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Title: Conference proceedings : Near East Labor Migration : implications for AID policy, June 5 and 6, 1979
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Title: Conference proceedings : Near East Labor Migration : implications for AID policy, June 5 and 6, 1979
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Table of Contents
    Front Cover
        Page i
    Title Page
        Page ii
        Page iii
    Table of Contents
        Page iv
    Executive summary
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 6a
    Introduction
        Page 7
        Page 8
    Proceedings of general session
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
    Proceedings of country specific seminars
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
    Annexes
        Page 41
        Page 42
        Page 43
        Page 44
        Page 45
        Page 46
        Page 47
        Page 48
        Page 49
        Page 50
        Page 51
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        Page 53
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Full Text












CONFERENCE PROCEEDINGS


NEAR EAST LABOR


MIGRATION:


IMPLICATIONS FOR AID POLICY


June 5 and 6, 1979


Department of State
Washington, D.C.


















Project Analysis and Evaluation Staff
Office of Development Plannidg
Bureau for Near East
U.S. Agency for International Development


November 1979
















CONFERENCE PROCEEDINGS


NEAR EAST LABOR


IMPLICATIONS FOR


MIGRATION:


AID POLICY


June 5 and 6, 1979



Department of State
Washington, D.C.















Richard Rhoda
Annette Binnendijk
with
Curtis K. Levinson
Project Analysis and Evaluation Staff
Office of Development Planning
Bureau for Near East
U.S. Agency for International Development


November 1979


--


























The ideas expressed in this report reflect materials and discussions

at the Conference on Near East Labor Migration: Implications for AID

Policy and should not be taken as official policy of the Agency for

International Development.







CONTENTS


Page,

I. EXECUTIVE SUMMARY. ........................................1

II. INTRODUCTION.............................................7

III. PROCEEDINGS OF GENERAL SESSION............................9

IV. PROCEEDINGS OF COUNTRY SPECIFIC SEMINARS

Egypt............................................19

Morocco.................. ............. ..................24

Tunisia ................................ ......... .........27

Yemen............................................. ....... 29

Jordan................................... ............. .... 34

Syria............... ..................... ..................38


ANNEXES

Conference Participants.................................42

Conference Agendas......................................43

Selected Excerpts from: "Aspects of International
Labour Migration in the Arab Near East:
Implications for USAID Policy," by Stace Birks
and Clive Sinclair....................................52

Discussion Paper on Migration Issues in the
Near East by Annette Binnendijk.......................72







I. EXECUTIVE SUMMARY


The Near East region displays great variations between countries with
respect to wealth and population. The oil-producing, capital rich
countries have relatively small populations while their capital poor
neighbors tend to have large populations and workforces. Capital rich
states do not have sufficient domestic labor to implement their ambitious
development plans; consequently, two to three million migrant workers
have been imported. At present, about half of the workers in capital
rich countries are migrants. This very large migration flow and the
counterflow of $5 to $10 billion in remittances, are crucial factors
in the development of countries in the Near East.

Impacts of International Migration

International migration has both positive and negative impacts on labor
exporting countries. Though there are differences of opinion concerning
the net impact, the majority tends to believe that the positive impacts
outweigh the negative impacts. A brief of impacts follows.

Possible Positive Impacts

1. Reduction or elimination of unemployment.
2. Increased consumption and quality of life as a result of remittances.
3. Investment of remittance funds in small businesses.
4. Increase in government revenues. (For example, customs tax on remittance-
stimulated import expansion or capturing remittances through the sale
of development bonds.)
5. Increase in foreign exchange as a result of remittances.
6. Improved status of women as a result of the absence of male migrant
workers.
7. Growth in the awareness and development orientation of returning
migrants.
8. Reduction of fertility.

Possible Negative Impacts

1. Vunerable, dependent economic position as migration and remittances
can change abruptly.
2. Labor shortages, often severe in key skill categories.
3. Decrease in the domestic production of key sectors, such as agriculture,
as a result of labor shortage.
4. Increased inflation as rapidly expanding remittance monies chase
limited supply of domestic and imported goods.

During the Conference, Birks and Sinclair emphasized the negative impacts
of Near East migration while others tended to stress the positive impacts.
It was clear that the data base supporting current understanding of the
situation is inadequate. Considerable additional work is needed on







obtaining accurate data on trends as well as understanding the complex
effects of labor and financial flows.

Trends in Near East Labor Migration

Between 1970 and 1977 migration increased very rapidly. Since 1977
migration has continued to increase, though at a slower rate. Current
evidence suggests that migration and remittance levels leveled off by
1979 (see Table 1). Current trends and shifts in the size and composition
of migration may have important implications for the future development
of capital poor, Near East countries.

As development in capital rich countries moves beyond the construction
phase, the composition of labor demand is shifting from lower to higher
skill requirements. This shift could result in many unskilled migrant
workers being forced to return to their home countries. At the same
time, the flow of skilled migrant workers probably will increase.

Another, equally important trend, is the growing use of labor from the
East Asian countries (Korea, Taiwan, the Philippines, Thailand, Indonesia,
and Malaya). Large companies from these countries have won numerous
recent contracts because they underbid the competition and utilize the
"enclave" or "work camp" approach. This approach isolates emigrant workers
from the domestic society; the companies supply workers with housing,
food, social services, and other basic needs. The male workers, who
emigrate without dependents, virtually all return upon completion of
contract assignments. The "enclave" approach is attractive to the
governments of capital rich states because they are concerned about
the impact of large numbers of migrant workers on domestic society.

In summary, the rate of increase in demand for Arab unskilled migrant
labor is expected to decline in the future; there may even be an absolute
decline. A rapid return of these migrants and the loss of remittance
income could have serious impacts on.the economies of Near East labor
exporting countries. Birks and Sinclair argue that there will be a
decline in migration and remittances and it will be rather rapid and
have dramatic impacts. Others at the Conference held far less pessimistic
views pointing out that there is no hard evidence that the total level of
workers will decline, and even a decline in workers does not necessarily
imply a decline in the level of remittances.

Impacts On Specific Countries

Though there are numerous similarities, the impact of international labor
migration differs somewhat from country to country.

Egypt

There is some controversy concerning the number of Egyptians working
abroad. Birks and Sinclair estimate that in 1975, 400,000 were abroad;
others argue that the number is much higher and reached over 1,000,000
by 1979. Current AID estimates for 1979 suggest that 800,000 are working







abroad and remitting almost $2 billion annually,over half of which is
in the form of own account imports. Despite these differences, it seems
apparent that to date migration has not solved Egypt's unemployment
problem. Though there are critical shortages of skilled manual labor
(especially construction workers), unemployment remains high (over 10%)
largely due to the inflexibility of the labor market. Low skilled and
unemployed workers usually are unable to move into higher skill jobs
vacated by migrants; they also have difficulty obtaining the travel
documents and tickets needed for migration and subsequent employment
in capital rich countries. A further obstacle to labor migration is
the reputation that Egyptian workers are not cooperative and difficult
to manage.

Training is an important factor in Egyptian labor migration. Vocational
training is a controversial topic because those who receive training often
migrate to high paying jobs in capital rich countries. Migration of
recent training graduates benefits Egypt by providing considerable
remittance income as well as giving migrants valuable work experience.
However, such migration leaves unresolved the problem of critical labor
shortages in key skill areas.

In summary, though migration complicates labor problems in Egypt, remittances
from migrant workers make a large and important contribution to the Egyptian
economy. Though experts are not all in agreement, the rapid acceleration
of Egyptian migration between 1970 and 1978 is not expected to continue;
the number of migrant workers will probably remain at current levels for
the next several years. Arab sanctions probably will have little impact
on Egyptian migration and remittance flows, but Egyptian domestic economic
policies could have considerable influence. Egyptian policies providing
incentives for the remittance of earnings may be even more important in
the short-term than changes in the number of Egyptians working abroad.

Morocco

Migration of labor to France has alleviated some of the un and under-
employment in Morocco. At present, there are about 190,000 migrants
in Europe.

Though remittances from migrants are presently an important source of
foreign exchange, the future is not bright because the number of Moroccan
workers in Europe is expected to decline. Furthermore, Morocco cannot
supply effectively labor to capital rich Gulf states because of her
very low labor skill level and lack of previous experience in supplying
labor to these states. In addition, political differences with Algeria
and Libya limit migration to these countries.

Morocco should not count on labor migration as a solution to unemployment
problems or a source of foreign exchange. Unemployment problems will
probably worsen in the years ahead; the labor force is growing faster
than employment. The predicted net return of migrants will aggrevate
the problem.







Tunisia

Like Morocco, Tunisian migrant workers traditionally went to France;
however, in recent years the focus has shifted to Libya. The Government
of Tunisia has placed tight restrictions on legal migration; therefore,
clandestine migration has made a large contribution to the estimated
50,000 Tunisian workers in Libya. Even if the Government altered its
policy and promoted labor migration, it is clear that migration to Libya
cannot provide jobs for the estimated 300,000 unemployed Tunisians. In
addition, prospects are quite limited for large scale movement of Tunisian
labor to Gulf states. It appears that the unemployment problem cannot
be solved through labor exportation.

Yemen

Yemen has been affected very dramatically by migration. Remittances
from migrant workers account for almost half of the total GNP. Largely
as a result of these remittances, real GNP has nearly doubled since 1975
and standards of living have improved accordingly. Though there is no
doubt that the impact of migration has been significant, the government
estimate of 1.2 million Yemenis working abroad seems exaggerated. Analyses
by Birks and Sinclair and a Swiss research team indicate that about 300,000
were working abroad in 1975; by 1979 this figure increased to 550,000-750,000
and remittances reached about $1.5 billion.

Migration has had a variety of impacts on Yemen. In addition to GNP
growth, imports and customs revenues have expanded very rapidly; investments
in buildings, motor vehicles and small businesses have accelerated; and
inflation has become a serious problem. There are severe shortages of
skilled workers. Some agricultural terraces have deteriorated due to
lack of maintenance. Farmers have shifted from labor intensive coffee
and cotton cultivation to crops requiring less labor such as qat.

The absence of Yemeni males has altered the role of women who now head
households, manage farms, control financial resources and demand more
attention from government. Fertility rates have declined significantly.

The migration/remittance bubble may be fragile; the government should take
steps to protect Yemen against the possibility of abrupt changes in the
future. The shift to higher skilled and East Asian labor in Saudi Arabia
could result in the return of some unskilled migrant workers. This possibly
could lead to unemployment problems in Yemen.

Jordan

Like Yemen, Jordan is heavily involved with migration although the skill
mix is substantially different. By 1979, about 40% of the Jordanian
labor force was working abroad and remittances amounted to almost $1
billion. About 40% of the migrants are relatively unskilled construction
workers; the majority of the rest are well educated and skilled. Though
there is considerable concern in Jordan about "brain drain", the problem







is not as bad as it might be because Jordan has an effective educational
system and enjoys a high degree of occupational mobility. Lower skilled
workers can move up into jobs vacated by skilled workers who migrate.

The government has adjusted quite well to labor distortions caused by
migration; it wisely has not tried to stop migration. The government
makes arrangements for replacement migrants to avoid labor shortages in
rural areas and pays attention to migration trends.

The changing demand for labor in capital rich countries may result in
the return of unskilled workers to Jordan. This possibly could cause
some unemployment problems, but they should not be serious because
Jordan is itself importing unskilled labor. Moreover, many Jordanian
migrant workers have relatively secure jobs because of their skill level,
education, and knowledge of Arabic. Jordan should be able to adjust to
the changing labor situation. Remittances will probably stabilize and
eventually decline slightly as construction workers return and ties
between other migrants and Jordan weaken through time.

Syria

Due to its size and government policy, Syria has not experienced the same
degree of migration impact as Yemen or Jordan. By 1979, roughly 400,000
or about 15% of the labor force were working abroad. The government
is very concerned about migration and has placed strong restrictions on
labor exports. Despite restrictions, migration continues causing some
skilled labor shortages in the private sector.

Remittances, which amounted to $.75-1.0 billion in 1979, make a considerable
contribution to the small, but active, private sector in Syria. Government
toleration of imports financed by remittances provides some flexibility
in the state-controlled economy.

Birks and Sinclair suggest that the Syrian Government should ease migration
restrictions, allow civil servants to migrate for short periods of time,
and develop general programs which enable Syria to reap greater benefits
from migration and remittances.

Major Conclusions and Recommendations

1. International migration of labor is a very important factor in the
development of both capital rich and capital poor Near East countries.

2. Migration has a clearly positive impact on the development of capital
rich countries and a mixed impact on labor exporting countries.

3. Remittances have contributed to economic growth but also have stimulated
inflation.

4. Migration has reduced unemployment in labor exporting countries and
caused shortages of skilled labor in several countries.








5. Migration and remittances are somewhat volatile and subject to
relatively abrupt economic and political changes.

6. There is a trend toward the increasing use of East Asian and higher
skilled labor. If it continues, it could lead to the return of unskilled
Arab workers. An important point of disagreement is centered around the
strength of these trends and relationships, and the resulting consequences
for labor exporting Arab countries.

7. A region-wide manpower planning system is highly desirable but
does not appear possible at present given the current attitudes of governments
in the region.

8. Careful monitoring and forecasting of international labor flows
are needed for rational development planning as well as proper design
of development projects.

9. Additional training activities are needed to provide labor for skill
shortage categories; some of those trained undoubtedly will migrate to
capital rich states.







Table 1. Trends in Near East Labor Migration and Remittances


Country


Jordana/


Estimated Number
of Migrant Workers
in Arab Countries

1975

1979

Estimated Remittance
Levels ($ millions
current prices)

1974

1975

1976

1977

1978

1979


400,000

800,000










880

1,761

1,950


150,000/ 2(

300,000Y 4(




120-160

265-350

675-900

765-1,020

790-1,050


Syria




)0-300,000-/

)0,000




m--



400




750-1,000


North
Yemen




300,000

550-750,000


203

479

1,013

1,340

1,423


In 1979, about 75,000 foreign nationals were working in Jordan.
Includes about 50,000 West Bankers.
1976 estimate, includes a very large number of workers in Lebanon.







II. INTRODUCTION



International migration of labor is a key factor influencing the
development of countries in the Near East and North Africa. Labor
is supplied to capital rich, oil producing countries by their capital
poor neighbors. This migration has made an important contribution to the
development of the wealthier countries. However, the net impact of
labor emigration on the development of capital poor countries is unclear.
Migrant remittances constitute a potentially important source of foreign
exchange. On the other hand, migration may result in severe shortages of
skilled and unskilled labor in some capital poor countries; this lack of
manpower can be an important constraint to development. Also, the return
of labor to capital poor countries, which probably will increase in the
future, might cause problems of unemployment because national economies
may be unable to expand rapidly enough to absorb sudden increases in labor
supply.

There are a number of important issues and questions concerning labor
migration in the Near East. What are current levels and patterns of
migration and remittances? How will these patterns change in the years
ahead? What are important migration and development policy issues for
capital poor countries and for international donor agencies? What policies
are needed in the short, medium and long term? How do present and anticipated
future migration and remittance flows affect AID programs and projects?
The importance of these questions led to the organization of the Conference
on Near East Labor Migration: Implications for AID Policy. The Conference,
which was held on June 5 and 6, 1979, at the State Department, Washington,
D.C., was presented by the Project Analysis and Evaluation Staff, Office of
Development Planning, Bureau for Near East, AID (NE/DP/PAE).

The Conference was based on an AID funded study, "International Labour
Migration in the Arab Near East: Implications for USAID Policy," written
by Dr. Stace Birks and Dr. Clive Sinclair, Co-Directors of the ILO
International Migration Project and affiliated with the Department of
Economics, University of Durham, England. The study raised a number of
questions and issues which provided both a focus and launching point for
the Conference sessions.

Five sessions were held. The large general session, which included about
50 participants, addressed broad migration issues which are of general
concern to the Near East Region. The session, which was chaired by
Mr. Joseph Wheeler, Assistant Administrator for the Near East Bureau,
AID, included presentations by Drs. Birks and Sinclair, brief remarks
by discussants, and open discussion. Background materials for the session
included the Birks and Sinclair report; "Discussion Paper on Migration
Issues in the Near East", by Annette Binnendijk, NE/DP/PAE; "International
Labor Migration in the Middle East and North Africa Trends, Effects
and Policies, by Zafer A. Ecevit, The World Bank; and a descriptive list
of specific issues prepared by the NE/DP/PAE staff.








Six country specific seminars focused on particular issues for individual
countries. The seminars, which involved about 15 to 25 participants,
addressed policy implications for both host country governments and
AID. The format of the seminars included a brief presentation by Birks
and Sinclair followed by open discussion structured around an agenda of
predetermined issues.

The seminars were moderated by Office Directors of the Near East Bureau,
AID. The first seminar focused on Egypt and was moderated by Mr. Gerald
Kamens, Director, Office of Egypt/Israel Affairs. Ms. Mary Huntington,
Officer in Charge, Tunisia/Morocco Desk, moderated seminars on Morocco
and Tunisia. The seminar on Yemen was moderated by Mr. Charles Weinberg,
Director, Office of Near Eastern/North African Affairs. Mr. Blaine
Richardson, Director, Office of Jordan/Lebanon/Syria Affairs, moderated
the seminars on Jordan and Syria.

Background materials for seminars included the AID funded Birks and
Sinclair report; ILO funded reports by Birks and \Sinclair and others on
international migration dynamics in each individual country; and issues
papers prepared by the NE/DP/PAE staff.

