Chapter 1

Migrant workers are building the new Dubai

Merchants and slaves is the introductory chapter to the book Stories from the Gate – stories told by migrant workers. The book is intended to highlight the plight of workers in many countries and the work done by labour agencies in the sending countries.

The migration of peoples from one region to another is as old as history itself (and probably older). Leaving aside the seasonal movements of nomadic peoples, early migrants were of two types: industrious individuals who made a conscious choice to travel to and live in an alien society as a means of economic advancement and those who had no choice at all and were moved en masse to provide a compliant labour force for the tasks that the local population did not wish to undertake for themselves. The former group, of which Marco Polo is one of the best known, were the merchants that built the trade routes upon which the economic prosperity of the ancient world was able to thrive; the latter were the slaves whose labour built the edifices that stood as monuments to this prosperity and this power. It began with the Israelites in Egypt four thousand years ago and it appears that even in the 21st Century and in some parts of the world, little has changed.

This flattening world

The phenomenon of migration on a large enough scale sufficient to change the cultural mix of societies, is a phenomenon of the second part of the 20th Century. The overwhelming trend of recent years has been the movement of people’s from the developing world to the developed world. In the process, these migrants have changed the societies they have adopted as their own.

The process has accelerated. The proportion of immigrants moving into the developed world, as a percentage of total population has more than doubled since the 1960s (Table 1). In terms of absolute numbers, migrants are now far more visible and in many instances are helping their host societies evolve. Some traditional receiving countries, such as Australia, Canada and the United States have integrated the concept of multiculturalism into the national policy platform and made discrimination against migrants punishable by law.

Sadly, that is not yet the case in all countries. In many parts of the world, migrants and especially those from the poorer socio-economic groups continue to suffer discrimation. Discrimination against migrants is manifested in two ways; migrants as a whole vs local populations as well as partiality between different national migrant groups. It is manifested by governments and by employers.

Table 1: Migrants as a percentage of total population

Year

World

More developed

Less developed

1960

2.5

3.4

2.1

1965

2.4

3.5

1.8

1970

2.2

3.6

1.6

1975

2.1

3.9

1.5

1980

2.2

4.2

1.6

1985

2.3

4.6

1.6

1990

2.9

7.2

1.8

1995

2.9

8.1

1.6

2000

2.9

8.8

1.5

2005

3.0

9.5

1.4

Source: (United Nations, Department of Economic and
Social Affairs, 2005)

Despite the ongoing efforts of the International Labour Organization (ILO) in fostering the concept of ‘decent work for all’ the concept is far too often “honoured more in the breach”. Discrimination against migrants can take a number of forms:

  1. social exclusion and deliberate policies of differential treatment by host governments such as access to social services;
  2. lack of employment security in countries where work and residence permits are combined into a single document;
  3. this often puts employees in an untenable position against employers who abrogate their contractual responsibilities for the most flimsy of reasons, leaving migrants without any adequate means of redress;
  4. forced labour and low wages that are often below the contracted amount; poor working and living environments compound the problem in many instances. This appears to be particularly prevalent in the construction industry;
  5. in some countries there is a virtual absence of social protection for migrant groups, a denial of freedom of association and union rights;
  6. migrants who, often unknowingly, fall foul of local laws and customs are sometimes meted harsh punishment for infractions that would often be considered minor outside the host country (arrest and imprisonment for leaving accommodation without carrying an identity document would be one such example);
  7. in any dispute between migrant workers and employers, migrants often suffer the harsher penalties no matter the rights and wrongs of the situation. The law is often partial in its application and works in favour of the national vs. the migrant.

None of these problems are insurmountable and often reflect the fact that the mobility of labour has outgrown the ability of governments and societies to cope with the change. That realisation should provide at least a ray of hope that, with goodwill and greater sensitivities by both migrants and the host country authorities, these problems will wither over the course of time.

And to put matters in perspective, while many of the unskilled workers of the world are price-takers and therefore working under less than ideal conditions, away from family and their traditional social support networks; they fulfill their contracts and return home without major trauma. But while possibly less than one percent of migrant workers encounter major problems overseas that require intervention by their diplomatic representatives, when problems do arise, they can often have horrific consequences.

