked or are in the process of peaking, sub-Saharan Africa is expected to see its population double by 2050. More than half of the projected increase in the global population up to 2050 is expected to be concentrated in just eight countries: the Democratic Republic of the Congo (DRC), Egypt, Ethiopia, India, Nigeria, Pakistan, the Philippines and Tanzania. Under current projections, India’s headcount is expected to peak around 2050, but there are early indications that it may peak well before then.

According to a recent report from the United Nations Population Division, of eight world regions, Eastern and South-Eastern Asia, Europe and Northern America, Australia and New Zealand, and Latin America and the Caribbean had the highest proportions of working-age people aged 25-to-64 years in 2022, accounting for 56%, 54%, 53% and 51% of their total population, respectively. However, due to ageing, the percentage of persons of working age has stabilized or has started to decrease in these regions. The implication of these dramatic changes in birth rates and in age bulge of populations is that the very structure of national and international labour markets is likely to undergo massive changes.

Second, consider changes in the global economy and advances in technology. Since the Global Financial Crisis of 2008, there has been a broad-based decline in productivity, particularly among developed countries. This is being addressed by even more investment in technology. In the post-pandemic world, with a dramatic shift in the supply-chain architecture, a preference for fewer hours of weekly work, changes in labour-force participation and geopolitics-led trade in goods and services, labour markets are tight in developed countries. In emerging economies like India, both capital intensity and capital productivity continue apace, resulting in ever lower employment elasticity of growth, meaning that fewer people are employed for each percentage point of economic growth as we go along.

This combination of tight labour markets in developed markets and unemployment (particularly of youth) in developing markets is resulting in varied responses from different countries. Canada and Australia, for instance, have dramatically reshaped their immigration policy. Using a point-based system for language proficiency, educational attainment and skills, Canada and Australia allowed 500,000 immigrants each last year. Immigrants account for nearly 20% of Canada’s and 30% of Australia’s population today, among the highest rates for large countries. India is the top source for both countries. The US continues with its preference for family-based immigration, with over two-thirds of its immigrant visas issued in that category. Nearly 14% of the US population is made up of legal and illegal migrants.

Immigration is a part answer to the data mystery of super-charged employment numbers in the US today. India is the second largest source, after Mexico, of legal migrants into the US. The number of international Indian migrants has more than doubled over the past 25 years, growing about twice as fast the world’s total migrant population.

Lant Pritchett, a development economist at the University of Oxford, has for many years written about the enormous potential income gains to low-skill migrants moving from lower to higher income countries. He recently fleshed out this proposal in the form of creating 16 million guest-worker jobs with timed-visas and no citizenship rights in developed countries for people from other countries. This would address the issues of unemployment in less developed countries, non-availability of low-skill workers in developed countries and illegal migration. Pritchett himself accepts that this is outside today’s Overton window, but the forces shaping the global labour market will eventually require a solution such as this. The migrant sources for these guest-worker programmes may include the likes of India and Bangladesh to begin with, but given the world’s demographic transformation, will evolve to be dominated by Nigeria, the DRC and Ethiopia in the decades ahead.

P.S: “Travel is the language of peace," said Mahatma Gandhi. To which one might add ‘migration.’