These Proceedings provide an overview and summary of activities at the
Conference. The sections on individual sessions are not simple transcripts
of the discussions; rather they are organized reports on the sessions.
The questions and comments by participants have been paraphrased and
placed in logical order so that the Proceedings read clearly. On occasion,
pertinent backgorund materials were inserted to clarify the text.




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III. PROCEEDINGS OF GENERAL SESSION



Moderator: Mr. Joseph C. Wheeler, Assistant Administrator
Bureau for Near East
Agency for International Development


Opening Remarks

Mr. Wheeler began the Conference by recalling instances where policy
manipulations made possible large increases in the beneficial results
of migration for the labor exporting country. For example, in Turkey
several years ago an AID policy paper suggested a system that in effect
would change the foreign exchange rate for remittances. The policy
paper was distributed to officials in the Turkish Government, and the
system was adopted. As foreseen, the devaluation was a spur to the flow
of remittances. Another example cited was the Egyptian case where
devaluation has resulted in an increase in remittances which may reach
as much as $2 billion this year.

Mr. Wheeler discussed briefly the impact of migration upon labor shortages
in Jordan, and suggested that AID might take advantage of the situation
for promoting the status of Jordanian women. He saw possibilities of
increasing women's participation via vocational training programs. In
the Yemen's development, an enormous factor is remittances and how to
tap a greater share of these flows for government's use in development
projects.

In conclusion, Mr. Wheeler stated that development planners in these
countries are continually facing policy questions related to international
migration phenomena. A few million migrants in the Arab Near East are
remitting between $5 to $10 billion, a sum greater than the total AID
program.

Presentation of the Report

Dr. Clive Sinclair, Co-Director of the ILO International Migration
Project, began by saying he was pleased with the opportunity to discuss
the policy implications of Near East migration with a major aid'donor,
the U.S. Agency for International Development.

Overview of Near East Labor Migration

He outlined the great regional differences in distribution of welath
and population. What he termed the "capital rich" countries (Saudi
Arabia, Kuwait, UAE, Qatar, Libya, Bahrain, Iraq, Oman) are characterized
by substantial oil endowments, high per capital GNP's, small populations
and consequently small labor forces. The indigenous labor forces are
reduced still further by the very young age structures of the population,
by high education enrollments, and by very low female labor force
I





-10-


participation rates. The capital rich states also share in common
ambitious plans for economic development (especially industrialization)
with the financial capacity to implement these plans. However, because
of their small indigenous labor forces, the capital rich states are
becoming more and more dependent upon foreign labor to implement their
economic development plans. Currently there are a total of about 2.5
million migrant workers, not including their dependents, in the capital
rich states, or nearly one-half of their total labor force.

The "capital poor" countries (Yemen Arab Republic, Egypt, People's
Democratic Republic of Yemen, Sudan, Jordan, Syria, Morocco, and Tunisia)
share a very different set of characteristics. They tend to have large
populations, low per capital GNP's, relatively high labor force participation
rates and large labor forces. Although a less obvious feature today,
a few years ago these countries also shared widespread unemployment.

During 1970 to 1975 there was a rapidly growing demand for migrant labor
in the capital rich countries; most of the migrant labor during these
years came from the Arab capital poor countries in the region. At first,
the outflow of labor was welcomed by the governments of the capital
poor countries. However, migration became a more controversial issue
when it became obvious that labor outflows were substantial, not temporary,
and had detrimental impacts on domestic development.

Dr. Sinclair indicated that since 1976 the patterns of migration in the
Near East have been undergoing change. The development phase in the
capital rich countries is moving towards ambitious industrial schemes;
it is becoming more and more difficult and costly to obtain the required
types of labor from Arab sources.

Changing Pattern of Labor Migration

To get the required skill mix, capital rich states are increasingly
contracting with large companies from East Asia (Korea, Taiwan, the
Philippines, Thailand, Indonesia and Malaya). Contracts are let for
both construction and operational phases of projects. A self-contained
"enclave" or "work camp" approach is utilized; companies supply workers
with housing, food, social services and other basic needs. The male
workers, who emigrate without dependents, virtually all return upon
completion of contract assignments. This and the fact that the "enclave"
approach isolates emigrant workers from the domestic society, makes
this type of contract particularly attractive to governments of capital
rich countries. These governments are quite concerned about the impact
of emigrant labor on domestic society. The "enclave" approach of East
Asian companies is also very cost effective. Apparently, Arab companies
have not yet been able to compete successfully for these contracts.
The trend toward this type of contract suggests that in the future a
greater share of emigrant labor will be supplied by East Asian sources.

Sinclair predicted that with the decline of the construction boom
in the capital rich states and with the substitution of East Asian




-11-


labor, the number of Arab migrants will tend to fall. Even in the social
service sector, which traditionally has used Arab workers, the governments
of the capital rich states are beginning to contract with single, often
East Asian, companies. Thus even this seemingly certain sector for Arab
employment is now also in doubt.

Even if the prediction of an aggregate decline in the number of Arab
migrants proves incorrect, Sinclair stressed that even a leveling off
of Arab migration would have extremely important implications for
development planning, remittance flows, as well as employment and
educational planning.

Governments should pay close attention to migration trends and forecasts.
Development plans based on the blind assumption of continued rapid
increases in migration and remittances, are unrealistic and have little
chance of being successfully implemented. The capital poor countries
may not continue to have foreign exchange surpluses and labor shortages
typical of the last few years.

Impacts of Migration on Capital Poor Countries

Dr. Stace Birks, the other Co-Director of the ILO International Migration
Project, took over the discussion at this point and began to outline
some of the major beneficial and detrimental impacts of international
migration for various capital poor countries.

Egypt. Despite Egypt's stereotype of being a labor-surplus economy
with a tradition of labor export, in fact Egypt has "failed" as a
labor exporter. In 1975, Egypt had only 4% of her labor force working
abroad; less than half a million workers. At the same time, an estimated
1.5 million, or about 13% of the labor force were unemployed. Birks
suggested that the reasons for Egypt's failure to export her unemployment
are related to the selectivity of migration; namely the "wrong" types
of labor left. Whereas well educated and skilled Egyptians could find
jbbs abroad relatively easily, the poor, uneducated Egyptian was not
in demand and furthermore faced complicated and expensive institutional
constraints to emigration.

Sudan. The Sudan typifies the speed with which migration can change
the domestic situation. During 1969-72, the major problem facing
Sudanese planners was unemployment. Attention continued to be directed
towards the "unemployment problem" up until 1976; however, by then the
SUdanese economy was suffering a labor shortage. At that time only
about 4% of 5% of the Sudanese labor force worked abroad; however,
virtually all of the emigration originated from the modern sector.
About 15% of that sector's labor force was abroad in 1975/76 thus
causing a domestic shortage of modern sector workers.

Jordan. In 1975, about 28% of Jordan's labor force worked abroad.
Such large labor exports have necessitated the importation of replacement
labor. The replacement labor tends to be of lower skilled and productivity





-12-


than the Jordanian labor it replaces. Another concern is the possibility
of net-return of the Jordanian migrants and the implications of this for
the replacement labor in Jordan. A factor that has helped Jordan cope
with migration has been the high degree of upward mobility in occupations.
For example, unskilled rural workers move into the semi-skilled jobs
vacated by migrants. A question is, if return migration becomes large-
scale, will downward mobility be as easily obtained? Will Jordan face
a problem of oversupply of skilled labor while unskilled jobs are vacant
of held by replacement migrants from other countries?

Syria. Only about 4% of Syria's labor force had migrated as of 1975.
Yet the Syrian Government claims that this has caused serious domestic
problems of labor shortages. Birks felt that the Government's claims
of detrimental impact have been overplayed and suggested that more out-
migration would even benefit the Syrian economy.

Oman. Historically, Oman has depended upon the agricultural sector for
export earnings. However, the labor shortage in agriculture caused by
migration is contributing to the gradual destruction of the old irrigation
system in-Oman.

Yemen. Migration has had some definite impacts on agriculture in Yemen.
Labor shortages and large income growth due to remittances have led to
a switch from production of coffee to qat, a mild narcotic. Coffee
is labor intensive while qat thrives on neglect and thus is ideal for
absentee farming. Demand and price changes also have contributed to
this shift. World coffee prices were relatively low while remittance
income greatly increased the domestic demand and price of qat. Given
the current high level of remittances, loss of foreign exchange from
coffee exports is no problem at present. However, in the longer term,
migration may decline causing serious economic problems.

Tunisia and Morocco. The impact of migration within the Near East has
been less obvious in Tunisia and Morocco. With the decline of European
demand for their labor, these countries might look for outlets within
the Arab world. However, Birks thought the market for their labor in
the capital rich Arab countries was rather poor.

Projected Demand for Arab Labor

At this point Dr. Sinclair again picked up the presentation and began
to outline projections of the future demand for Arab labor in the
Near East. He emphasized that their projections were not meant to be
definitive statements of what will happen, but merely feasible scenarios
that will help planners think through the implications of possible
alternative trends. Birks and Sinclair have developed two alter-
native scenarios. Both scenarios use the development plans of
capital rich states to arrive at the same future level of demand for
foreign labor. While total demand is assumed to grow, it is growing
at a declining rate. The two scenarios differ in their assumption
regarding the share of the market that the Arab capital poor countries
will have. The first scenario optimistically assumes that all Arabs,




-13-


who are able and willing to migrate, will find jobs. In the second
scenario it is assumed that the absolute number of Arab migrants will
remain constant at the 1975 level (or if they have grown since 1975,
fall back to this level). Thus the current share of the market going
to Arabs will fall. Sinclair reemphasized their view that the nature
of the labor market in the Near East region is changing dramatically
and that the Arab role in that market is declining.

Policy Implications

Once again Dr. Birks took over the presentation and shifted it to the
policy implications of international migration in the Near East. He
noted that migration is beneficial for individual migrants and results
in improved income distribution both within the region and within
individual countries. However, the impact of migration upon the domestic
economic development of the capital poor countries is not so clearly
positive. In fact, with the passage of time, the initial advantages
of migration may turn into disadvantages. For example, labor's outflow
first eases unemployment problems but soon turns into labor shortages;
also, remittances first increase purchasing powers and stimulate production
but may soon fuel high inflation.

Birks pointed out that because of the dramatic strength of the labor
demand forces involved, there is relatively little capital poor governments
can do to actually control or constrain labor flows. However, there is
a number of short-term policies that governments can undertake to enhance
the benefits and reduce the costs associated with migration. For
example, the Sudanese Government has adopted a number of relatively
successful schemes that deserve closer study and consideration by other
labor exporters. Medium term policy should be oriented not towards
attemptingg to change rather inevitable migration flows, but rather to
"redict and possibly stabilize these flows.

Birks recommended that AID encourage the governments of capital poor
countries to develop longer-term perspectives on migration. Most
of the governments have not thought about the changing patterns of
demand for their labor or the future implications of these. Rather,
they have been preoccupied with the short-term problems of dealing with
current labor shortages and how to channel remittances most effectively.

After these concluding remarks, Mr. Wheeler thanked Drs. Birks and
Sinclair for their presentation, saying he appreciated their "going
out on a limb" with controversial projections.

Comments on the Report by Mr. James Mattson

Mr. James Mattson, Middle East and South East Asia Advisor, Bureau of
International Labor Affairs, Department of Labor, made a number of
points. First, he underlined the volatility of the manpower market in
the Arab Near East. For example, the number of Egyptian emigrants
has increased greatly over the 1975 figures. Furthermore, the Egypt-Israel
i





-14-


peace agreement may have implications for Egypt's future level of
migrants working in the Arab countries and also perhaps in Israel.
He also pointed out that there is a reverse gap between the capital
rich and capital poor countries with respect to the quality of human
resources. Currently the populations of the capital poor countries have
higher education and skill levels; however, this gap gradually will
narrow as increased educational investments in the capital rich countries
begin to pay off.

Mattson made some suggestions regarding the type of strategies that the
labor-exporting Arab countries might adopt. He thought that some
Arab countries, such as Egypt and Jordan, can possibly compete with
the East Asian companies for large scale contracts in the capital-rich
states. He noted that problems to overcome included lack of large
companies and management capabilities. He suggested also that more could
be done in training labor in direct response to demand in capital rich
states.

Mattson pointed out that Arab migrants have some distinct advantages
in the labor markets of the capital rich states that were not emphasized
in the report. As a greater proportion of the economy (especially in
services) begins to use the Arabic language, Arab-speaking migrants
will have a distinct competitive advantage. Thus the replacement of
Arabs by East Asian labor may be slower than suggested by Birks and
Sinclair.

On a regional basis Mattson thought there was limited scope for affecting
migration flows. The capital-rich states, he argued, have deep hesitations
against becoming too dependent upon a single labor source. In other words,
they will attempt some distribution of foreigners to maintain their
latitude. Also, the capital-rich countries tend to use cost-effectiveness
criteria to make decisions on labor: i.e., which sources provide
quality labor at cheaper prices. He identified three areas where he
thought there was scope for working with labor-exporting countries:

(1) training programs directed at job opportunities,
(2) information programs that make the population aware
of realistic and profitable career opportunities, and
(3) efforts to adopt more realistic wage policies.

In conclusion, Mattson said he hoped that AID would continue to address
migration related issues and opportunities.

Comments on the Report by Dr. Nazli Choucri

Dr. Nazli Choucri, the Department of Political Science, MIT, commented
on areas of her agreement and disagreement with the report. First,
she thought that short-term policies aimed at current labor-shortages
were essential. While the longer-run was of some importance, she
doubted whether governments would be willing or able to do such planning.




-15-


With regard to the scale of Egyptian migration, while she thought the
report's estimate of 400,000 migrants in 1975 was more or less correct,
the magnitude had increased substantially by 1978, reaching perhaps
as many as one million workers abroad.

Choucri agreed that a tapering .off in the growth of demand for labor
in the capital rich countries was obvious. She wondered when this
might begin and suggested that migration flows might not slow down
for yet another three to five years.

In contrast to the report's prediction that the share of labor from
Arab sources would decline, Choucri thought that Arab labor would
continue to predominate in the capital rich countries. She argued
that other than in the construction sector, East Asian labor could
not easily penetrate. For example, education and government services
would continue to demand Arabic-speaking labor. Also, Arab labor.has
the advantage of sharing a common culture and ethnicity.

She suggested that the development strategy of labor-exporting countries
should give more attention to training and education. Training activities
should focus on specific objectives and recognize the differences between
training to address specific labor shortages, training to compete with
East Asian labor, training for productivity increases, and training for
long-term development.

Open Discussion

At this point the moderator, Mr. Wheeler, opened the discussion to the
audience.

Negative and Positive Impacts of Migration

Donald McClelland, NE/DP, opened the discussion by making a number of
comments in reaction to the report's emphasis on the negative impacts
of migration rather than the less obvious advantages. It is his opinion
that the beneficial impacts of migration substantially outweighed the
disadvantages. He likened migration to a labor-intensive export in
its purest form. Certainly, GNP growth in the capital poor countries
has accelerated as a result of migration, and even growth in GDP has
been good. In conclusion, he argued that in the absence of migration,
the gap in wealth between the capital rich and capital poor Arab countries
would be much greater.

Gerald Kamens, NE/EI, continued the discussion on the advantages and
disadvantages for labor-exporting countries. He asked about the
seriousness of the skill shortages in labor-exporting countries.
Choucri indicated that though skill shortages are a real problem,
they do have a positive side. Skill shortages stimulate skill upgrading
and sectoral shifts in labor. Bradshaw Langmaid, NE/DP, added that
migration indirectly has resulted in larger beneficial labor shifts
and more increase in occupational mobility than could have been achieved
through direct programs.





-16-


Peter Bechtold, State/Foreign Service Institute, suggested that psychological
costs of migration may outweigh the benefits. He focused on the problems
faced by returning migrants. Their high wages in capital rich countries
raises their expectations and sets them up for disappointment upon their
return. Returning migrants may come to resent their governments for
being unable to adequately meet their employment and other needs. This
might lead to serious political problems. Choucri added that Egyptian
migrant construction workers have learned unionism and radical politics
in the Persian Gulf; upon their return they are more powerful and organized
in their efforts to pressure government into meeting their demands.

Implications for AID Projects

David Mandel, NE/PD, asked about implications for AID projects. He
first noted that there is general agreement concerning the eventual decline
in growth of demand for Arab labor. Mandel indicated that AID is presently
reviewing and approving projects to be implemented over the next three to
five years. These projects generally assume a labor shortage. In light
of the predicted decline, how can AID alter its projects to increase
their chances of success? Unfortunately, the group was unable to provide
a good answer to Mandel's excellent question. It was suggested that
AID could assist government planners in monitoring migration trends,
forecasting further levels of migration and remittances, and analyzing
the long-term implications of migration. Perhaps, AID should provide
technical assistance to help governments address eventual unemployment
problems. Choucri suggested that AID could focus less on vocational
training and more on basic education which is important to national
development regardless of changes in migration trends. McClelland
indicated that he wasn't convinced that migration would decline and
unemployment levels would raise. He felt that changes would probably
be gradual, thus implying that AID should not drastically change its
project approach. Blaine Richardson, NE/JLS, added that demand for Arab
labor would probably remain high because an increasing number of Arabic
speakers will be needed as the service sector expands in the years ahead.