Sorting out these problems, whether they involve an unscrupulous employer, a profit motivated labour broker or an uncaring administrator in the host country’s government, is usually the role of the labour section within an embassy. Problem solving is not their primary role; their function is really an administrative one. Too often, however, they are called upon to intervene in disputes between employers and employees or between their nationals and the host government authorities. It should not be this way, but this is the reality of the situation. When things go wrong, they are the advocates of last redress.

The second and major part of this book is the story of their work as told by representatives of the labour corps themselves and drawn from some of the major labour sending countries of Asia Pacific.

But before we head down that track, it is best to begin by putting the story of migrant workers into perspective. We begin therefore with a discussion of the dynamics of global migration and, particularly, how migrants from the Asia Pacific region have both benefitted from and been victims of, that author Thomas L. Friedman has called, the “new flat world”.

Globalization has changed everything

Entire cultures, especially in the West have changed dramatically over the past fifty years; once homogenous (and dare we say, slightly xenophobic) societies have withered.

The United States, Canada, Australia and some other countries have been immigrant societies from their birth although for many years, immigration policies were not entirely non-discriminatory. The U.S. race riots of the 1960s not only changed American society in a fundamental way, it also changed the worldview on discrimination based either on nationality or ethnicity. However, it was not only the traditional immigrant countries that changed; Europe in its entirety evolved as borders melted or at least became porous. Traditionally non-immigrant societies such as those of the U.K., France and Germany, were all similarly affected.

Possibly, in the Post-War period, it is Europe that has changed more than other areas. The European countries have been changed by successive waves of migrants. In the case of the UK, the first wave came from South Asia, then from Hong Kong and other former British colonies, and, more recently, from Eastern Europe. Measured by number of inhabitants, London may well now claim to be the world’s second largest Polish city. France and the Netherlands have similarly absorbed many immigrants from their former colonies.

Now Europe is faced with another wave of migration from the countries of the Middle East. Dealing with this latest wave is a challenge that is still being faced.

Systemicdiscrimination against migrant populations still exists. Often this is a case of policy failing to catch up with reality and the lack of sufficiently strong pressure group acting on behalf of migrants. After all, the cynical politician would claim that migrants have no vote and therefore no constituency to protect. This has been discussed elsewhere (International Labour Conference, 2004).

Even the more traditional societies of the Middle East and Asia are now being affected as migrants begin to exert their influence. In some countries, migrants now make a significant contribution to the national GDP and comprise the majority of the workforce.

Continuing to look at the global picture, the United Nations estimates that there are now more than 200 million people living outside of their home country and the number has been increasing rapidly in recent years. Almost one in 35 people alive on the Earth is an international migrant and 40 percent of them are living in the developing world (Figure 1 and Table 2).

Figure 1: Trends in global migration: Number of migrants by location

Figure 1: Trends in global migration: Number of migrants by location

Source: (ILO, 2006; United Nations, Department of Economic and Social Affairs, 2005)

Note: LAC refers to Latin America and Caribbean area

***

Table 2: Migrants as a percentage of the population

Year

Africa

Asia

Europe

Latin America

North America

Oceania

2005

9%

28%

34%

3%

23%

3%

1990

11%

32%

32%

5%

18%

3%

1960

12%

38%

19%

8%

17%

3%

Source: (United Nations, Department of Economic and Social Affairs, 2005)

***

The recent surge in the large-scale movement of people came about in the 1970s when more liberal attitudes towards the opening of borders combined with the advent of low-cost (comparatively speaking) air travel made it affordable to a much greater number. But, it was in the 1980s that cross-border migration really took off, with a surge of immigrants into Europe, especially from Africa and South Asia.

In 1960, 38 percent of all migrants were located within Asia and while available data suggests that intra-regional migration within Asia continues to increase, the biggest changes have come about within Europe. In today’s Europe, the migrant population is more than 34 percent of the total — almost double that of 1960. Overall, the characteristic of the past 50 years has been the large-scale movement of people’s from the less-developed regions to the more developed (or rapidly developing) areas of the world.

