Rich countries woo highly skilled migrants

By Steve Schifferes
BBC News Online economics reporter

Not all immigrants are asylum seekers

Rich countries are increasingly competing to recruit highly skilled immigrants to meet labour shortages in key industries like IT. But are poor countries losing out?

Much attention - especially in the UK - has been focused on the controversy over the growing numbers of asylum seekers.

Far less has been paid to another part of the migration story - the growing number of highly skilled immigrants who are working abroad.

While many countries are trying to limit the number of asylum seekers permanently settled on their shores, they are simultaneously trying to increase the number of people with specific skills and high levels of education and skills whom they want to encourage to move there.

In Britain, for example, around two-thirds of foreign workers who came into the UK in 2002 (103,000 out of 160,000) are classified as being in professional or managerial occupations, a considerable increase compared with 10 years ago.

And while definitions of what constitutes "highly skilled" varies, using the broad yardstick of being educated to degree level and above, increasing numbers of university graduates from developing countries are heading for greener pastures abroad.

According to Professor Richard Black of the Sussex Centre for Migration Research, a substantial proportion of African graduates now live outside the continent.

One estimate suggests that 60% of Gambia's university graduates, 25% of graduates from Sierra Leone, and 10% from Kenya, are now US residents.

Who is coming?

Highly skilled migration has always existed, of course.

But until recently, it mainly consisted of high-powered bankers and multinational company executives who were seconded from one rich country to another.

Indians are moving abroad - and jobs are moving to India

Now new sectors have become more prominent, and developing countries more important.

The IT industry, especially in its Silicon Valley heartland in the US, has become dependent on Indian and Chinese software engineers.

One-third of new IT start-up companies in California are now run by immigrants.

India has both exported workers abroad, and now increasingly capitalised on their expertise and Western-trained skills to set up outsourcing companies back home.

Secondly, the shortage of key public sector professionals has led to an explosion in the recruitment of doctors, nurses and teachers, and here Britain leads Europe and probably the world.

Britain recruits nurses and doctors from developing countries like India, South Africa and the Philippines, while relying on other Commonwealth countries like Australia and Canada to meet teaching shortages in the South-East of England.

And the new workers are increasingly coming on a temporary or contingent basis, even in professions like accounting, with shorter assignments abroad and no guarantee of a return.

Competing countries

According to Professor John Salt of University College London's Migration Research Unit, competition between countries over attracting skilled migrants has become more intense.

African countries may offer fewer opportunities to returning migrants

The US and the UK have created special immigration schemes to attract them, competing with existing schemes that have existed for some years in Australia, Canada, and New Zealand.

In Germany, a new "green card" scheme has been introduced to recruit foreign IT specialists and to train 250,000 domestic specialists by 2005.

The new approach involves the governments working closely with employers to work out where labour shortages exist, highly tailored to specific requirements by industry - and then to fast-track admissions on a temporary basis.

California IT employers, for example, pushed hard for an expansion of the US H1B temporary visa scheme, which at its peak admitted 193,000 workers per year.

Less successful have been attempts to attract entrepreneurs, with many countries offering free immigration for business people with assets over $1m.

Professor Salt says that such schemes are poorly targeted and poorly monitored as it is hard to establish whether the entrepreneur actually spent the money in the country he migrated to and created any jobs.

Harmful 'brain drain'?

Developing countries worry that by sending many of their highly skilled workers overseas is costing them dear.

They lose the money they spent on educating their young people to a high standard, and they may lose those with an entrepreneurial spirit as well.

But most studies show that in the long-term such migration benefits developing countries more than its harms them.

They receive more money back from the migrants who send remittances back home to their families.

And when the migrants eventually return, as many do, the new skills and technologies they have acquired can be used to boost living standards at home.

This is particularly true of middle income developing countries, according to Professor Black.

He says that the Philippines deliberately decided to over-produce nurses to work abroad, who now make a huge contribution to the economy through the remittances they send home.

But he warned that in other poorer countries, for example in Africa, the benefits could be less, especially if they could not absorb the returning migrants in productive ways in their own economy.

And the skills learned in African universities may be less transferable abroad, leading African graduates to end up working in dead-end jobs in other countries.

Do the workers lose out?

Although most economists believe that migration is a net benefit to both sending and receiving countries, and that highly skilled migration is particularly beneficial, there is no doubt, according to Professor Salt, that there are major distributional effects.

For example, most highly skilled UK migrants live in London and the South-East, boosting that region's economy at the expense of other regions.

And sectors such as IT and finance, which receive the most skilled migrants - who get the best and the brightest from around the world - also prosper at the expense of firms in sectors which are less well-endowed with human capital.

And to some extent, companies benefit at the expense of workers, as salaries are lower than otherwise due to the important of extra skilled workers, while profits are probably higher.

Estimates by Harvard Professor Jorge Borjas, however, suggest that the benefit to both the US economy and the taxpayer are greater for highly-skilled immigrants.

For example, an immigrant with below-average education will cost the US about $13,000 per year; however, one who has at least two years of college education generates $198,000 in taxes over his lifetime.