Labor Dynamics in Capital Rich Countries

Much of the remaining open discussion focused on labor dynamics in
capital rich countries. Both Peter Benedict, NE/TECH, and Sam Justice,
Department of Labor, noted that capital rich countries are heavily involved
in training their indigenous labor forces. Won't indigenous labor be
able to replace skilled migrant workers in the years ahead? Birks responded
that the size of the indigenous labor force was simply too small to
provide all the skilled labor required for implementation of development
plans. Sinclair added that there is increasing dualism in the labor
markets of capital rich countries. Domestic labor is attracted to
government employment which provides very high salaries, free housing
and many other benefits. In general, productivity is quite low. Foreign
labor is largely confined to the private sector where competition is
more keen, wages are lower and productivity is higher. Birks indicated
that often domestic workers are reluctant to take training or private







sector jobs because public sector employment is so easy and wages are
so high. Therefore, capital rich countries will continue to rely on
imported labor for unskilled workers as well as private sector skilled
workers.

Summary of Policy Implications

Bradshaw Langmaid, NE/DP, summarized the policy implications of Near
East labor migration. He made three basic points.

First, he noted that migration and remittance levels do not operate in
parallel. Economic policies can have profound impacts on remittance
levels without influencing migration levels. For example, Turkey
changed its exchange rate for remittances and therefore greatly increased
remittance flows. Langmaid suggested that AID should study the various
practical examples of policies for increasing remittances and advise
host governments accordingly.

Second, migration may have a destabilizing impact because shortages of
labor or capital can change rapidly. Several of the labor exporting
countries were experiencing high unemployment and severe capital shortages
a few years ago. Now the situation has reversed and they have labor
shortages and capital is much less scarce. If the Birks and Sinclair
predictions are correct, this could reverse again in the future. This
dynamic economic situation calls for flexible economic policies. Migration/
remittance phenomena presents a potential engine for development. It
can provide a real stimulus for social change, increase participation of
womdn in the development process, reduce fertility, and encourage local
development. AID must find ways to exploit the development opportunities
associated with the migration/remittance process.

Third, Langmaid stressed the key role of education and vocational training
in the migration process. AID must decide who to train in what skills.
Should we be concerned about the temporary "brain drain" associated with
the movement of recent training graduates to capital rich states? Should
labor migration be considered as the ultimate form of labor intensive
exports? To properly address these education and training issues,
better manpower planning is needed.

Closing Remarks by Mr. Wheeler

Mr. Wheeler closed the discussion by reemphasizing the dynamic nature of
Near East labor migration. Recurrent changes can be expected in the level
and composition of migration flows; the trend toward East Asian labor
imports may accelerate. The changing migration situation presents
problems as well as opportunities for Near East labor exporting countries.
Mr. Wheeler suggested that the psychological impacts of migration and
eventual return are particularly intriguing. He noted that John Kenneth
Galbtaith's recent book indicates that trauma is an important element'
in development. In many ways, the migration process can be viewed as
a traumatic experience which can stimulate development. We must learn
to uAderstand and take advantage of migration in a way which promotes





-18-


development. This Conference represents an early stage in our dialogue
on Near East labor migration. We should keep up to date on this issue.





-19-


IV. PROCEEDINGS OF COUNTRY SPECIFIC SEMINARS



Egypt

Moderator: Mr. Gerald Kamens, Director
Office of Egypt/Israel Affairs
Bureau for Near East
Agency for International Development

Presentation by Dr. Stace Birks and Dr. Clive Sinclair

Dr. Birks opened the presentation by providing some background information
on Egypt. The country has a large population, 38 million in 1975/76,
and large work force, 12.5 million. This gives a crude participation
rate of about 33%, which is relatively high for an Arab country due to
the participation of women. About half of the labor force is in agriculture;
the majority of nonagricultural workers are in the public sector; and
about 1.5 million or 13% of the labor force are unemployed.

Number of Egyptians Working Abroad

According to the Birks and Sinclair report, an estimated 400,000 Egyptians,
or only about 3% of the labor force, were working abroad in 1975. This
figure is lower than other estimates and lower than Birks and Sinclair
had anticipated. To clarify the estimate, Birks briefly explained the
methodology used. The methodology looks at two sets of information.
First, Egyptian data sources provide an estimate of the number of Egyptian
workers abroad. Second, information from each labor importing country
gives an estimate of the number of Egyptians working in that country.
By working with these two estimates, Birks and Sinclair obtained their
figure for the number of Egyptians working abroad. It seems surprising
that only 400,000 were working abroad in 1975 when unemployment in Egypt
was so high, about 1.5 million. It is also surprising that acute shortages
of tradesmen and craftsmen could exist with such high levels of unemployment.

Explanation of Why So Few Are Working Abroad

Birks suggested an hypothesis to explain this anomaly. There is very
little occupational mobility within the Egyptian labor force. Consequently,
there is very little readjustment within the labor market to compensate
for exports of certain types of manpower. This explains why acute shortages
of skilled labor can exist simultaneously with high unemployment. Public
sector employees, which account for almost 75% of nonagricultural employment,
are essentially immobile occupationally. They generally can maximize
their long-term economic gain and security by remaining in their public
sector jobs. Relatively few migrate to capital rich states or seek
employment in labor shortage sectors such as construction. The remaining





-20-


workers tend to be uneducated, inexperienced, and often unemployed.
They have difficulty moving into labor shortage sectors because of the
inflexibility of the Egyptian labor market. They cannot migrate easily
to capital rich countries because of institutional constraints; for
example, they have difficulty obtaining travel documents and tickets.
Consequently, many remain unemployed in Egypt despite numerous employment
opportunities in capital rich countries.

An additional obstacle is the rather poor reputation Egyptian labor has
in capital rich states. The Egyptian-Qatar labor supply agreement provides
an example. The agreement called for 22,000 workers over a two-year
period. However, a large proportion of the workers did not like the pay
or working conditions and therefore returned prematurely to Egypt.
The agreement failed because it lacked proper planning, management, as
well as adequate supervision and training of employees. Egyptian workers
apparently have a reputation in capital rich countries of being difficult
to manage. They often haggle over wages and working conditions; many
insist on bringing their families. East Asian workers often are preferred
because they accept lower wages, have comparable skill and productivity
levels, are easier to manage, and tend to live in enclaves isolated from
the rest of the community.

Policies to Increase Labor Exports

The negative image of Egyptian workers and the shift in demand toward
more skilled workers, suggests that Egypt will be unable to export
her unemployment problem. Despite these factors, the Government Manpower
Plan calls for greater emigration of workers. Birks suggested four
actions which could be undertaken for Egypt to export more labor.

1. Carefully evaluate the external market for Egyptian workers and
determine what types of workers can be placed in which sectors of which
countries.

2. Train and make available for migration large numbers of the types
of workers which are demanded in capital rich countries. This may require
some basic changes in the Egyptian education/training system.

3. Minimize institutional constraints to labor migration. Simplify
regulations regarding travel documentation and develop programs which
encourage migration of public sector employees.

4. Aggressively market labor through advertising and promotion of
bilateral agreements and contracts for labor supply.

Though it is possible for Egypt to export more labor, this will take
considerable effort. The prospects for increased labor emigration
are not bright.




-21-


Discussion

Number of Egyptians Working Abroad

Nazli Choucri, MIT, indicated that there are considerable differences
of opinion concerning the number of Egyptians working aborad. She
suggested that World Bank numbers are roughly similar to the Birks and
Sinclair figure of 400,000 Egyptians working abroad in 1975. Choucri
added that the 1976 census figure of 600,000 is very realistic. The MIT
research based on Egyptian data generally indicate that many more Egyptians
were working abroad than reported by Birks and Sinclair. James Mattson,
Bureau of Labor, pointed out that 1975, the base year for Birks and Sinclair,
was not a typical year. The number of Egyptians employed in Libya in
1975 has since declined considerably; however, Egyptian employment in
other Arab countries has increased very rapidly since 1975.

This topic concluded with general agreement that there are widely varying
estimates of the number of Egyptians working abroad. An issue was raised
concerning the impact of Arab sanctions on Egyptian labor exports. Though
nobody really knew what impact this might have, there seemed to be some
agreement that the impact would be limited.

Construction Sector

Dr. Choucri spent a few minutes discussing MIT research on the Egyptian
construction sector. The critical shortage of construction workers in
Egypt has occurred because about half the workers have migrated, mostly
to Libya. MIT has studied very carefully the specific occupational
composition of Egyptian construction workers in Libya; this study provides
insights to the composition in other capital rich countries. Choucri
indicated that detailed MIT research shows that labor is the most important
constraint to construction in Egypt. Mattson added that he had visited
several construction sites which were without needed workers. Korean
labor is being utilized at some sites in Cairo. Kamens mentioned that an
AID study of the sector also indicated that lack of skilled labor is the
key constraint.

Choucri emphasized the importance of construction in the development process.
It if difficult to undertake development projects without a healthy
construction sector. Bottlenecks in the construction sector can adversely
affect all other sectors. In Egypt, the labor shortage in the construction
sectbr has contributed to increased wages in agriculture. According to
Choucri, agricultural workers have moved to cities in search of construction
jobs thus alleviating rural underemployment and enabling wages to
rise. This is in partial contrast to the Birks and Sinclair hypothesis
concerning the rigidity of the Egyptian labor market.

Education and Training

Most of the open discussion period was spent on education and training.
Choucri indicated that for 20 years Egypt has been committed to supplying
teachers for universities and school systems in other Arab countries.





-22-


She added that about 40% of Egyptian university professors are teaching
abroad. Egyptian school teachers are rewarded for good domestic service
by being allowed to teach abroad where they can increase their income
substantially. The massive migration of Egyptian professors and teachers
may put strains on the education system. Tom McDonough, NE/TECH, added
that AID is studying basic education in Egypt and the impact of teacher
migration.

Choucri indicated that basic education in Egypt is in need of reform.
There is essentially a "two track" system. Privileged groups get
better teachers, individual tutoring and other benefits while less
privileged obtain lower quality education. Mattson added that officials
in Saudi Arabia feel that the Egyptian education system is 20 years out
of date.

Though there are four agencies nominally involved in vocational education,
very little vocational training is provided by the public sector. Most
craftsmen are trained in private sector apprenticeships. There appeared
to be general agreement that the Government of Egypt and AID should do
more vocational training. Choucri indicated that there are a variety
of different types of vocational education; the Government must carefully
decide what types should be provided. Craig Buck, NE/EI, stated that the
Government of Egypt is not particularly interested in vocational training.
They tend to view education as an equity tool rather than as a system
to produce workers. The system guides students into academic education
and toward white collar jobs. Vocational skills are not emphasized.

Increased vocational training is controversial because those who receive
training often migrate to capital rich countries where they can get
wages far higher than those in Egypt. In addressing this issue, Gerald
Kamens mentioned that consideration was given to training women for the
AID vehicle maintenance project because they have more difficulty migrating.
He next asked if the Government should overtrain with the knowledge that
some of the trainees will migrate. By overtraining, perhaps enough
trained workmen would stay in Egypt to alleviate critical manpower
shortages. There appeared to be general agreement that overtraining is
a good idea; it certainly helps needy Egyptians and will help Egypt
in the long run.

The discussion shifted to the pros and cons concerning the migration
of recently trained workers. Many felt that it would be preferable if
trained workers chose to stay in Egypt. However, the incentives for
migration are large. George Lichtblau, State/NEA, suggested that we
should try to keep trained workers by providing positive and negative
incentives. Choucri interjected that negative incentives don't work.
The problem with some positive incentives, such as increased wages, is
that they distort the economy and may cause political problems.

Most seem to agree that the migration of recently trained workers should
not be regarded as a serious problem. Ed Anderson, NE/DP, suggested that
AID should train and expect migration. The highest return for our training




-23-


investment is obtained when trainees migrate because wages are so much
higher in capital rich countries. Though such training may indirectly
help capital rich states, it definitely helps Egypt and Egyptians.
Egypt gains foreign exchange through remittances and Egyptians gain
higher incomes. Choucri added that the migrants will eventually return
to increase the pool of domestic skilled labor.

Mattson suggested that it is useful to distinguish two types of training
related to the migration issue, training for specific skills and training
for specific jobs. For skills training, he said that migration might
be encouraged because training graduates can gain better experience
by working in the capital rich countries. In contrast, if the training
is for specific jobs in Egypt, then incentives must be used to retain
the trained workers in those jobs. However, it is unclear what types
of incentives might work.

Remittances

Bradshaw Langmaid, NE/DP, brought up the issue of remittances and
their importance to the Egyptian economy. He suggested that policies
might be identified which lead to either growth in remittances or
increased Government utilization of remittances. He added that attempts
to tax remittances usually are not successful. There is a general
feeling that considerable Egyptian resources outside the country are not
being remitted. Also, a sizeable amount of the goods and money which
flow into Egypt do not show up on official remittance accounts. George
Lichtblau reported that many owrkers return from capital rich countries
with wads of dollars in their pockets. Ed Anderson, NE/DP, indicated that
international banks in Egypt were giving 12% interest on dollar accounts.
This provides a very strong incentive for migrant workers to bring their
dollars back to Egypt and invest them in these banks. Though this provides
a very healthy return for the Egyptian workers, there is no guarantee
that the banks invest these funds in Egypt.

Implications for AID Activities

Gerald Kamens asked seminar participants for their ideas concerning
the implications of labor migration for USAID Mission activities.
Sinclair responded that the Mission should become more heavily involved
in training. Choucri agreed but emphasized the need to carefully target
vocational training activities; she added that improvements are needed
also in basic education.

Robert Mitchell, NE/TECH, suggested that the Egyptian Government lacks
an adequate understanding concerning their manpower needs. This is
especially apparent with respect to the planned development of port
cities and new towns. He mentioned that AID could help the Government
with manpower planning. Reggie Moore, Department of Labor, agreed and
said that existing manpower planning is very piecemeal and in need of
technical assistance. Though Sinclair agreed, he added that we know
the basic parameters of the manpower problem and the areas of critical
labor shortage. He suggested that AID should not divert resources from
training to the collection and analysis of manpower data.





-24-


Sinclair indicated that manpower planning efforts should adopt a regional
approach because the labor markets of the various countries are closely
interconnected. Egypt's manpower troubles, as well as her future development,
are linked closely to other Arab countries. Better cooperation is needed
between countries. As an example, Sinclair suggested that AID should
approach the Saudis about possible funding of Egyptian training activities
because Saudi Arabian development is dependent upon skilled labor from
Egypt and other countries. AID has already tried this. The Saudis
refused because they can get the workers for free and they are already
heavily subsidizing governments in Egypt and other capital poor Arab
countries. Craig Buck, NE/EI, added that the Saudis already are indirectly
paying for training as part of construction contracts. The cost to
contractors of training the needed construction workers is included
in the contract amount.

Mr. Kamens closed the session by noting that the seminar had been quite
useful because it clarified some of the issues surrounding Near East
labor migration and sensitized the AID operational staff to this important
development question.


Morocco


Moderator: Ms. Mary Huntington, Officer in Charge
Tunisia/Morocco Desk
Office of Near Eastern/North African Affairs
Bureau for Near East
Agency for International Development

Presentation by Dr. Clive Sinclair

Dr. Sinclair opened the seminar with a brief presentation of study
results from Morocco. He indicated that Morocco's large population
and periphery location make it an atypical Arab country. Though gaining
independence in 1956, Morocco is still very dependent upon France. The
per capital gross national product is quite low and poverty is further
aggravated by a very unequal distribution of income. About half of the
labor force is engaged in agriculture. Sinclair noted that Morocco
today is in some ways similar to Egypt 20 years ago.

International migration of Moroccan labor traditionally was directed
toward Europe, especially France. There are currently some 190,000
migrants in Europe. This migration has alleviated some of the un and
underemployment problem in Morocco as well as contributing valuable
foreign exchange. By 1975 migrants' remittances provided as much foreign
exchange as phosphate exports. However, in recent years the number of
migrants abroad has declined as a result of the recession in Europe
and the forced return from Algeria of 30,000 migrants.




-25-


Remittances

Sinclair stressed the difference between remittance income and other
sources of foreign exchange. Remittances are private transfers and
generally beyond government control. They are largely spent on
consumption, much of which is imported. Consequently, remittances
often are recycled out of the country to pay for imports. A relatively
small portion of remittances are invested in productive activities.
In contrast, income earned from phosphate exports is controlled by
government and can be utilized for productive investment.

Though remittances have increased in recent years, Sinclair indicated
that the future outlook is rather bleak for two reasons. First, the
number of Moroccans working abroad is expected to decline in the years
ahead. Second, those migrants who remain in France are expected to
remit less of their incomes as their ties to Morocco gradually decline.
The future demand for Moroccan labor will decline for a few reasons.
The demand in France is expected to remain low for several years.
Morocco cannot compete as a supplier of labor to oil rich states because
of her periphery location, very low labor skill level, and lack of
previous experience in supplying labor to these states. Migration
tends to follow existing flow patterns; it is not easy to establish a
new migration channel. Also, political differences with Algeria and
Libya limit migration to these neighboring countries. In sum, the
future of labor emigration from Morocco is problematical.

Unemployment Problem

According to Sinclair, the current serious unemployment problem in
Morocco will worsen in the years ahead for three reasons. First,
there are simply too many workers and too few jobs and the gap will
increase.as more workers enter the labor force. Second, the Moroccan
education system does not match well the labor needs of the economy.
The aspirations of school graduates are not consistent with jobs
supplied by the economy. Third, the predicted net return of migrants
will aggravate the unemployment problem.