Migrants mean business

The governments of countries such as Australia, Canada and the United States have long recognized that by absorbing migrants into their national societies, they stimulate domestic economic growth. Simply put, migrants are good for business.

Post-War Australia has changed dramatically from being predominantly an Anglo-Saxon dominant culture to a truly multicultural society, embracing both other overseas cultures as well as Australia’s own indigenous peoples. This came about as a result of an enlightened policy adopted with consistency since the 1960s of opening the door to migrants of all nationalities who wish to make Australia their home while ensuring support for Australia’s basic democratic norms. Although there is still some way to go to truly level the playing field — and many would argue there has been an overcompensation for past injustice in some areas — much good has been achieved.

As a result, Australians now enjoy one of the most diverse of societies. In many communities, there is a wide choice of ethnic restaurants from Peruvian, Mexican, Thai, Indonesian, Lebanese, Korean, Sushi bars and these days’ even Kimchi parlours. But that is just for a start.

Often the local butcher will be Chinese. The ‘French baker’ is likely to have come from Vietnam, the newsagent could be from India while the local pharmacist might have been born in Australia of Singaporean parents and his ‘Strine’ accent would be as broad as that of any sheep shearer. The checkout operators at the local supermarket will likely represent a similar wide variety of ethnic backgrounds.

And this is not peculiar to the major cities. The same story is being repeated all across Australia and, no doubt, in other countries that have adopted similar policies — that of assimilating migrants while respecting (and encouraging) ethnic diversity within the local community.

Discrimination against migrants (or on any other basis) is not only discouraged in countries like Australia; it is illegal.

Australia welcomes not only business migrants — people who bring with them their business or investment skills as well as their business networks thereby linking Australia more closely with the rest of the world; but has recognized that migrants generally are good for business. These people migrate individually or as part of a family unit and generally, assimilate into their adopted country. It is sometimes difficult for the first generation that still maintains close family and personal ties to their original homeland, but for the second generation onwards their adopted country is also their first country.

These people are migrants by choice. They are the modern equivalent of the merchants and artisans of old and driven by the same spirit of adventure and determination to succeed. But while globalization has provided new opportunity for those able to take advantage of the flattening world; for others it has added to their deprivation and hardship.

Mass migration as an industry

Figure 2: Total estimated annual emigration from selected Asia Pacific countries

Figure 2: Total estimated annual emigration from selected Asia Pacific countries

Source: Table 3 below (based on ILO data)

***

The process of globalization — the opening of supply chains, capital and labour markets to global competition — has added a new dimension to the movement of peoples; that of the mobile labour force. While the Asia Pacific region has long been a supplier of business and professional migrants, it has now become a major supplier of contract labour; ostensibly, providing new avenues of employment for workers who might otherwise be either employed doing menial tasks in the informal sector back in their home country or who would not be employed at all. To those who broker the contracts between buyer and sellers of labour, a new industry — and a new opportunity to make money — has been born in the process.

While those migrants relocating elsewhere to pursue their professional careers have themselves taken on a global characteristic, and might as easily come from Australia as from Sri Lanka, those migrants at the lower end of the labour pyramid generally come from those countries where poverty is endemic or where the local economy is unable to supply sufficient jobs for the available workforce. It is these people who are among the world’s most vulnerable since, like the slaves of old, they are not, in many instances, in charge of their own destiny. The former are price-setters, this latter group are the price-takers.

Within the Asia Pacific Region, Indonesia and India have traditionally provided the greatest number of migrants followed closely by the Philippines and Bangladesh (Figure 2 and Table 3). The demographic mix, however, varies between countries. Pakistan, Bangladesh and (to an extent) Indonesia, tend to provide much of the construction labour to countries of the Middle East while those from South Asia and the Philippines, because of their better overall command of English, provide many of the professional and service industry workers. Indeed in the case of the Philippines it has been estimated that as many as 65 percent of medical graduates are now working overseas (Ramota 2005).

According to the ILO, the gross emigration of labour has risen at an annual rate of six percent in the Asia Pacific region as a whole. This is a rate that is twice as fast as that of the labour force in the countries of origin (ILO, 2006).