Government Policy

Dr. Sinclair indicated that the Government of Morocco should not count
on labor emigration as a solution to unemployment problems and a source
of foreign exchange. The Government should regard remittance income as
a "small bonus" which is not likely to continue. Though the Government
signed an agreement in 1976 with Saudi Arabia for transfer of 50,000
to 100,000 workers, the agreement has not been implemented and should
not give rise to optimism. There are too many economic obstacles
against the large scale importation of largely unskilled Moroccan labor
into Saudi Arabia at a time when the growth in Saudi demand for unskilled
labor is declining. Sinclair noted that other Government programs aimed
at the unemployment problem, such as the Promotion Nationale, have
been ineffective. The Government of Morocco is going to have to face
a serious unemployment problem in the years ahead.





-26-


Discussion

Present and Expected Future Condition of Moroccan Economy

Richard Rhoda, NE/DP, pointed out that there are definite differences
between the Birks and Sinclair report and the AID Country Development
Strategy Statement (CDSS) with respect to the condition of the Moroccan
economy. The Birks and Sinclair report is quite pessimistic; it indicates
that GDP per capital has scarcely increased. On the other hand, the
CDSS states that "there are reasons for optimism about Morocco's future
economic development" and that per capital GDP has grown by over 3%
annually between 1973 and 1977. Sinclair addressed this issue by stating
that the report used World Bank data. Moderator Mary Huntington indicated
that the CDSS also utilized World Bank data. Don McClelland, NE/DP,
partially clarified the situation by stating that the World Bank has
two separate data sets, which are based on different assumptions and
definitions and used for different purposes. One set, the so-called
atlas methodology, is based on a three-year moving average to balance
changes in exchange and inflation rates. The second set is based on
current units of value or constant dollars for some specific year.
At this point, the group agreed that there was some confusion concerning
the real state of the Moroccan economy and the discussion moved to other
topics.

Future Migration/Remittance Prospects

McClelland suggestedthat remittances could possibly increase if the
European recession ended and demand for labor increased. Stace Birks
indicated that if the European demand increased, it would probably be
filled with Greek, Spanish and Portugese workers. He was quite pessimistic
concerning the possibility of future increases in migration of Moroccan
labor to Europe. Annette Binnendijk, NE/DP, suggested that the amount
of remittances might be increased by implementing development bond schemes
or other policies. Sinclair agreed, but indicated that the absolute
number of migrant workers will decline and therefore so will remittances.
George Lichtblau, State/NEA, stated that the French Government will
help Morocco adjust to the changing labor situation and will protect
Moroccan jobs in France. Birks agreed that French Government officials
have made such statements; however, he doubted that the Government would
do very much to increase the number of Moroccans employed in France.

Returning Migrants

Richard Rhoda asked about migrants returning from France and the potential
for utilizing their job skills. Sinclair indicated that there was little
information on migrants returning to Morocco. His feeling and Turkish
evidence suggest that workers tend to "down skill" when migrating. For
example, simi-skilled workers take unskilled jobs abroad while skilled
workers take semi-skilled jobs. Consequently, migrants do not return
with increased skill levels. Bill Kaschak, NE/DP, suggested that
Moroccan migrants to France gain experience in a modern social and




-27-


economic system. Upon return, this experience potentially could provide
a conduit of social change. Sinclair indicated that there are limited
data on this topic for Morocco. He added that Turkish data suggest
that migrants do experience some change in social and economic views.
Many of those who returned to Turkey used their savings to establish
themselves in self-employed occupations as taxi drivers, small shopkeepers,
etc. Many of these small businesses failed because more were established
than existing demand could support. In rural areas, some returning
migrants started small cooperatives; however, these generally have not
been successful because members have not been willing to do the required
manual labor and the cooperatives lacked adequate management. Sinclair
suggested that the provision of technical assistance to returning migrants
is a suitable area for aid donor agencies.

Joan Silver, NE/DP, indicated that additional information on returning
migrants might be available from surveys. AID is involved in a relatively
large survey related to the Moulouya irrigation project. The survey may
provide useful information on returning migrants.

A question was raised concerning the impact of international migration
on urbanization. Are migrants who are originally from rural areas
likely to settle in urban areas upon return from abroad? The group
agreed that this was an important question; however, few data are
available. Most agreed that internal migration was a more important
issue for Morocco than international migration. The declining demand
for international migrants may stimulate urban migration as the rural
unemployed move to cities in search of jobs.

Government Policy

James Mattson, Department of Labor, brought up two points concerning
government policy. First, he.asked whether the Government of Morocco
could increase labor exports by pursuing an aggressive marketing campaign.
Sinclair responded by saying that he felt such a campaign would probably
have limited impact. Second, Mattson asked what the attitude of the
new government was toward unemployment, training and migration. George
Lewis, NE/NENA, indicated that the new government appears to be somewhat
more sensitive to these issues than the previous one.


Tunisia

Moderator: Ms. Mary Huntington, Officer in Charge
Tunisia/Morocco Desk
Office of Near Eastern/North African Affairs
Bureau for Near East
Agency for International Development





-28-


Presentation by Dr. Stace Birks

Dr. Birks began by noting that the Government of Tunisia was quite
disillusioned with migration. The Tunisia case demonstrates how
little a government can do to alter migration flows.

Two quite separate patterns of Tunisian migration have emerged over
the last 20 years. During the 1960's the major movements were to
France; during the 1970's Libya became the major importer of Tunisian
labor. France attracted skilled workers from urban areas. In contrast,
Libya attracts unskilled labor from rural areas. At present, skilled
workers returning from France are facing urban unemployment while rural
workers flow into Libya.

Birks indicated that it is very difficult to estimate the number of
Tunisian migrants to Libya because much of this migration is clandestine;
the Government of Tunisia has placed tight restrictions on legal
migration. Current estimates place the number of Tunisian workers in
Libya at about 50,000. Even if the Government allowed free migration,
Libya could not provide jobs for the 280,000 Tunisian unemployed.

Birks noted that over the years, Tunisian and Egyptian migration to
Libya has been inversely related. At some times Tunisians have replaced
Egyptians; at other times the relationship has reversed.

Tunisian workers in Libya are in an unstable situation. They occupy
modern sector unskilled jobs which can be filled easily with Libyans.
Also the Libyan Government attitude toward Tunisian workers is capable
of dramatic and rapid change. Consequently, Tunisian workers may lose
their jobs at any moment.

Birks closed his presentation by suggesting that AID pay close attention
to current French aid efforts to retrain and otherwise help migrants
returning from France. He felt that AID could learn lessons from these
efforts which might prove useful in trying to help capital poor countries
adjust to large scale return of migrant workers.

Discussion

Much of the discussion focused on skill levels and training. William
Kaschak, NE/DP, asked if rural Tunisians, who worked in the modern sector
in Libya, obtain any useful skills. Birks responded that such migrants
gain some modern sector experience but do not learn any specific job
skills. Richard Rhoda, NE/DP, suggested that Tunisians returning from
France are faced with unemployment while there is considerable demand
for these skills in Libya. Why don't the migrants returning from France
move into Libya to take these jobs? Birks indicated that some do, but
most are prevented from migration by government policies, which are
particularly strict for skilled workers. They may slip into Libya by
lying about their skills; however, such migrants often have a difficult
time obtaining employment in Libya at their skill level.





-29-


Mary Huntington indicated that Tunisia needs improved manpower planning
and vocational education. The existing education system is academically
oretnted and not directed toward the employment and manpower needs of
the country.

Don McClelland, NE/DP, suggested that the Government policy against
migration is politically rather than economically motivated. He felt,
and the group tended to agree, that some additional migration would
benefit Tunisia. For economic reasons the Government tolerates a con-
siderable degree of clandestine migration; however, from a political
standpoint they oppose it.

Some rural areas have used remittances to become accustomed to a standard
of living which is higher than the local rural economy can support. What
will happen if remittances decline? Will people accept a lower standard
of living or move to cities in search of higher incomes? Mary Huntington
suggested that internal migration may be a more serious problem in Tunisia
than international migration.


Yemen

Moderator: Mr. Charles Weinberg, Director
Office of Near Eastern/North African Affairs
Bureau for Near East
Agency for International Development

Presentation by Dr. Clive Sinclair

Number of Migrants

Dr. Sinclair opened the presentation by noting that the number of short-
term migrant Yemeni's working abroad at the time of the 1975 census was
approximately 300,000. He expressed concern that a differentiation
between short-term migrants and long-term migrants be made. Long-term
migrants are defined as those Yemenis living abroad with families who
have little or no intent of returning to Yemen on a permanent basis.
Short-term migrants, on the other hand, go abroad for a period of 1-3
years, remit funds and then return home. They may later migrate again.
These short-term migrants are the focus of this seminar.

Sinclair discussed the variance between his figures for the number of
Yemeni migrants abroad and the official government figures. The Birks
and Sinclair figure of 300,000 is a result of comparing the number of
Yemenis missing on census day 1975 with the number of Yemenis in Saudi
Arabia on the same day. As most Yemeni migrants work in Saudi Arabia,
the figures correlated. They also derived 11 different models of the
number of Yemeni migrants based on correlating savings rates in domestic
banks, remittance rates and other economic data. They disputed the




-30-


Government's figure of 1.2 million on the grounds that if 1.2 million,
for the most part men, returned to Yemen, there would be an impossible
sex ratio with men far outnumbering women. Also, a Swiss research team
which checked the accuracy of the census results, tended to support
the 300,000 figure. Most seminar participants were reluctant to accept
the 300,000 figure and felt that a far larger number of Yemenis were
abroad in 1979.

Remittances

From 1972 onward to the present, remittances for Yemeni workers have
been rising sharply to the point where in 1976, remittances from migrant
workers amounted to 46% of total GNP. Birks and Sinclair attribute
the dramatic rise in remittances to the increasing number of Yemeni
workers abroad and rising wage rates in Saudi Arabia.

The question was raised concerning the importance of remittances as
a resource for individual communities. Sinclair indicated that remittances
are primarily a private resource. He stressed the private nature of
remittances and emphasized that they are not a source of public funds at
government disposal. Remittances are private transfers which are used to
improve farms, start family businesses, or purchase consumption goods
normally unaffordable. When the Saudi Arabian Government made it
illegal for non-citizens to own businesses, large sums of cash were
remitted by Yemeni merchants in Saudi Arabia. Though bank transfer
accounts provide some data, it is difficult to maintain accurate
information on remittance flows. Therefore, taxing bulk remittances
is difficult. Also, if taxes were imposed, migrants would remit less
through official channels and more through untaxable informal channels.
The government benefits from remittances indirectly by collecting custom's
duties on goods imported with remittance money.

Remittances have been largely responsible for rapid inflation. Yemen
has a very small port with a limited capacity; therefore, imported goods
arrive in limited supply. Increased demand for these imported goods,
as well as the limited supply of domestic goods, results in rapid
inflation.

Migration
Birks and Sinclair found a sizable difference in life styles and welfare
between villages which sent workers abroad and those which did not. The
villages of migrant workers had consistently higher living standards
and were.able to maintain their farms with a greater amount of modern
equipment. As this becomes more obvious, villages are inclined to send
more men abroad. This in part accounts for the increasing number of
Yemeni migrants in Saudi Arabia and elsewhere.

Government Interest in Remittances

Two possible reasons for government interest in remittances are increasing
government revenues and boosting foreign exchange. Birks and Sinclair
postulate that both reasons are invalid for Yemen. The government receives





-31-


a large amount of aid in the form of cash grants. Also, Yemen enjoys
a good credit rating with the world's major lenders; loans are relatively
easy to obtain. Consequently, Yemen has an abundance of foreign exchange.
Government revenues have increased very rapidly and have surpassed the
government capability of using them efficiently for development activities.
Therefore, the Government has no real need of harnessing remittances
for additional revenue. Also, the amount of volatility and fluctuation
in remittance levels makes it an erratic if not undesirable source of
funds.

The Future of Remittances

Birks and Sinclair predict a sharp fall in the amount of remittances
due to a falling number of Yemenis abroad in the next two to six years.
The number of workers will decrease because East Asian firms employing
the "enclave" approach are capable of providing more productive labor
at a lower cost. Also, wage rates in Saudi Arabia are expected to
decline. This is especially true in the Saudi Arabian construction
industry which not only employ East Asian firms but also utilize modern
technology. New equipment tends to reduce the number of workers needed
for a project and the workers who are needed have to be skilled in the
equipment's operation. Most, if not all, Yemeni migrants are unskilled.
This shift from labor intensive techniques to capital intensive techniques
will result in a decrease in demand for Yemeni labor. With a return of
migrants and decline of remittances, an increasing number of Yemenis
will be seeking jobs at home for income to replace remittances. This
may result in widespread unemployment. Sinclair predicted that once
the remittance decline starts it will rapidly pick up pace. He suggested
that the government formulate contingency plans to deal with the possibility
of large scale return of migrant labor.

AID Policy

Birks and Sinclair suggested that AID's policy be formulated around
the principle that remittances are volatile and not the key to Yemeni
development. Sinclair predicted that Yemenis currently in Saudi Arabia
will not be expelled but no new labor will be accepted. He suggested
that AID assist both Yemen and Saudi Arabia with an investigation to
define their labor importing-exporting relationship. He also indicated
that AID could provide assistance by:

1. Working with the Government of Yemen to monitor remittance levels
in an effort to try and make more accurate trend predictions.

2. Helping design a remittance utilization program aimed at converting
liquid cash balances into deposits which could help lessen the shock
of declining remittances.

3. Working on projects which try to convert migration for employment
into migration for education and training.





-32-


4. Helping with the establishment of domestic vocational training
centers which would be used to train Yemenis in modern skills and
techniques useful both in Saudi Arabia and Yemen,

5. Exploring the demand, and supply of Arab labor through a regional
survey system.

6. Establishing mechanisms for educating the capital rich states in
the meanings and implications of their manpower demands for the capital
poor states.

Discussion

Remittance Impact on Nutrition

A question was raised in regards to the nutritional balance between
families receiving remittances and those not receiving remittances.
Birks answered that although there was no major study on the subject,
he was confident that families receiving remittances enjoyed a higher
nutritional level than others who did not.

Impact on Women and Fertility

Kathy Staudt, PPC/WID, asked whether remittance monies in the hands
of women had affected government outreach to women. She also suggested
that migration and remittances may have profound changes on male-female
relationships. Birks stated that most of the research on that topic
was in Oman but the situation is similar to Yemen. Women are acquiring
cash flows at the same time they acquire additional responsibility over
farms due to the absence of migrant males. This has lead to a shift
from crops to small livestock which is less labor intensive, thus
freeing women from heavy field work.

Keys MacManus, NE/TECH, brought up the issue of shifting from labor
intensive crops, i.e., cotton and coffee,to non-labor intensive goods,
i.e., qat,and the effects of such a shift on children. Sinclair replied
that once children are not needed to work in the fields, they can
take the time to go to school without lowering farm productivity or
family income.

Richard Rhoda, NE/DP, asked for information about the impact on fertility
levels due to the absent male population. Birks replied that there was
a significant reduction in fertility. The Population Council did a
study on the subject and the results are available from the Ford
Foundation in Cairo.

Don McClelland, NE/DP, reacted to the Birks and Sinclair position by
discussing the possibilities of remittances having a desirable impact
in the community over the long run. Real GNP has doubled from 1975 to
1979 mostly as a result of remittances which have put broadly dispersed
wealth in the hands of many. This impact of remittances is parallel





-33-


to AID's goals. McClelland stated that Yemen can afford heavy imports
because they improve the quality of life by increasing consumption
and hold down inflationary pressure. Remittances result in some
direct investment and considerable indirect investment. Sinclair said
that he essentially agreed with McClelland, but added that more emphasis
should be placed on the long-term impacts of migration and remittances.

Impact on Agriculture

Sinclair commented that irrigation terraces that are vital to agricultural
production were collapsing into disrepair due to lack of attention. Gary
Towery, NE/NENA, argued that some are in disrepair, but the best and most
productive are being maintained.

McClelland discussed the shift in agricultural production from sorghum
to wheat, and the general movement from labor intensive crops such as
coffee and cotton, to labor saving crops such as qat. Birks noted that
a major issue is finding ways to reorient the population back into
agricultural production. McClelland disagreed that reorientation was
necessary; he noted that farm production has been holding steady and
most, if not all, returning migrants rejoin their families on the farm
and do not move to cities.

Adjustment to Large Scale Return of Migrants

Jerry Segal, PPC/PB, remarked that if remittances decline, most people
will have a very difficult time changing over to a lower level of
consumption. Also, existing remittance monies should be put to use now
for the purpose of long-term investment because these funds may not be
available in the future. Bernard Wilder, NE/TECH, commented that long-
term remittances will eventually return to past levels. Sinclair indicated
that adjustment of return migrants may be a serious problem. It is
doubtful if any migrants will be able to return to subsistence farming.
Many may migrate to Sana and other urban centers in search of the
higher wages they became accustomed to in Saudi Arabia. Basharat Ali,
NE/NENA, added that most, if not all, Yemeni migrant workers plan to
return home after remitting a certain amount of money.