In some countries, especially the countries of the Gulf Cooperation Council (GCC), migrants now comprise a significant proportion of the total population and the economy has become dependent on migrant workers in order to grow. In the UAE for example, migrants outnumber local inhabitants by almost 2.5:1.

Table 3: Estimated annual emigration of labour from selected countries of Asia Pacific

Country

Data available

Recorded average annual labour emigration

Adjustment required for excluded or undocumented flows

Total

Main destination countries/regions

Bangladesh

1999-2002

224

53

277

GCC, SEA, India

India

1999-2002

316

200

516

GCC, USA, East Asia

Indonesia

2002

480

50

530

GCC, Malaysia

Pakistan

1999-2003

135

25

160

GCC, USA, W. Europe

Philippines

2002-2003

265

25

290

SEA, GCC, USA, Europe

Sri Lanka

1999-2003

192

16

208

GCC, Singapore

Thailand

2001-2003

160

0

160

Taiwan (China), Japan, Israel

Viet Nam

2003

75

0

75

Malaysia, Japan, Republic of Korea

Others (Myanmar, Malaysia, Lao PDR, China)

2003

32

120

152

Thailand, Singapore, Australia, Europe

530

100

630

Japan, Republic of Korea, SEA, USA

Source: ILO, 2006

***

The explosive growth of labour migration is particularly noticeable for the countries of the Middle East. Migrant workers, most of whom are there as short-term contract workers, have grown from virtually zero in the 1960s to a level where they form a significant proportion of the workforce and population at the present time (Table 4 and Figure 3).

Migrant populations have grown rapidly throughout the region with the most rapid climb evident in Saudi Arabia and the United Arab Emirates (UAE). Kuwait too has returned to a growth path in the aftermath of the First Gulf War of 1990.

Table 4: Asian migrant workers in selected economies around 2000 (thousands)

Country

Numberof Asian migrant workers

Total population

Asian migrants as % of total population

Migrants as a percentage of total population

Asians as % of total migrants

19 071

0.8%

21.40%

4%

Hong Kong (China)

310

6 637

4.7%

40.70%

11%

Japan

900

127 034

0.7%

1.30%

54%

Korea, Republic of

386

46 779

0.8%

1.20%

523

2 230

23.5%

62.20%

38%

Malaysia

1 050

22 997

4.6%

6.10%

75%

Saudi Arabia

2 732

21 484

12.7%

23.90%

53%

Singapore

607

4 017

15.1%

33.60%

45%

Taiwan (China)

383

22 216

1.7%

N/A

N/A

Thailand

665

61 438

1.1%

1.40%

77%

UAE

931

3 247

28.7%

70.40%

41%

Source: ILO, 2006, World Bank data and authors calculations

Note: (i) Taiwan population data obtained from the Taiwan Statistical Yearbook; (ii) Australian data understates the Asian migrant population since Australian policy encourages migrants to seek Australian citizenship

***

The importance of exported labour to the economies of Asia Pacific

Figure 3: Growth in migrant population of selected Middle Eastern Countries

Figure 3: Growth in migrant population of selected Middle Eastern Countries

Source: World Migration Database (authors advise data should be used with caution)

***

The phenomenon of contract labour is really a two-edged sword for the sending countries. In the short-term, the export of labour eases domestic employment problems and, at the same time provides a source of income from remittance of overseas earnings of workers. In many countries, this income now forms a significant factor in economic growth.

On the downside, migration, especially the migration of skilled workers, weakens the developmental capacity of the home economy thereby exacerbating problems over the longer term. Of course, if migrants eventually return bringing with them new skills, the home country can eventually reap the benefit of their return. China, Korea and Taiwan are all examples of this.

Considering the remittance factor, at the national level this influx of hard currency, usually in the form of United States dollars, supports the exchange rate and reserve position. At the same time, at the micro-level when remittances are converted into local currency, they provide financial support at the family level, which can be used as microfinance for small business start-up or for general consumption expenditure.

Indeed the remittance pattern provides another way of looking at the importance of overseas workers to the economies of the countries of Asia Pacific. Table 5 shows the trend in remittance income for the developing world by region. The two regions benefiting the most from earnings of their foreign workers are ‘East Asia and the Pacific’ followed by ‘Latin American and the Caribbean’ (LAC).