Impact on Government Activities

Birks again indicated that the government has no shortage of funds.
He added that there are few effective means of channeling private
remittance income into development investments. Kathy Staudt, PPC/WID,
asked about the impact of remittances on local government. Bernie
Wilder, NE/TECH, explained that Local Development Associations (LDA's),
with technical assistance from AID, were pursuing projects essentially
funded by remittance income in the hands of villagers.





-34-


Jordan


Moderator: Mr. Blaine Richardson, Director
Office of Jordan/Lebanon/Syria Affairs
Bureau for Near East
Agency for International Development

Presentation by Dr. Stace Birks

Dr. Birks began his brief presentation by saying that Jordan had a
history of exporting skilled labor. There already was talk of a
"brain drain" in the 1960's. Jordanians are possibly the best educated
nationals of Arab Near East countries. Rough survey data suggest that
two-thirds of Jordanian emigrants in 1975 had at least secondary school
education. In that year, about 150,000 were working abroad; this
represents almost 30% of the labor force. Roughly 100,000 were in
Saudi Arabia and about 25,000 to 30,000 were in Kuwait. If Palestinians
are included, the estimated number of migrant workers rises to 265,000.

The rapid increase in migration of skilled labor has focused attention
on the "brain drain" problem. Though shortages of certain skills are
readily apparent, it is difficult to assess the actual costs and benefits
of "brain drain." It has eliminated the problem of "educated unemployed"
in Jordan. Much of the education expenditure is paid for privately;
therefore, migration does not represent as great a direct cost to the
Government of Jordan. Though there is concern for 'brain drain," it
should be remembered that about 40% of Jordanian emigrants are construction
workers, many of which are essentially unskilled.

The high degree of occupational mobility in Jordan has relieved some of
the deleterious impacts of migration. The Jordanian education system,
especially technical education, has been able to train labor to replace
those who migrate. In general, migration has resulted in widespread
skill upgrading. Urban semi-skilled workers are trained and placed in
skilled jobs vacated by migrants. Rural unskilled workers move into
cities to become semi-skilled workers. Rural unemployment has been
eliminated; in fact, Jordan has imported 70,000 replacement migrants
to work in rural areas. Most of these replacement migrants come from
Egypt, Syria or Pakistan.
In many respects, the Government of Jordan has adjusted quite well to
the labor distortions caused by migration. The Government wisely has
not tried to stop out-migration. It quickly arranged for replacement
migrants to avoid labor shortages in rural areas. The Government
recognizes that the Jordanian economy is very dependent upon remittances
and foreign aid. Remittances counted for 32,4% of GNP in 1976. It has
attempted to adopt policies which maximize the benefits while minimizing
the costs of this dependency.




-35-


Birks and Sinclair predict that Jordan soon will experience a net
return of migrants. These returning migrants could cause unemployment
problems in Jordan as well as forced exportation of replacement migrants
in rural areas. The net return of migrants also will be associated
with a rapid decline in remittances.

Discussion

Returning Migrants

The first question raised concerned the acquisition of new skills by
migrant workers. Do previously unskilled migrants obtain useful skills
in capital rich countries? Birks responded by stating that rural migrants
obtain some skills when they moved to work in Jordanian cities. However,
few new skills are obtained during employment in capital rich states.

Richard Rhoda, NE/DP, suggested that return migration possibly could
cause problems of urban unemployment while doing little to alleviate
labor shortages in rural areas. Most migrants, even those originally
living in rural areas, have lived for some time in Jordanian cities
and in urban areas of capital rich states. When these migrants return
to Jordan, they may be unwilling to live in rural areas. They may
remain in Jordanian cities and seek employment. As the number of
returning migrants increases, urban unemployment problems could become
serious. Birks responded by saying that this was a real possibility.

Blaine Richardson indicated that Jordanian migrant workers are relatively
well educated and highly skilled. Consequently, they should be able to
retain their jobs in capital rich countries as demand shifts away from
unskilled and construction labor and toward higher skilled occupations.
Sinclair agreed and added that it is useful to divide Jordanian migrant
labor into two groups: skilled and unskilled. He said that the
relatively unskilled construction workers, about 40% of Jordan migrants,
will be the first to return while the skilled Jordanian workers will be
among the last to return. In fact, there will probably be demand for
educated Jordanian workers in capital rich countries for many years to
come. Birks added that Jordanian workers have a good reputation, in
contrast to Egyptians.

Richardson commented on the apparent inconsistency between the fact
that 40% of migrants were construction workers, assumed to be relatively
unskilled or uneducated, and that two-thirds of migrants were reported
to have at least secondary education. Birks responded that the data
on education level may be faulty; they were based on a rough and possibly
unreliable survey.

Kurt Teil, NE/JLS, suggested that the return of Jordanian migrants
might result in the expulsion of the replacement migrants from Pakistan,
Egypt and Syria. He asked about the contract terms concerning replacement
migrants; would there be any problem trying to get them to leave Jordan.





-36-


Sinclair said that most replacement migrants have short-term six to
ten month contracts. He believed that they probably would leave without
incident.

Tell commented that Jordan may not be able to reabsorb returning
professional and skilled workers. Sinclair agreed, adding that as
early as 1972/73 some professionals in Jordan were unemployed. However,
this may not be a problem because Jordanian professionals will probably
be demanded in sufficient numbers in other'Arab countries. Birks
indicated that Jordanian professionals in capital rich countries probably
will hold fast to their jobs when return migration begins in earnest and
the job market tightens. These migrants will tend to "settle-in" and
gradually loosen ties with Jordan.

Palestinian Migrant Workers

Ron Neumann, State/NEA, suggested that Palestinian professionals will
be less apt to "settle-in." They will keep their Jordan option open
because their welcome in capital rich countries is insecure. Sinclair
agreed and remarked that Palestinians have been living in Kuwait for
years but their tenure is uncertain. Len Rosenberg, NE/PD, asked how
many Palestinians gain citizenship in capital rich countries. Birks
responded by saying that many had acquired citizenship in the United
Arab Emirates and plan to remain there. In contrast, Palestinians
in Kuwait accept their tenure as temporary.

Future Remittance Flows

Moderator Richardson directed the discussion toward the prepared list
of seminar issues. He asked Birks or Sinclair to comment upon their
prediction that remittance flows will fall "very dramatically in the
near future." Stace Birks remarked that remittances will fall but not
necessarily "very dramatically in the near future." Remittances will
fall for three reasons. First, the "short-term" construction migrants
will return in large numbers. These relatively low skill, single male
workers earn high wages, a large portion of which is remitted. The
return of these workers will have considerable impact upon remittance
levels. Second, wage rates will decline. Third, those Jordanians living
abroad with their families will gradually loosen ties with Jordan and
consequently remit less. Don McClelland, NE/DP, asked if there are any
data which indicate a net return of migrants. Sinclair said there was
none but migration has leveled off. He added that the large influx
of East Asian workers has started already. Kuwait was the last capital
rich Gulf state using predominately Arab labor; however, East Asians
have made serious inroads into Kuwait.

Arab Sanctions Against Egypt

Ron Witherell, NE/JLS, asked if Arab sanctions against Egypt might
force Egyptian replacement migrants to leave Jordan. Sinclair said





-37-


that he didn't think this would happen. He added that if it did happen,
Jordan easily could replace these workers with other migrant workers.

Brain Drain

Moderator Richardson asked Birks and Sinclair to comment upon the
seriousness of the "brain drain." Sinclair opened by suggesting that the
Government had adjusted quite well to the "brain drain" problem. He
mentioned that their research indirectly uncovered shortages of professionals.
Joan Silver, NE/DP, discussed her recent meeting with the Chief of Jordan
Census Office. She indicated that the Census Office suffers from severe
labor shortages. Processing of household survey data is two years behind
schedule due to lack of statisticians. Though numerous opportunities
exist for employee training abroad, the Census Office cannot spare people
to take advantage of such opportunities. They need on-the-job training
programs and short courses to train needed workers as soon as possible.

Ron Witherell remarked that government sector wages were too low;
consequently, good workers do not stay long. He wondered what wage
levels were like in the private sector where they were relatively free
to fluctuate with market conditions. Sinclair indicated that few data
were available on the subject. He added that private sector wages is
an area in need of study.

Impact of Migration on Agriculture

Stace Birks suggested that migration has had considerable impact on
agriculture. He indicated that traditional rainland farming has lost
a large number of workers. In the late 1960's and early 1970's, many
rural workers moved to Jordanian cities. Now, they mostly migrate
internationally. James Achterhoff indicated that migration has benefited
traditional agriculture in Jordan. Migration has reduced rural under-
employment and forced agricultural modernization. It also has decreased
fragmentation; in fact small adjoining farmers have to cooperate so
that labor saving techniques, such as tractors, can be utilized.

Implications for Government of Jordan Policy

Blaine Richardson directed the discussion toward policy implications.
He mentioned that a recent IMF report suggested that the Government of
Jordan had adopted policies which are well suited to the current migration
situation. Birks agreed and remarked that the Government acted swiftly
to obtain replacement migrants when labor shortages first began to appear
in rural areas. He added that the Government has done a lot to facilitate
labor mobility which has helped alleviate some of the "brain drain"
problems. Sinclair added that the establishment of a bond scheme and
the Amman Stock Exchange has stimulated investment,

The Government also has Instituted beneficial training programs. Sinclair
suggested that they might try offering training programs but delaying
certification until graduates had worked in Jordan for a specified length





-38-


of time. This would help alleviate some of the labor shortages.
Richardson added that the Government has been fairly progressive with
respect to training women, Sinclair agreed but added that relatively
few women actually are employed in Jordan.

Richard Rhoda, NE/DP, asked if the Government was aware that an increasing
number of migrants would be returning in future years. Have they adopted
any plans to deal with possible future unemployment problems? Birks
replied that they were well aware of the eminent return of migrants.
However, they perceive this as a solution to current labor shortages;
they are not concerned about the possibility of unemployment problems.


Syria

Moderator: Mr. Blaine C. Richardson, Director
Office of Jordan/Lebanon/Syria Affairs
Bureau for Near East
Agency for International Development

Presentation by Dr. Stace Birks

Background on Migration

Dr. Birks opened the session by noting that Syria has a larger endowment
of human and physical resources than Jordan. These include a population
of 7.5 million with a literacy rate of 65% and a small amount of oil.
Syria, as a relatively large Near East country, tends not to be as
vulnerable to the effects of migration which can affect adversely
smaller countries such as Jordan.

There has been a traditional worldwide dispersion of Syrians with long-
term Syrian colonies as far abroad as Latin America and the Orient. This
is in part due to the Francophone influence from the period of French
activity and in part due to the limited number of opportunities at home.
During the 1960's, Syria experienced a surge of outward migration due
to the increasing socialist influences of the Syrian Government. These
migrants tended to be middle class merchants and skilled workers. The
migrants live outside Syria on a more or less permanent basis and are
excluded from this Seminar.

In 1973, the oil boom of the capital rich states created a large number
of new job opportunities for migrants. This was a new experience for
Syria who had not encountered a heavy demand for her labor. By 1975,
there were from 70,000 to 80,000 Syrians abroad, about 50,000 in the oil
producing states and the remaining 20,000-30,000 dispersed between
Jordan, Turkey, and other countries.




-39-


Government Attitudes Toward Migration

In spite of the fairly small number of migrants leaving Syria, the
Government is very concerned about the effects of outward migration and
its impact on manpower shortages. The Government has placed strong
restrictions with penalties for government workers who migrate, so few
leave. This proves to be one of the strongest negative barriers to
migration in the Arab World. Due to the increasing size of the public
sector and strong restrictions against migration of Government workers,
most migrants come from the private sector. Migration also has been
selective by skill level; numerous skilled craftsmen are working abroad.
This has resulted in severe shortages of skilled manpower in the small
private sector. The Syrian government does, however, allow unskilled
labor to migrate with little or no restraint. These are the primary
components of Syrian communities in Jordan and Turkey. The Government
even has an agreement with Jordan so that private sector workers can
cross freely into Jordan.

Due to the socialist structure of the Syrian economic and social picture,
there exists little possibility of replacement migration into Syria.
Since the Government controls wages in the private sector, they tend to
be kept below regional averages. Taking this into account, there is
little incentive for other migrants to enter Syria in search of jobs.

Birks and Sinclair predict that migration will occur in spite of government
barriers. They point out that the restrictions themselves tend to be an
incentive to out migration; the harder the government acts to contain
migrants, the more they will be convinced to leave. The government is
aggravating the negative effects of migration by pursuing policies which
concentrate migration in the small private sector of the economy. In
order to improve Syria's present migration situation, Birks and Sinclair
recommend that the government ease barriers to public employee migration
so as to balance its effects across the economy.

There should be a government designed program to provide incentives for
short-term migration and bonuses to return to domestic employment.
There is also a need for intensive programs to train Syrians for skilled
jobs at home and abroad. Syria should take advantage of the numerous
possibilities for increasing the benefits and minimizing the costs of
migration.

Discussion

Don McClelland, NE/DP, remarked that the USAID Mission has estimated
that 200,000 to 300,000 Syrians are working abroad. These figures
are far higher than those of Birks and Sinclair. He added that the
difference might be attributable to migration to Iraq which isn't included
in the Birks and Sinclair estimates. Moderator, Blaine Richardson,
NE/JLS, added that Syria and Iraq were developing closer political ties
which implies an increased rate of migration. Sinclair clarified the
figures by stating that migration to Iraq was not included in their study,
but was probably included in McClelland's figures.





-40-


Kurt Teil, NE/JLS, indicated that AID noted a figure of 350 to 450
million dollars in remittances based on bank statements. He added
that total remittances, including those outside the banking system,
could be as high as $750 million. These provide a source of private
exchange which offers an alternative to Syria's drab economy. Remittances
are the life blood of the small private sector which adds color and life
to the state controlled economy.

Blaine Richardson added that the government tends to overlook many
aspects of migration, remittances, and the "grey market" which they
support. Stace Birks replied that the government should bring these
activities out in the open to reduce the over abundance of labor in the
public sector and increase foreign exchange.

Sinclair wrapped up the session by noting that Syrian bank figures
are of such poor quality that they are essentially useless. Sinclair's
final points were that the Government needed to decrease the civil
service, boost foreign exchange and reduce unemployment. These goals
could be accomplished by a careful, controlled migration policy.

Moderator Richardson concluded by thanking Drs. Birks and Sinclair for
their presentations and added that the Conference proceedings and report
could be used by the Missions to open up useful dialogue with governments
on labor questions and related economic issues.





-41-


ANNEXES





-42-


CONFERENCE PARTICIPANTS


Conference Speakers

Stace Birks, University of Durham
Clive Sinclair, University of Durham

Near East Bureau Participants


AA/NE, Joseph C. Wheeler


NE/DP,
NE/DP,
NE/DP,
NE/DP,
NE/DP,
NE/DP,
NE/DP,
NE/DP,
NE/DP,
NE/DP,

NE/PD,
NE/PD,
NE/PD,
NE/PD,
NE/PD,
NE/PD,

NE/TECI
NE/TECI
NE/TECH
NE/TECH
NE/TECH
NE/TECH
NE/TECH
NE/TECH
NE/TECH
NE/TECI

NE/NEN/
NE/NEN/
NE/NEN/
NE/NEN/
NE/NENA
NE/NENA

NE/JLS,
NE/JLS,
NE/JLS,
NE/JLS,


Bradshaw Langmaid, Jr.
Joan M. Silver
Annette Binnendijk
Richard Rhoda
Curtis Levinson
Peter 0. Sellar
Bill Kaschak
Ed Anderson
Don McClelland
Jim Brown

Robert Bell
Robert Fedel
David Mandel
Justin Williams
Leonard Rosenberg
Stephen Lintner

H, Keys MacManus
H, Peter Benedict
, Robert Mitchell
H, Michael Lukomski
H, John Giusti
, Thomas McDonough
, Thomas Atwood
, Catherine Fort
, Bernard Wilder
, George Self


NE/EI,
NE/EI,
NE/EI,


Gerald Kamens
Craig Buck
Bert Porter


Other Participants

PPC/PD, Jerry Segal
PPC/PDPR, Harold Lubell
PPC/WID, Kathy Staudt
PPC/WID, Paula Hoddard

PDC/OLAB, A. Adler

INR/RNA, Ted Kattouf


State/NEA/RA,
State/NEA/AFN,
State/NEA/AFN,


George Lichtblau
Jerrilynn Pudchun
Ron Neumann


FSI, Peter Bechtold

CIA, John Wood
CIA, Mike Stoddard
CIA/OPR, Jim Achterhof

Bucen, Beverley Carlson
Bucen, Bill Benth
BuCen, Kent Daniels
BuCen, Bill Duncan

Dept. of Labor, James Mattson
Dept. of Labor, Reggie Moore
Dept. of Labor, Sam Justice

ICRW, Nadia Youseff

MIT, Nazli Choucri


, Charles Weinberg
, Mary Huntington
Gary Towery
SGeorge Lewis
SJoseph Brooks
SBasharat All.

Blaine Richardson
Ron Witherell
Gerald Foucher
Kurt Teil


~I

\s

~I
Il




-43-
GENERAL SESSION AGENDA

"ASPECTS OF INTERNATIONAL LABOR MIGRATION IN THE ARAB NEAR EAST:
IMPLICATIONS FOR AID POLICY"


Tuesday, June 5, 1979
10:00 a.m. to 12:00 a.m.
Rm. 1105, Dept. of State


INTRODUCTIONS


- by Ms. Joan M. Silver, Chief,
& Evaluation Staff, Office of
Planning, Bureau for the Near


Project Analysis
Development
East, AID.