Looking at individual countries however, we see a slightly different picture. According to World Bank data (World Bank 2008), India and China are the two countries with the highest remittance income followed by Mexico and the Philippines. Five of the ‘top 10’ are from within the Asia Pacific region of which four of them are the countries of South Asia and the fifth is the Philippines (Figure 4).

Yet another way to consider the importance of remittance income is to look at the data on a per capita basis (Figure 5). Within Asia Pacific, this clearly shows the importance of remittances to countries such as the Philippines in supporting domestic consumption expenditure.
Looking further at the available remittance data, shows that workers from East Asia (including Southeast Asia) appear to be concentrated in (and therefore more dependent on) the United States and Western Europe whereas workers from South Asia appear to be distributed more evenly between regions and therefore, supposedly, less vulnerable to a downturn in any single market. With the present state of the global economy, this suggestion remains to be tested.

Table 5: Remittance flows to developing countries, 2006-2008

2006

2007

2008

Developing Countries (total in USD billion)

229

265

283

(as share of GDP, %)

-2.1

-2.0

-1.8

East Asia and Pacific

53

58

62

Europe and Central Asia

39

51

54

Latin America and Caribbean

57

61

61

Middle-East and North Africa

27

32

35

South Asia

40

44

51

Sub-Saharan Africa

13

19

20

Growth rates (%)

East Asia and Pacific

13%

10%

7%

Europe and Central Asia

23%

31%

5%

Latin America and Caribbean

18%

6%

0%

Middle-East and North Africa

10%

20%

8%

South Asia

20%

11%

16%

Sub-Saharan Africa

35%

42%

6%

Developing Countries

18%

16%

7%

***

Figure 4: Top 10 Remittance-recipient countries in 2008

Figure 4: Top 10 Remittance-recipient countries in 2008

Figure 5: Source of remittances by region

Figure 5: Source of remittances by region

Figure 6: Value of remittances per person

Figure 6: Value of remittances per person

Source:

Figure 4: World Bank, Migration and Development Brief, November 11, 2008
Figure 5: Source: adapted from World Bank, 2008
Figure 6: Source: Data from Figure 4 with 2008 population, author’s estimate

***

A time of turbulence

At the time of writing (1H2009), the global economy is experiencing its greatest challenge since the Great Depression of 1929 and this time the effects of economic contraction are being felt by the entire world.

The International Monetary Fund (IMF) has signalled that the impact of the slowdown in 2009 will likely be worse than earlier expected. The IMF is now predicting that the global economy will actually fall by 0.5 percent in 2009. The level of ‘toxic debt’ could reach USD 4 trillion, far worse than previously thought.

As late as November 2008, the IMF was forecasting that there would be a slight — 1.25 percent — expansion in 2009, but even this latest dire prediction is seen to be overly optimistic by some. The outcome could be even worse. Overall, the developed economies — economies that have provided much of the drive for Asia’s manufactured exports in recent years — are expected to contract by two percent this year (2009). Japan will be among the hardest hit with negative 2.6 percent expected but Britain will be hit even harder. According to the IMF, the UK economy is expected to slow by 2.8 percent. Even the oil-rich countries of the Middle East are affected; some more than others.

Clearly, in a more volatile world, those countries that have chosen to integrate themselves into the global marketplace are now feeling the chill (Figure 7).

Figure 7: What a difference a year makes

Figure 7: What a difference a year makes

GDP growth expectations, January 2008 and January 2009
Source: Trading Economics Research, www.tradingeconomics.com

***

But while the present global outlook is grim, in Asia it is not quite all doom-and-gloom. Developing economies as a group are expected to halve their growth in 2009 as compared to last year, from 6.3 percent in 2008 down to 3.3 percent in 2009, but bear in mind that China and India (as well as Brazil in the global picture) skew the gross figure. China’s economy has come off the boil but is still expected to be the star performer worldwide at between six and seven percent growth (down from nine percent) and India will slow to around five percent (from 7.1 percent). The rest of Asia will perform below the average. According to the ADB, Southeast Asia may manage just 0.7 percent expansion this year after recording 4.3 percent in 2008 (Asian Development Bank (ADB) 2009).