OPENING REMARKS

PRESENTATION OF REPORT





COMMENTS ON REPORT


OPEN DISCUSSION


- by Mr. Joseph C. Wheeler, Assistant Administrator,
Bureau for the Near East, AID.
- "Aspects of International Labour Migration in
the Arab Near East: Implications for USAID
Policy" by Dr. Stace Birks and Dr. Clive
Sinclair, Co-Directors of the ILO International
Migration Project, Department of Economics,
University of Durham, England.
- by Mr. James Mattson, Middle East and South
East Asia Advisor, Bureau of International
Labor Affairs, U.S. Department of Labor.

- by Dr. Nazli Choucri, Dept. of Political
Science, Massachusetts Institute of Technology.
- Moderated by Mr. Joseph C. Wheeler.
(1) Trends in International Migration in
the Near East.
(2) Effects of International Migration on
the Arab Labor-Exporting Countries.
(3) Implication for Government Policies of
the Arab Labor-Exporting Countries.
(4) Implications for AID Policies and
Programs in the Near East.


- by Mr. Joseph C. Wheeler.


CONCLUDING REMARKS





-44-


SEMINAR AGENDA

EGYPT
International Labor Migration
Issues and Implications

Tuesday, June 5, 1979
2:00 p.m. to 3:30 p.m.
Rm. 6439, State Dept.


INTRODUCTIONS: Moderator Gerald Kamens, Director, Office of Egypt/
Israel Affairs, Bureau for Near East, AID

Stace Birks and Clive Sinclair, Co-authors, "Aspects
of International Labour Migratibn in the Arab
Near East: Implications for USAID Policy."
Nazli Choucri, Massachusetts Institute of Technology

BRIEF PRESENTATION OF STUDY RESULTS: Dr. Birks and Dr. Sinclair

BRIEF COMMENTS ON REPORT: Dr. Choucri

OPEN DISCUSSION: Moderator: Gerald Kamens

A. Clarification of Present and Expected Future Migration and
Remittance Flows

Present Egyptian unemployment versus excess labor demand
in oil rich countries

Relationship between migration and remittances

Methodology of Study

Impact of Arab sanctions on remittances and migration flows

B. Impacts of International Migration

External dependency
Impact on Egyptian labor market





-45-


C. Implications for Government Policy

Policy making in an uncertain migration/remittance environment

Policies of basic education

Policies and programs to increase employment and emigration
of unskilled workers

Policies to increase and effectively utilize remittances

D. Implications for AID Activities

Relationship between AID vocational training activities
and migration

How to best increase the benefits and reduce the cost of
migration




-


-46-

SEMINAR AGENDA


MOROCCO/TUNISIA

International Labor Migration
Issues and Implications

Tuesday, June 5, 1979
4:00 p.m. to 5:00 p.m.
Rm. 6439, State Dept.


INTRODUCTIONS: Moderator: Mary Huntington
Officer in Charge, Tunisia/Morocco Desk
Office of Near Eastern/North African Affairs
Bureau for Near East, A.I.D.

Stace Birks and Clive Sinclair, University of Durham, U.K.
Co-authors, "Aspects of International Labour
Migration in the Arab Near East: Implications
for USAID Policy"

BRIEF PRESENTATION OF MOROCCAN STUDY RESULTS: Dr. Birks and Dr. Sinclair

OPEN DISCUSSION: Moderator: Mary Huntington

A. Migration Projections and Future Economic Considerations

Present and expected future of Moroccan economy:
comparison of Birks & Sinclair and CDSS views

Future levels of remittances

B. Impacts of International Migration

Impact on internal migration

Impact on fertility

C. Implications for Government Policy

Suitable policy for Moroccan surplus labor situation

Policies to utilize skills of returning migrants

Possibility of future labor supply agreements





-47-


D. Implications for AID Activities

Impact of AID education and training projects on
international migration

Availability of needed Moroccan skills for AID projects

BRIEF PRESENTATION OF TUNISIAN STUDY RESULTS: Dr. Birks and Dr. Sinclair

OPEN DISCUSSION: Moderator: Mary Huntington

A. Migration Projections and Future Economic Considerations

Importance of labor exports from Tunisia

Future of remittances

B. Impacts of International Migration

Returnees from France and unemployment levels
Impact on rural to urban migration

Impact on Tunisian Society

Impact on fertility

C. Implications for Government Policy

Benefits versus disbenefits of migration
Policies to increase benefits and reduce disbenefits

D. Implications for AID Activities

Impact on project implementation

Impact of education/training and other projects on
migration





-48-

SEMINAR AGENDA

YEMEN

International Labor Migration
Issues and Implications
Wednesday, June 6, 1979
9:30 a.m. to 11:00 a.m.
Rm. 6439, State Dept.


INTRODUCTIONS: Moderator: Charles Weinberg, Director
Office of Near Eastern/North African Affairs
Bureau for Near East, A.I.D.

Dr. Stace Birks and Dr. Clive Sinclair, Durham University,
England, Co-authors, "Aspects of International
Labour Migration in Arab Near East: Implications
for USAID Policy"

BRIEF PRESENTATION OF STUDY RESULTS: Dr. Birks and Dr. Sinclair

OPEN DISCUSSION: Moderator: Charles Weinberg

A. Clarifications of Present and Expected Future Migration
and Remittance Flows

Present number of Yemeni migrant workers

Probability of decline in number of Yemeni migrant workers

Probability of decline in remittances

Impact of inflation on GNP growth

B. Impacts of International Migration

External dependency

Impact on agriculture

Use of remittances for imports
Impact on women's roles and fertility

Impact of returning migrants on Yemeni society





-49-
4

C. Implications for Government Policy

Existing or suggested policies

Government utilization of remittance income

Policies concerning Yemeni construction industry

Policies to reduce agricultural decay

D. Implications for AID Activities

Impact on AID project implementation

Affect of AID education/training project on migration

Need for an alternative or contingency AID development
strategy

Future relevance of current and proposed AID projects





-50-


SEMINAR AGENDA

JORDAN/SYRIA

International Labor Migration
Issues and Implications

Wednesday, June 6, 1979
2:00 p.m. to 3:30 p.m.
Rm. 4717, State Dept.

INTRODUCTIONS: Moderator: Blaine Richardson, Director
Office of Jordan/Lebanon/Syria Affairs
Bureau for Near East A.I.D.

Stace Birks and Clive Sinclair, University of Durham, U.K.
Co-authors, "Aspects of International Labour
Migration in the Arab Near East: Implications
for USAID Policy"

BRIEF PRESENTATION OF JORDAN STUDY RESULTS: Birks and Sinclair

OPEN DISCUSSION: Moderator: Blaine Richardson

A. Migration Projections and Future Economic Considerations

Present and projected future number of migrant workers

Influence of foreign workers in Jordan

Confidence in prediction of "dramatic decline" in remittances

B. Impacts of International Migration

Advantages versus disadvantages for Jordan

Contribution of remittances to investment

Seriousness of "brain drain"

Impact of sudden influx of returning migrants

External dependency

C. Implications for Government Policy

Policies influencing migration or its impact




-51-


Policies to maximize benefits and minimize costs of migration

-'Policies to deal with returning migrants

Policies to combat inflation
D. Implications for AID Activities

Impact of labor shortage on AID capital projects

Correct focus of AID agriculture sector assistance

Impact of AID education and training projects

BRIEF PRESENTATION OF SYRIA STUDY RESULTS: Birks and Sinclair

OPEN DISCUSSION: Moderator: Blaine Richardson

A. Migration Projections and Future Economic Considerations

Current and future level of emigration and remittances

Seriousness of labor shortage

B. Impacts of International Migration

Impact on agricultural output

Advantages and disadvantages of migration, net impact
on Syrian economy and society
C. Implications for Government Policy

Better implementation of existing migration policies

Policies to overcome labor shortages

D. Implications for AID Activities
Impact of migration on AID target group
Impact on implementation of AID projects











SELECTED EXCERPTS FROM



ASPECTS OF INTERNATIONAL LABOUR

MIGRATION IN THE ARAB NEAR EAST:

IMPLICATIONS FOR SAID POLICY






Dr. Stace Birks and Dr. Clive Sinclair






May 1979


Prepared for

Project Analysis and Evaluation Staff
Office of Development Planning
Bureau for Near East
U.S. Agency for International Development
Contract No. AID/ne-c-1593


-52-




-53-


CONTENTS


Page Number.


INTRODUCTION AND SUMMARY CONCLUSIONS


Preface
The Form of the Report


vii

vii
viii


ix


Summarised Conclusions and Policy
Recommendations


THE ECONOMIC FOUNDATION TO AND GENERAL
PATTERNS OF MIGRANT LABOUR MOVEMENTS IN
THE ARAB WORLD

Introduction
The Distribution of Wealth in the Near
East
Populations of the Arab States
The National Labour Forces of the Arab
States
Economic Development in the Capital Rich
States
Economic Development in the Capital Poor
States
The International Transfers of Labour
The New Scale of Economic Development
Transforms Migrant Labour Patterns 1975
The Changing Perspective of the Migrant
Receiving Countries
Formalised Supplies of Indian and Pakistani
Labour
The Oriental Connection
Enclave Development in the Capital Rich
States
Conclusion


Part 3. THE LABOUR EXPORTERS : COUNTRY REVIEWS AND
POLICY STATEMENTS 40

3A The Arab Republic of Egypt 40
S(i) The Number of Egyptians working abroad 40
(ii) The Size and Disposition of the
Egyptian Labour Force 42


Part 1.

1A
1B


Part 2.



2A
2B

2C
2D




-54-
Page Number

(iii) Egypt's Limited Modern Response to
Labour Exporting 43
(iv) Policies to Facilitate International
Migration for Employment from Egypt 49
(a) The Evaluation of the Market for
Egyptian Workers overseas 49
(b) Government Action to Increase
Migration for Employment 55
(v) Conclusion 57
3B The Democratic Republic of the Sudan 58
(i) Introduction 58
(ii) The Rapid Expansion in Sudanese
Labour Exports 59
(iii) Migration for Employment and the
Sudanese Economy 61
(iv) Economic Development and the Sudanese
Manpower Shortage : Implications for
Policy 62
(v) The Spontaneous Labour Market Response
: A Net Benefit 69
(vi) Sudanese Efforts to Utilise Remittances 70
3C The Hashemite Kingdom of Jordan 72
(i) Introduction 72
(ii) Occupational Mobility : Implications
for Policy in Jordan 74
(iii) The Brain Drain 75
(a) The Scale of Emigration of the
Better Educated 75
(b) Policy Implications of the Brain
Drain 77
(iv) Agriculture and Migration for Employ- 7
ment : Replacements
(v) Remittances : A Predicted Decline 79
(vi) Human Resources Development 83
(vii) Conclusion 8b
3D The Syrian Arab Republic 86
(i) Introduction 86
(ii) Disposition of the Workforce 87
(iii) Outmigration of Syrians 88
(iv) Labour Shortages in Syria !1
(v) Policy Implications 94
(vi) Conclusion 94





-55-


The Sultanate of Oman
(i) Introduction
(ii) Population and Workforce of the
Sultanate
(iii) Migration and Withdrawal of Labour
from the Rural Sector
(iv) The Impact on the Rural Sector of
Labour Withdrawals caused by
Migration for Employment
(v) Similar Agricultural Transformation
in the Yemen : Crop Substitution
(vi) The Future of Labour Migration from
Rural Oman
(vii) Government Policies to Arrest
Agricultural Decline
(viii) Immigrant Labour and the Omani
Modern Sector
(ix) Conclusion
The Yemen Arab Republic (YAR)
(i) Introduction
(ii) The Number of Yemenis Abroad : Some
Estimates
(iii) Migrants and the Domestic Workforce
(iv) Impact of Migration on Economic
Development
(v) Withdrawal of Labour
(a) The Selectivity of Migration
(b) Agriculture
(c) Policy Implications of this
Labour Withdrawal
(vi) Remittances
(a) The History of Remittances
(b) Implications for Policy
(vii) Intangible Acquisitions of Migrants
: Negotiations for more Training
(viii) The Future of Yemeni Migration
(ix) Conclusion


Page Number

95
96

96


99

101

103

10b
lOl

109
110
111
111

112
114

lib
116
116
117

119
119
119
123

125
127
128





-56-
The Republic of Tunisia
(i) Patterns of Tunisian Migration
(ii) Migration to Libya
(iii) Migration for Employment and the
Tunisian Labour Market
(iv) The Direction of Tunisian Labour
Exports : Options for Planners
(v) Conclusion

The Kingdom of Morocco

(i) Introduction
(ii) The Domestic Labour Market of*
Morocco
(iii) Rising upon Significance of
Remittances
(iv) Potential and Policies for Moroccan
Migration for Employment.


Page Number
128
128
131
133


136
138

.139


PROJECTIONS OF THE NEAR EAST LABOUR
MARKET TO 1985

Introduction
The Domestic Demand for and Supply of
Labour
The International Supply of Labour
The Resolution of Demand and Supply
(i) Scenario One -: Maximum Arab
Penetration of Capital Rich
Labour Markets
(ii). Scenario Two : A Selective
Labour Market, less open to
Arab Labour
Scenarios One and Two : Conclusion
The Implications of the Projection
Results for Capital Poor States


CONCLUSION AND BROAD POLICY STATEMENT

Introduction
Migration for Employment and Economic
Development of the Capital Poor States
The Broad and Temporal Perspectives
within which USAID should Frame its
Policies


Part 4.


Part 5.


5C.


147
147

147
149
152


152


154
155

158





-57-


PART 1. INTRODUCTION, SUMMARY AND ABBREVIATED CONCLUSIONS


Preface

This Report is derived from the research carried out by

Dr. J. S. Birks and Dr. C. A. Sinclair whilst they were co-

directors of the International Migration Project. This was a

study commissioned by the International Labour Office as part

of the World Employment Programme, Migration for Employment

Project. The aim of the project is to investigate the implic-

ations of international migration movements from low-income

to high-income countries for economic and social policymaking.


Supported by the United Nations Fund for Population

Activities, the I.L.O. initiated a wide range of stocktaking

and evaluation activities, of which the International Migra-

tion Project was part.


The views expressed in this report are not necessarily

those of the International Labour Office, or of any other

international agency or government with which the authors have

been or are associated.


The authors alone are responsible for what is included in

this report.





-58-


1B The Form of the Report

The report covers the labour market of the Arab Near

East as,defined to include the Maghrib, North Africa, the Nile

Valley, the Levant and the Arabian peninsula. Mauritania and

Turkey are excluded except insofar as they bear relevance to

the focus of the study.

The main focus is the capital poor labour supplying

countries of : the Arab Republic of Egypt; the Democratic

Republic of the Sudan; the Hashemite Kingdom of Jordan; the

Syrian Arab Republic; the Sultanate of Oman;' the Yemen Arab

Republic; the Republic of Tunisia; and the Kingdom of Morocco.

The analysis begins with a review of the wealth and

human capital endowments of the major Arab states, and analyses

the contrasting forms of economic development that have arisen

from these resource distributions. These patterns have

resulted in high-income and low-income countries developing at

startlingly different rates, and comprise the economic founda-

tions for the system of international migration for employment.

The patterns of migration are then described, and the impact

of the transfers of labour on the shape of industrial develop-

ment in the oil exporting states outlined.

Part 3 consists of detailed analysis of the nature of and

effects of international migration for employment upon the

Arab labour supplying states. In each case, what appears to

be the most acutely damaging or most beneficial aspect of

labour exporting to the particular country is highlighted with-

in a general framework of discussion.




-59-

The study of each of these individual country assessments

concludes with statements of suitable policy aims and

directionswith respect to migration for employment. These

serve as guides to possible USAID action in these states.


In part 4, these individual country policy statements are

cast in the overall trends of the Arab region's labour market.

The demand for and supply of labour are projected to 1985 in

order to demonstrate policy priorities and the rapid rates of

e.onozicktchange under which the labour suppliers' policies

have to be shaped and effected.

Part 5 demonstrates the broad regional issues which have

to be faced by the labour supplying states, which hinge around

their dependance upon the capital rich countries of employment.

Stemming from this is the temporal, economic and political

framework within which USAID should consider the avenues of

action in the Arab Near East.

Part 6 comprises a note on compensation. Without this,

the report would have been incomplete, in view of the

importance of compensation as an issue in the region.



1C Summarised Conclusions and Policy Statements

Most generally two factors are of overriding significance.

(a) The widening gap between capital rich and capital
poor countries, which is not being reduced, but which
is probably being aggravated by migration for employ-
ment.

(b) The likelihood of large scale unemployment occurring
in the medium term in the capital poor states as
their labour returns home after being discarded by
the capital rich countries of employment.




-60-


The authors predict a turn about in the international

labour market in the Arab world. This will be of crucial

significance to the Arab labour suppliers upon which the

report is focused : at the present their chief problems

and preoccupations are with labour shortages and problems of

effective utilisation of remittances. Although these problems

are acute, we assert they are transitory. Opportunities in the

capital rich states for Arab labour from the capital poor

states will diminish rather than grow. In fact, despite con-

tinued economic growth of the oil exporters, employment of

Arab migrant workers could fall sharply.

In this event, a new more intractable set of problems

will be facing the capital poor states. They will experience

a net return of.large numbers of erstwhile migrant workers,

and consequently extensive unemployment contemporaneous with

declining remittance levels.

As investment for economic growth and employment creation

becomes increasingly constrained by foreign exchange shortages,

so the existing social and political order in these capital

poor states will be increasingly tested.

The authors suggest a regional labour market strategy in

an attempt to predict and stabilise labour flows. This is .an

essential medium to longterm strategy to ease the impact of

vacillations in demand of the labour markets of the capital

poor states. This strategy should be part of an attempt to

attain some stability of labour demand. With a fall in inflation

this would create a climate within which attempts should be made t(

engender economic growth and an increase in real incomes in

the non-oil endowed states.




-61-
In short, the authors feel it essential, because of the

rapidity of change in the Near East, to look beyond the

present state of affairs, to the near future, when the labour
J
market will be of markedly different characteristics from

those existing today.

Present day problems associated with the role of these

capital poor states are, however, not ignored. They

are analysed in detail, and the numerous paths of action to

minimise the deleterious impacts of migration for employment

are described and evaluated.

Efforts must be made to utilise remittances in the national

interest rather than individual interest by encouraging use

of bank accounts for transfers; instigating development bonds,

and storing foreign exchange reserves for the future. Agri-

culture must be protected in the short term, so as to maximise

its longer term potential. Positive government action is

recommended to encourage migrants to return, rather than

negative efforts to prevent their departure to seek work, for

example. The need to monitor economic development in the oil

exporting states is stressed. Other such policy details are

covered in section 3. The acute shortcomings of schemes

advocating compensation for countries' exports of labour are

detailed in Part 6.

Above all, though, planners in the region who intend to

aid the capital poor states must not devote themselves totally

to the plethora of opportunities for action in the short term,

under present day conditions of labour shortage. Much can and

should be done to make more effective the ad hoc policies





-62-


already in train to maximise benefits from migration for

employment to all parties involved. Care should be taken,

however, that such actions do not make conditions worse for
J
the capital poor states in the future, when their labour is

only demanded in much smaller numbers by the oil rich states.




-63-

PART 5. CONCLUSION AND BROAD POLICY STATEMENT

5.A Introduction

The capital rich states are on an unstoppable, unswervable

path of economic development. Only points of detail are

alterable; the essential pattern is deeply set.

Imports of labour have, of course, been an essential com-

ponent of this progress. Without the productive capacity the

migrants represent, it would have been impossible for these

oil exporting states to have embarked at all upon economic

development of the present nature. Their apparently insatiable

demand for labour continues to grow, and will do for the

medium term at least.

The satisfaction which countries of employment perceive

in regard of their policies of labour importing stems from the

fact that most of the benefits from the employment of migrants

remain within their borders. There is only a relatively small

leak of remittances, so the standard of living of the indigenous

populations of the capital rich.states benefit markedly from

employment of non-nationals.

The current pattern of economic development brings an inevitable

reliance in the oil exporting states upon increasing amounts of

migrant labour. However, this does not imply future stability

of the migration system in the Arab world. Indeed, the demand

for Arab labour in the region will continue to be unpredictable,

even in the short term, and is likely to fall rather than remain

stable in the medium term. This is because of the trend of

utilisation of non-Arab labour in the capital rich states


demonstrated in the projections.




-64-
5B Migration for Employment and Economic Development in the Capital
Poor States

The benefits of the migration system to the capital poor

labour supplying states are by no means so clear cut. Migration

for employment has not contributed to accelerated economic

growth amongst the countries of origin of labour. This, in

general terms, seems to result from their essentially passive

participation in the migration system, and the scale of with-

drawal of labour from their domestic markets. The benefits

which these labour supplying countries expected to accure from

migration for employment has not been brought about. The

advantages that result from small scale involvement as a

supplier of labour are lost when participation reaches the

stage when large proportions of the workforce depart. This is

particularly the case when the withdrawal of labour from the

supplier country labour market is rapid; the international

labour market in the Arab world has certainly been volatile,

and oscillations have been of a considerable scale.

The result of this has been that advantages to supplying

labour, as perceived by the capital poor countries of origin

of migrant labour, have transformed,almost overnight, into

marked disadvantages. Thus, the "diminished unemployment effect

quickly becomes labour shortages. Similarly receipt of

remittances evolves over a very short space of time, from being

a welcome source of foreign exchange into an inflationary evil

as the scale of labour exporting grows.

It is the pace with which the impact of these factors con-

cerned with migration change which has surprised the capital

poor states. The degree to which they have been caught out is




-65-

illustrated by the fact that in the Sudan, for example,

research was still being directed towards reduction of unemploy-

ment when, in fact, labour shortages caused by emigration were

already biting hard. More generally, the capital poor states

as a whole were evaluating the advantages accruing from

migration for employment, and were either tacitly approving or

actively encouraging further departures of their nationals at

a time when migration was of a scale such that the deleterious

impact was outweighing the benefits.

It is this pace of change which explains the passive

participation of the labour supplying states. Because they

were not aware of the scale of the problem-and the new side

effects consequent upon the labour movement following 1973,

they stood by silently whilst, effectively, their labour

forces were stripped by the immensely strong market forces

generated by the economic development of the capital rich oil

exporting states. In fact, once the pattern of migration was

established there was in any case little that these capital

poor governments could have done in the face of such market

pressures. They had to face the fact that migration for

employment had grown, almost without their realising it, or

at least without their being able to do anything about it,

into a factor that was of prime importance in effecting their

own domestic economic development.

It is because of the speed with which these remarkably

violent market forces, generated by the desire of the capital

rich states to industrialise rapidly, have wrested so much

manpower from the labour markets of the capital poor states




-66-
that the policy of their governments, in so far as it is

directed towards migration at all, is pragmatic, inconsistent

and perhaps contradictory.

As described in Part 3 of this report, all the governments

are involved in ad hoc domestic policies designed to mitigate

the worst aspects of the impact of migration for employment,

to minimise inflation and to encourage investment expenditure.

In fact, these policies, ad hoc short term domestic

measures, so overtly unsatisfactory in the face of a widening

gap in wealth between labour importers and labour exports,

represent the best that labour suppliers can impliment. This

is because the unfortunate fact is that they have no real

bargaining power within the international labour market. The

longer term trends of economic development, and the demand

for labour within the Arab world in particular, are virtually

entirely the result of economic forces generated by the

capital rich. These are therefore completely beyond the con-

trol of the capital poor.

Nevertheless, it is not sufficient to advocate that the

capital poor countries should continue to accept a pattern of

migration which exaggerates differences in development between

supplier and demander countries of labour. There is no reason

why they'should be content to see the gap between rich and

poor countries widen, with the advantages from migration

accruing largely in the capital rich countries of employment.

Efforts must, moreover, be made to reduce the growing depen-

dance of the capital poor upon the labour importers, and to

change the balance of the system. No ad hoc domestic policies

in capital poor states can bring this about.





-67-

Yet the suppliers of labour are constrained in their

powers of negotiation by a paramount economic consideration -

the fact that alternative supplies of labour to the capital

rich states are freely available. This labour is cheaper,

and earns greater returns for the country of employment. The

governments of the capital rich states are becoming increas-

ingly pre-disposed towards non-Arab labour. The bargaining

power of the countries supplying labour is diminishing; the

sender countries of labour are constrained in their attempts

to secure, for example, better terms of employment for their

nationals working abroad, by the likelihood of the countries

of employment turning increasingly to non-Arab labour.

Cartelisation of the labour supplying nations would over-

come the problem of competition between Arab labour suppliers

provided, of course, the ranks hold firm, which is rather

unlikely. Critically, though, such cartels would have no

means of preventing the importation of labour from outside the

Arab world, in particular, Asian or Oriental. Indeed this

will happen anyway. If the comparative cost of Arab labour

rises further against labour from the east, then these trends

towards use of Asian and Oriental labour will be reinforced.

Although not all expatriate Arab labour employed by the

capital rich states could be replaced by labour from the east

(a fundamental point of strength amongst the Arab labour

exporters) it seems difficult for the countries of origin of

migrant labour to put economic pressure upon the countries of

employment. What economic pressure they can muster is likely

to be counter-productive, causing adverse repercussions to the

supplier countries of labour.





-68-


The most effective policy option for the capital poor

states is to encourage the capital rich states to co-operate

in a regional manpower policy. This would predict labour

demand, rather than alter it to the-benefit of the Arab

suppliers. But Arab labour demand could then be regularised,

removing the precipitate oscillations of demand upon various

skills in the supplier countries of labour.

It is towards this regional manpower policy that Arab

solidarity should be directed. The scheme has the political

advantages of being truly regional, rather than being

essentially divisive within the Arab world. This is in con-

trast to setting labour suppliers, as a group, or through

bilateral or compensatory agreements, against the countries of

employment. Such confrontation would expose the dependant

position of the countries of origin of labour.

One of the essential aspects of this scheme is to limit

the numbers of workers drawn in from outside. This would

avoid unemployment in the source countries of Arab labour

which would result from the possible large scale reduction in

the demand for Arab labour. Such a fall in demand will.occur

if the capital rich substitute Asian labour for Arabs on a

large scale at the end of the present construction phase of"

their development programmes.

It is this possibility of a large rapid increase in

unemployment in the Arab labour supplying countries which

should be the major pre-occupation of negotiators of the

capital poor states.





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Compared to the consequences of a future collapse in the

demand for their labour, their past experiences of unemployment

and their present problems associated with their role as

labour suppliers will seem minor.


SC The Broad and Temporal Perspectives within which USAID should
Frame its Policies

The policy aims spelt out for the individual capital poor

states comprise the avenues for the most immediate action of

aid donors and international agencies in the Near East.

In the short term, it is certainly towards these capital

poor states that aid disbursements should be directed.

The capital rich Arab states should not be ignored, however.

Although financially wealthy, they are critically short of

what they feel to be first rate planning advice. This they

can purchase. It is in the best interests of the region as a

whole, and of course of the capital poor states, to see that

expertise and technical assistance purchased by the capital

rich is indeed of good quality and the best integrity. It is

the oil exporting states, above all else who are determining

the future shape of economy and society in the Near East. The

dependance of the capital poor upon the oil exporters has

been demonstrated : therefore no integrated strategy of aid

for the capital poor states would be complete without monitor-

ing of developments in the capital rich economies.

Above all though, planners must not let the plethora of

opportunities for action in the short term obscure the longer

term aims, possibilities and strategies.




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In medium to long-term consideration, two factors are of

overriding significance:

(a) the widening gap between capital rich and capital

poor states,

(b) the likelihood of large scale open unemployment in
the capital poor states as the labour returns home after

being discarded by the capital rich states.

The first of these two points demonstrates clearly the scale

of the development problem in the Near East. The quickly growing

large populations of the capital poor states, presently making

even maintenance of existing levels of wealth difficult, will

become an even greater obstacle to achieving real growth of per
capital gross national product. Yet unless growth in real terms

is brought about in the capital poor states, political upheaval
will become increasingly likely, in turn threatening the capital
rich states.

In short, the strategy adopted to aid development in the capital

poor states will have to be ambitious in scale and farsighted in

nature. Little less than the transformation of their patterns of
their economic growth are needed.

This general perspective is brought into yet sharper relief,

and the development problems compounded by the possibilities

of returning migrants from the capital rich states causing wide-
spread open unemployment. It is towards ameliorating this

probability, which is medium rather than long-term, that development
efforts should be orientated. There is no doubt that prolonged

unemployment on this scale of workers with aspirations and desires

heightened by their experiences in the capital rich states, will
put great strain upon the political and economic fabric of the

capital poor states.




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Thus AID, in considering policy options in assisting the

economic development of the capital poor states should look

beyond the immediate set of problems, which are in large part

merely transitory, and consider the deeper, more intransigent

difficulties towards which the capital poor states are heading.




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DISCUSSION PAPER ON MIGRATION ISSUES IN THE NEAR EAST
Annette Binnendijk
NE/DP/PAE, A.I.D.
INTRODUCTION

This background paper addresses the major issues identified as important
for discussion at the general session on migration in the Near East
on June 5, and presents some background analysis on these issues.
The issues include, but are not limited to, those raised in the Birks
and Sinclair report. Some interested persons in AID and other agencies
have commented on the report; in some cases responding with alternative
viewpoints and also suggesting additional discussion topics not dealt
with fully in the report. An attempt has been made to incorporate
these ideas -- especially the controversial issues -- into this background
paper.

In summary, the four major issues for discussion are identified as
follows:

I. What are the probable trends in Near East migration in the
next five to ten years?

II. What are the beneficial and detrimental impacts of migration
upon the labor-exporting countries?

III. What policy recommendations can be made to the governments
of the labor-exporting countries to help enhance their net
benefits from migration?

IV. What activities can donor agencies such as AID undertake to
assist the labor-exporting countries in dealing with their
migration-related problems and opportunities?




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I. Projection of Future Size and Composition of Labor Migration
Attempting quantitative projection of future Near East migration
flows is a difficult task that few have yet attempted.l/ Yet most
analysts who have studied migration trends in this area agree that
there will be a slow down over the next few years in economic growth
and labor demand in the oil rich countries. There is also a general
consensus that the composition of this expatriate labor will continue
to become more non-Arab and more highly skilled. Beyond this basic
agreement, however,there is a divergence of views over the extent of
the slow down and the change in composition. For example, will aggregate
labor demand in the oil rich countries simply slow down its growth or
will it level off? While it is agreed that the proportion of skilled
labor will increase, does this mean that the number of unskilled
required will only grow slowly, remain constant or actually decline?
Similarly, while it is fairly certain that the share of non-Arabs
working in the oil rich states will increase, wTTil he number of
Arab migrants still increase, level off or possibly decTlne? What are
the implications for specific labor-exporting Arab countries?
Below is a brief discussion of the social, political and economic
factors likely to determine future migration patterns.

a. Trends in Aggregate Migration Flows
The projection of a slow down over the next few years in
economic growth and labor migration in the oil rich countries
is attributed mainly to a labor constraint. This constraint
is, however, not due to lack of supply (Asian and Oriental supplies
are probably available even if Arab labor supplies are limited)
but rather due to a growing hesitation to increase expatriate
labor in the oil rich countries much beyond the current proportions.
Already by 1975, nearly one-half of the employment in the oil
rich countries was expatriate labor. Concern over the political
and social consequences of higher proportions of foreign population
is already strongly evident and will probably temper these nations'
desires for continued rapid rates of economic growth.2


1/ In addition to the Birks and Sinclair "scenarios", the World Bank,
Development Economics Department is preparing alternative simulations
of labor flows by skill level, which should be available by
October, 1979.

2/ This concern isreflected (a) in laws designed to keep migration
(especially of unskilled labor) "temporary" by refusing migrants
privileges, rights and services provided to nationals; (b) in
growth of "work camps" isolated from the general population; and
c) in sensitivity and secrecy with which some oil rich countries
guard census data on resident foreign populations.




-74-


Besides these social and political concerns that increasingly
may constrain migration flows, economic trends may have similar
impacts. As the current labor-intensive construction phase of
their development merges into the operational phase, future
total demands for labor may slow down.

b. Trends in Composition of Migration Flows

The political and social concerns over large expatriate
populations in the oil rich countries will probably affect
future composition of labor demand as well as size. More capital-
intensive approaches to development may be tried in an attempt
to limit labor needs; this in turn would affect the composition
of labor, requiring proportionally more skilled manpower. Further-
more, the desirability of importing Oriental labor as part of
"work camp" or enclave projects has been growing. Contracting
with these Oriental firms for turn-key projects has proven cost-
effective, has reduced economic costs of providing services and
housing for migrant labor and furthermore has had social advantages
of isolating the foreigners from the local population and assuring
that their stay would only be temporary. Data reveals that the
share of the labor market supplied from Asian and especially
from Oriental sources has markedly increased during 1975-78, and
indications are that these trends will probably continue.

However, the extent to which these current trends will
become the "wave of the future" is undetermined. For example,
there has been little research on the capacity of the Oriental
labor market to continue supplying qualified labor. And how
appropriate will the "work camp" approach to development prove
to be in later stages? Finally, numerous occupations will probably
continue to demand Arabic-speaking persons; in fact an argument
could be made that while language is relatively unimportant in
construction projects, it may become an increasingly important
factor in future job opportunities in industry, service and
commerce.

The future composition of the migrant labor force will also
be affected by economic determinants. As the current stage of
rapid construction of infrastructure gives way to an operational
stage with increasing diversification into industrial, commerce
and service sector development, the demand for more skilled
labor will increase relative to overall labor demand. That the
skill composition is likely to change in this direction is clear
from viewing the trends already occurring in the more developed
examples of Bahrain and Kuwait.
This changing composition of labor demand has implications
for future migration trends in the Arab labor exporting countries;
for most it implies a slow down or leveling off of migration
outflows; for countries exporting mainly unskilled labor, such
as the Yemen, it probably implies a decline.




-75-


Participation of women in the labor force is generally
very low in the Arab Near East countries, and particularly so in
the oil rich countries. In the oil rich countries, women's
traditional employment in agriculture has declined and has not
yet been replaced by new opportunities in the modern sector,
primarily for cultural/religious reasons.. However, as women
gain greater educational status and as labor shoFtages continue,
some employment participation gains may be forthcoming in some
of the oil rich states for indigenous and migrant women in the
higher skilled categories.

c. Stability of Migration Flows

In addition to future magnitude and composition of migration
issues, another major concern should be with the stability and
predictability of future flows. Given the lack of regional
planning or even basic data, it is unlikely that trends can be
accurately predicted. The rapid increase and changing composition
in migration trends since 1973 attests to the possibility of
future fluctuations. Also, internal political instability and
possibility of regional conflicts affecting migration opportunities
in the Near East should not be completely discarded. Within
the last few years, for example, migration trends were interrupted
by the Egyptian-Libyan conflict and by the Iranian internal
unrest. Arab disunity over the Egyptian-Israeli peace treaty
may also influence future migration trends.