The economic downturn has affected employment prospects within the region with jobs being lost in many places and exacerbating the unemployment problem in sending countries. According to the ILO, at the end of 2007, some 177 million people worldwide were seeking jobs. That number has been increasing sharply and will go higher over the next twelve months. The latest forecast puts the number of jobless by the end of 2009 at between 198 and 230 million and there are indications that, based on the latest data, these estimates could yet prove to be on the low side.
Asia may not be as badly affected as the more developed economies, but the impact will be felt nevertheless and in countries that continue to provide insufficient jobs for their working-age populations, the outlook may be severe. Retracted workers in Asia will find it more difficult to find suitable alternatives overseas and those that do will increasingly become price-takers. This will impact on remittance earnings from overseas workers, which for many countries make a significant contribution to GDP.

All other variables aside, countries with strong remittance income streams such as the Philippines, will find it easier to whether the present storm than those that do not (Table 6). Indeed, when exchange rate considerations are taken into account, the value of remittances in local currency units may see little change from previous years. This remittance income, at least provides a necessary umbrella and shelter from the worst effects of the present storm but is it a sufficient one?

Table 6: Remittances, GDP and growth rates

Country

Inward Remittance 2008

Share of 2008 GDP

Growth rate GDP

Source

(a)

(a)

(b)

Units/year

USD billions

%

2008

2009

Bangladesh

8 979

9.50%

6.20%

5.60%

Cambodia

353

4.20%

6.50%

2.50%

China

34 490

1.10%

6.60%

3.60%

India

45 000

3.10%

7.10%

5.00%

Indonesia

6 500

1.50%

6.10%

3.60%

Malaysia

1 810

1.00%

4.60%

-0.20%

Pakistan

7 025

4.20%

5.80%

2.80%

Philippines

18 268

11.60%

4.60%

2.50%

Sri Lanka

2 720

8.10%

6.00%

4.50%

Note on sources:

(a) World Bank; Remittance data, 2009 release

(b) Asian Development Bank; 2009 Asian Development Outlook

Note on sources:
(a) World Bank; Remittance data, 2009 release
(b) Asian Development Bank; 2009 Asian Development Outlook

***

Gross remittance earnings may, in some cases. decline for a period, but they are expected to be less severely affected than private capital flows to the developing world (Figure 8). When the world eventually returns to a positive growth path — expected sometime in 2010 — will those that have shielded themselves from the effects of globalization be in a better or worse position than before it began? Will labour exports continue to provide the shock absorber that it has done so far? The answer is likely to be ‘yes’ and ‘no’ with a ‘perhaps’ thrown in for good measure. There will be no uniform result across the globe; it will depend on the structure of the individual economies.
To explain this vacillating answer, we must, before closing off this initial discussion, consider for a moment the effects of the present crisis on globalization in all its aspects, including the growth of the international market for labour.

Is globalization in retreat?

With the apparent success of the G20 London Meeting of April 2009, the announcement of a USD 1.1 trillion stimulus package and an apparent willingness to forge ‘a new consensus,’ markets around the world have started to show signs of cautious optimism that a road to recovery is at last emerging from the shadows. There are indications that the period of ‘frightening uncertainty’ as one newspaper editorial described it, may be coming to an end and that we may, at least, be seeing ‘the end of the beginning.’

The recession is not over and hard times will be with us for a while. There appears to be a general consensus among economists that it will take at least eight quarters before the world returns to a sustainable growth path.

The financial crisis that had its origins in the sub-prime mortgage market in the USA spawned panic in financial markets, which led in turn to a general meltdown. This in turn caused a collapse in manufacturing output, in construction activity, in investment and employment. Jobs around the world continue to be cut. US unemployment is the highest in 25 years. In the UK, the British Chamber of Commerce is forecasting 3.2 million unemployed. This pattern is ricocheting around the globe.

Many people fear — or welcome — the end of globalization as one of the casualties of the present economic meltdown. Philippine economist Walden Bello, said as much in his widely published article ‘Globalization in Retreat’ which first appeared in the Third World Quarterly (Bello 2006) but which has since been widely reproduced electronically especially in recent months. Sceptics such as Bello claim that globalization has not brought about benefits to the developing world, has hampered the quest for decent work by producing a competitive ‘race to the bottom’ and has had disastrous social consequences of which systemic poverty and global warming are the most frequently cited.

Such claims are not without some foundation and indeed, there are many who believe that while globalization may have delivered for the large global corporations and the educated elite, it has not really done so for the global citizenry – or has it?
The three aspects of globalization, in its economic sense, are (i) the integration of the manufacture of goods (or provision of services), (ii) the movement of capital and (iii) jobs. Are each of these aspects in retreat or are we rather seeing a reassessment brought about by present necessity?
The IMF has, for a long time pointed out that those countries that have joined the global supply chain and embraced globalization, especially those that have embraced the global trading regime have fared better in terms of average annual growth than those who have kept their doors shuttered. Overall, poorer countries have been growing faster than the richer ones and the gap between rich and poor has continued to narrow. This is especially true for the BRIC economies but holds true for many others as well — ASEAN is a classic example of this where annual average growth rates have continued to be above the global averages.

Indeed as recently pointed out by the Economist newspaper, ‘The gap between real GDP growth in emerging markets and in rich countries widened from nothing in 1991 to about five points in 2007 – and, says the IMF, it will stay at 5.3 points in 2008 and 2009. Helping poorer countries catch up has long been among the benefits touted for globalization.”

One of the ironies of the present situation is that it is precisely those countries that have opened their markets to global trade that have been among the first to feel the cold winds of recession as trade flows become collateral damage to the financial storm. Hong Kong, Korea, Malaysia, Singapore, Thailand and even Malaysia have all gone rapidly from robust growth to economic reversal. Taiwan too, which depends on exports for 60 percent of its GDP may see as much as an 11 percent decline in GDP in 2009.

World trade was growing at an annual average rate of 20 percent in early 2008 even though the clouds were then gathering. When the storm struck in September of that year, growth dropped rapidly and by the end of 2008 had gone into reverse. Trade was battered on two fronts; firstly from the downturn in consumer confidence but also from the drying up of trade financing which had been caught up in the whirlwind.

Manufacturing is in steep decline. Jobs in manufacturing are being lost from Germany to Japan and with them will go for a while, opportunities for contract workers in the major manufacturing centres around the world. By contrast, those countries less dependent on trade and more dependent on domestic consumption or remittance earnings from overseas workers (which often ends up as consumption expenditure) may fare slightly better in the short-term simply because their economies are less exposed to the world and therefore less volatile.

But really, with the information age truly upon us, there is no turning back from the present path of global integration. What the present crisis has shown is that globalization in its present form, driven forward by its own momentum, has run its course. Take away that momentum and the system falls over. This is the fundamental message that has been delivered. We were in a state of unstable equilibrium.

What will likely emerge is a new more regulated form of globalization. Financial markets are already being restructured with greater regulation and state intervention likely to be the new paradigm. Trade patterns too may be affected with new ‘energy’ taxes appearing to take account of the carbon footprints left by many of the world’s global consumer goods. In the near future, we may see these new taxes imposed on goods transported from distant markets. There will be a financial incentive to ‘buy local’. This will not be a tariff on imported goods but a consequence of moving to a ‘greener’ industrial base.

While structural changes to the financial and manufacturing environments are already on the cards, there has so far been very little debate on the need for further labour market reform, especially in the context of the future global flow of labour. How will labour fare under the new paradigm? Will it encourage or hinder the quest for ‘decent work for all’? These questions are of paramount importance to labour practitioners and especially those workers in the field charged with the welfare of migrant workers.

Our conclusions is that globalization may be making a tactical retreat at the present time but the premise that the world is undergoing ‘deglobalization’ is too great a leap to make. Over the past twenty years, the world has flattened and that process is irreversible.

What we appear to be seeing is a reassessment and a redefining of the process of globalization. In this, there is both threat and opportunity for those countries with a labour surplus. We will return to this theme in the following chapters of this book.

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Editor’s note: A PDF file of this chapter will be made available for download

 

See also:

The story of Reza