II. Beneficial and Detrimental Impacts of Migration on Labor-Exporting
Countries of the Near East

The beneficial and detrimental impacts of migration upon the
Near East labor-exporting nations are diverse and complex, and empirical
evidence is severely lacking. The private benefits and costs to the
migrants themselves may be very different than the benefits and costs
to the society as a whole. Also, there may be a time-dimension where
there are net benefits from emigration in the short term but mounting
costs in the longer term. The problem is further complicated by the
probable changes in the regional labor market projected above, and the
likely socio-economic impacts of these future trends upon the labor-
exporting countries.
There are no conclusive studies of the net impact of emigration
on the labor-exporting countries of the Near East. Attempts to
quantify the interrelationships are complicated by lack of data and
by the diversity of the positive and negative effects. Any attempt
at a cost-benefit dnalysis-of migration would probably cost a great
deal in time and money and might still give misleading results. Such
a study might end up concentrating upon the macro-economic and current
impacts, while ignoring longer-term and unquantifiable social, but
nevertheless, important implications. Analysts disagree considerably
in their opinions of what the net impact of migration has been in the
labor-exporting Arab.countries.




-76-


Here the analysis will be limited to a qualitative assessment of
the probable short and longer-term impacts upon various development
objectives of the labor-exporting countries.

a. Impact on Economic Development

In the short term the emigration helped to Filieve unemployment
and underemployment and also relieved foreign exchange constraints
to development via remittances. Remittances alleviate balance
of payments problems in the same manner as foreign investment or
aid. However, its impact on capital formation and growth is less -
direct. Whereas foreign investment and aid generally go directly
into productive areas, remittances are generally under private
control and thus its immediate impact on growth depends upon the
migrant's propensity to save and invest, and upon the attractiveness
of investment opportunities available to him. While little
empirical evidence exists on uses of remittances, the general
opinion is that most is spent on land, housing and consumption
items, rather than upon setting up businesses or'similar productive
investments. Indirectly however, the remittances increase
purchasing power that tends to stimulate demand and thus economic
growth. Taxes on remittances (mostly indirectly via import
tariffs) have also enriched the labor exporting governments,
which in turn have facilitated development efforts. Aid from the
oil-exporting countries (although perhaps not directly related
to migration) have similarly promoted economic growth in the labor-
exporting countries of the Near East.

On the other hand, there are a number of negative impacts
that tend to show up especially in the longer term. Alleviation
of unemployment may soon give way to labor shortages, especially
in critical skill levels. In three of the Arab labor-exporting
countries (Jordan, Oman and Yemen Arab Republic) nearly a third
of the labor force has already emigrated. Not only is the cost
of educating and training these workers thus lost, but critical
skill bottlenecks may obstruct production in certain industries
of the labor-exporting country.

Similarly, the beneficial impact of increased purchasing power
via remittances on production may soon give way to negative
inflationary pressures. Especially if domestic production capacity
is limited due to labor shortages, demand-pull inflationary
pressures may be severe. In addition, the pressure of emigration
upon increasing domestic wages adds to a cost-push inflationary
pressure.




-77-


The negative impacts of emigration upon domestic production
may be particularly severe in certain sectors. For example, the
construction sectors appear to be constrained in a number of labor
exporting countries and some of these countries have even had to
resort to importing labor themselves (most notably Yemen and
Jordan). Agriculture in the Yemen, which depends upon a very
labor intensive maintenance of terraces, may be suffering
irreversible damage.

The (possibly temporary) absence of labor and high cost of
even unskilled labor in the labor exporting countries may have
an added undesirable effect of encouraging a capital-intensive
economic structure. Given the likelihood of reduced demand for
unskilled labor in the oil-rich countries in the medium term
future, such a structure would prove inappropriate when and if
labor begins to return and seek jobs at home.
An additional cost to the economy of migration is the opportunity
cost of educating and training labor that is subsequently lost
in the "brain drain".

b. Impact on Employment Opportunities

Migration flows, of course, occur because individuals seek
better employment opportunities abroad, and thus from the individual
migrant's perspective migration is beneficial, at least in the
short term. Perhaps the migrant even picks up some skills on the
job that will affect his later productivity and employability.

From the point of view of the labor-exporting society as a
whole, the immediate effect has been very favorable. Unemployment
and underemployment problems have been alleviated. Whereas some
find work abroad, those left behind also benefit by the reduced
population pressure. With greater capital and land to labor
ratios, labor productivity and renumeration tends to increase.
Levels of domestic job opportunities may also be enhanced by the
greater production opportunities stimulated by increased purchasing
power of remittances. However, this stage is already giving
way to cases of severe labor shortages. Labor bottlenecks at the
skilled technical and managerial levels can slow down production
and general employment.
Attention must also be given to probable future employment
opportunities at home and abroad. In the event of large-scale
return of unskilled labor (perhaps not too unlikely) to the
home countries, how prepared will they be to reabsorb such labor?
Most likely it will be the unskilled rather than the skilled labor
that returns in large numbers. If the agriculture sectors are
allowed to decay, and if a capital-intensive modern sector has
been allowed to develop in the meantime, the problem of reabsorption
may be great.






. Impact on Living Standards and Equity


Obviously, the migrants (and their families) improve their
material living standards by emigrating. To the extent that the
majority of the emigrants are unskilled, poor and unemployed,
the equity distribution of income among nationals is.probably
improved. Also, among those poor non-migrants, chances of finding
employment and improved wage rates is enhanced by the migration
outflow.

In the medium term future, however, as migration opportunities
become more constrained to the skilled classes, the "equalizing"
benefits of migration are likely to be reduced. As inflationary
pressures grow, the poor are likely to suffer the most. Indeed,
if a large scale return of the unskilled migrants is in the future,
the domestic economies may have difficulties absorbing such
returnees, with ominous implications for the poorer classes and
for whatever equity was gained.

d. Social and Political Implications
There are a number of possible social and political implications
of emigration upon the labor-exporting societies.

1. Women's Role

Although the opportunities for women to directly gain
employment in the oil-exporting countries has been minimal
thusfar, the phenomenon may have affected their roles and
opportunities indirectly. With husbands gone, their roles
in family economic and other decisions may have increased.
Also, the labor shortages created at home may have given
some women opportunities to participate in the labor force
that might not otherwise have been available. On the other
hand, it is conceivable that if the agricultural sectors --
where women have traditionally had economic roles -- are
allowed to decay, women's economic contribution may actually
decline unless alternative opportunities emerge.
2. Demographic Impact
The impact that emigration may have had upon demographic
trends has been little explored. To the extent that the
living standards of the poorer classes have gained, death
rates have. probably declined as a result. Also, exposure
to new ways to safeguard health, nutrition and sanitation
information brought by returning migrants may have had a
positive impact on survival rates. These forces would tend
to promote rapid population growth. The impacts upon




-79-


fertility are more speculative; on the one hand, absence
of one's spouse and likely improvements in infant mortality
would suggest that fertility might be reduced as a result of
emigration. On the other hand, with population pressures
reduced by the migration "safety valve" the incentives to
reduce family size are less pressing. Children will have
added economic value on the farm with adult male labor gone
and besides can grow up to emigrate and send remittances
to help support the family later.

Another little researched area is the impact that international
migration may have on urbanization. Going abroad may be a
substitute for going to a city and thus at least temporarily
alleviate urban growth problems. However, when and if there
is a large scale return home of unskilled migrants, would they
be prepared to return to the land, assuming the agricultural
sector could still absorb them? Having attained new life styles
and expectations, it is likely that most such returned migrants
would settle in urban areas.

3. Other Social and Cultural Impacts

Experiences gained abroad may have significant impacts
upon the migrants and those associated with them. Living
styles and expectations may change. Skills may be enhanced.
Knowledge of the wider world and alternative cultures may be
obtained. While most of these changes are probably for the
better, some changes may be painful; changing from traditional
patterns of life are never smooth nor easy. Long separations
of family members and alienated living conditions abroad
as secondary citizens may have negative psychological
implications.
4. Political Implications

Finally, there are some important political constraints
for the labor-exporting countries resulting from emigration.
Interdependence is increased, and in a rather one-sided
manner. While the economies and labor markets of the labor-
exporting countries become increasingly dependent upon the
oil-exporting countries'. policies, they have no monopoly
over labor supplies and thus have little leverage or bargaining
power vis-a-vis the oil-exporting countries. In an area
where conflict is frequent and internal unrest often errupts,
placing too great a dependence upon other nations' stability
and good will (i.e., Arab Unity) may be undesirable.

On the other hand, the labor-exporting countries are not
totally without leverage. They are relatively very populous





-80-


and the oil-rich states obviously have a stake in their neighbors'
continued political stability. They cannot afford policies
that would cause widespread unemployment and possible
rioting in the labor-exporting countries in the region.
Furthermore, the oil rich economies currently do depend
heavily upon Arab labor migrants for their development, and
these migrants could not be easily replaced without disruption.

III. Policy Recommendations for the Labor-Exporting Countries

a. Regional Policies

From a regional viewpoint, there is probably little scope
for forming a "labor cartel" among the Arab labor-exporters
or attempting to gain compensation from the oil-exporting
countries for negative impacts experienced as a result of
migration trends. Having no clear monopoly on the labor supply
and being in a situation where other non-Arab sources are looking
increasingly desirable to the oil-exporters, the Arab labor-
exporting countries have minimal bargaining power. Moreover,
any compensation funds extracted might prove to be at the expense
of current aid levels and might create an undesirable "adversary"
situation between the oil rich and poor Arab states.

In conclusion, there appears to be relatively little that the
labor-exporting countries can do jointly to affect future migration
trends, which are controlled mainly by the oil rich states.
However, there may be some scope for regional cooperation
in terms of planning interregional migration flows. Being able
to predict and possibly stabilize future labor demands and move-
ments would greatly help the labor-exporting countries in planning
educational and training needs for their internal and external
labor markets, thus helping to avoid unforeseen labor shortages
or surpluses. Indications of future magnitude and composition
of labor demand in the oil-exporting countries would also help
the labor exporting countries prepare for and accommodate these
trends. Similarly, prediciton of future remittance levels would
help countries plan and conserve their foreign exchange needs.
Such regional projections are currently being undertaken by
the World Bank at a relatively sophisticated level, and hopefully
these results will be shared with the labor-exporting countries
and with the rest of the donor community. A point which needs
clarification is whether the statistics and analytical techniques
available are sufficient for making predictions of labor flows
at country-specific and skill-specific levels. If "forecasts"
prove impossible, it may still be useful to simulate alternative
"scenarios" and to draw policy implications for these alternative
contingencies.




-81-


b. Domestic Policies

At the country level, there is scope for undertaking policies
that will minimize the adverse effects and maximize the beneficial
effects of migration.

A prerequisite to taking policy actions to influence migration
trends should be a thorough evaluation of the costs and benefits
to the domestic economy resulting from migration. This may
require gathering more statistical information on migration and
remittanceflows and researching little understood patterns,
such as remittance utilization, agriculture implications, impact
on women, etc. Efforts should be made to include social and
political as well as macro-economic impacts in the assessment,
and future as well as current impacts. Although difficult in
the present absence of regional manpower planning efforts,
individual countries should attempt to integrate probable
migration outflows and inflows into their overall development
planning.
Once an assessment has been made, governments can attempt
to influence the patterns of migration and remittance flows
via specific policies and programs. However, it should be noted
that the market forces involved are very powerful, and government
interventions may only have minimal influence. Most important
is an awareness of the probable directions these forces will
take, and planning to accommodate the flows in a way that maximizes
the benefits and minimizes the costs.
If domestic labor shortages are becoming a problem, several
steps may be taken to alleviate the shortages, including (a)
encouraging return of migrants by providing incentives such as
fringe benefits, social security plans, housing schemes, job
security, etc; (b) developing short-term training programs
aimed at filling critical shortages; (c) requiring that scholarship
students work at home for several years before migrating abroad;
(d) encouraging the participation of women in the labor force;
and (e) encouraging in-migration of "replacement" labor.
If greater emigration of labor is considered to be a desirable
objective, this might be stimulated by (a) reducing institutional
constraints such as lengthy and costly paperwork requirements;
(b) greater advertising of migration opportunities; (c) establishing
migrant recruitment agencies capable of competing with the
Oriental "work camp" project approach.
Remittance flows have proven to be very sensitive to economic
policies. If there is fear that once remittances are made these
funds may no longer be freely exported, or that they may be





-82-


heavily taxed or otherwise appropriated, they tend to remain
abroad. Other factors are the availability of banking systems
for easy transfer and of profitable investment opportunities.
Decisions to invest remittances in small businesses will depend
upon factors such as availability of natural resources, infra-
structure, a market for products/services, credit facilities,
tax incentives, etc. Economic liberalization policies, such as
devaluation of currency and freeing foreign exchange conversion
systems, have tended to attract remittances, especially for
productive investments. Thus, remittances may be encouraged
and channeled into more productive uses by (a) establishing
banks for migrants' transfers and instigating development bonds
schemes with reasonable interest rates; (b) creating a favorable
environment for investment by assuring migrants that their remittances
will not be appropriated, or heavily taxed, that re-exporting of
assets will be allowed, and that reasonable profits can be made;
and (c) encouraging the establishment of small businesses by
preventing over-valuation of the domestic currency, by widening
capital markets, and by providing tax credits and small business
services.
Inflation may be controlled by appropriate monetary and
fiscal policies. However, overambitious anti-inflation measures
should be avoided, as this may dampen economic growth and only
stimulate more emigration.

In addressing migration, care must be taken to look beyond
the current concerns of how to deal with labor shortages and how
to channel remittances into productive channels. While these
issues are important, they may be short-term problems. In the
longer term, placement of perhaps large numbers of returned
migrants with raised expectations may become the over-riding
issue. Care must be taken to protect the deterioration of the
agricultural sector which traditionally absorbed large amounts
of labor and to avoid the development of an economic structure
which is too capital-intensive.

IV. Implications for AID Activities
a. Impacts of Migration Upon Current AID Projects

Design and implementation of AID projects are currently being
affected by migration-related phenomena, especially in the Yemen,
Jordan, and Egypt. Often the costs of implementing capital
projects are very high due in part to the scarcity of qualified
labor, particularly in the construction sector. Not only are
current wage levels high, but inflation drives these continually
upwards, making estimating future expenditures very difficult.





-83-


In some cases labor cannot be gotten at any price and project
designs must be changed substantially to overcome these shortages.
For example, in the Yemen,plans for a housing project had to
be changed from the original design to importing U.S. prefabricated
modules due to construction labor shortages. Thqriginal desi n
of the Yemen poultry pr t oi olvwiesprea
a ic nation o ma fa ers h be changed subs an a y
ue o ea sen m e working
t tura women. he Yemen participant training program and
project ww raining components have also been affected; finding
qualified candidates for training positions has been very difficult
in part because of the initially small stock of educated persons,
but also because of the "brain drain". Also, there'has been
some problem with enforcing the return of trainees,especially
those who received technical training which is in great demand
in the oil rich states. Although perhaps not on the same scale,
AID projects in Jordan and Egypt are also affected by migration.
For example, in Egypt the construction of the Suez cement plant
has been held up due to the shortage of construction labor required
to complete the civil works. These implementation problems
encountered in AID projects, which can be critical to the project's
success, suggest that special attention to migration-related
phenomena should be considered in project design reviews.

b. Migration Trends and AID Country Development Strategies

As has been discussed, the development efforts of the labor
exporting Arab countries have been fundamentally affected by
migration. The typical strategies for labor-surplus, capital-
short economies do not currently apply. The problem is compounded
by the volatility of this regional labor market and the likelihood
of significant changes in the not too distant future. In order
for AID to develop an appropriate medium-term strategy in these
countries, an understanding of the current and probable future
implications of migration is required. There are numerous
possibilities for worthwhile data collection, research and analysis
in migration-related areas that would contribute to AID's own
strategy development activities and to our capability to wisely
advise the recipient governments on policy issues.

c. Potential AID Activities for Assisting in Migration-Related
Problems and Opportunities

There are a number of opportunities for AID to assist the
governments of the labor-exporting Arab countries in their efforts
to increase the benefits and reduce the costs of migration. Some
possibilities are identified below:
1. Assist in short-term training schemes to fill labor
shortages.





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2. Develop Arab migrant recruitment agencies to compete
with Oriental "enclave" approach.

3. Develop schemes to enhance emigration opportunities
for women or to increase their productive activities at
home.

4. Assist in schemes designed to encourage remittance flows
and channel them into productive investments (e.g., bond
schemes, establishment of banks, credit facilities and other
services for small businesses, etc.)

5. Assist in reducing longer-term reliance on migration and
remittances (via programs encouraging diversification of
exports, self-sufficinecy in food production, labor-intensive
production techniques).
6. Assist in manpower and migration planning efforts,
related research and data collection requirements.





















Annette Binnendijk
NE/DP/PAE
June 1, 1979




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