The significance of labour mobility



An advance reading of our Leader in our March 1, 2023 Digital Edition

Dynamism, Equity, Balance and Mobility determine a successful immigration framework: Immigration Minister Michael Wood with India’s High Commissioner Neeta Bhushan (right) and Labour MP Vanushi Walters (left) at the Indian Newslink Lecture held at JW Marriott Auckland on February 27, 2023 (INL Photo by Vikas Devarakonda)

Venkat Raman
Auckland, February 28, 2023

Delivering the Indian Newslink Lecture 2022 series on February 27, 2023 in Auckland, Immigration Minister Michael Wood underscored the importance of protecting the rights of migrant workers. These rights include safety and security at work, freedom from exploitation and equally important, freedom of movement.

Ending bonded labour

New Zealand has ended or is about to end the ‘bond’ to which migrant workers were conditioned- tied to the employer who brought them into the country. There were merits in the system, for after all, it is the employer who headhunts the migrant workers, brings them into the country, employs them and helps them to settle down. Benevolent employers also arrange to sponsor their families and in some cases, find jobs for their partners as well.

While the system has worked well for many years, unscrupulous people began to exploit migrant workers, leading to government action. Much to the chagrin of genuine employers, the new system of free transfer of work visas has gone in favour of migrant workers.

Rightly so, we would say.

Protection of migrant labour has become a worldwide movement.

Arab Gulf trends

Even the countries of the Gulf Cooperation Council (GCC States) have moved away from the ‘Kafala Policy,’ essentially a sponsorship system that gives employers considerable power over migrant workers. This power includes control over the rights of these workers to leave and renter the country, and equally worse, to change jobs.

Major reforms introduced by almost all GCC States- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates have had far-reaching implications for migrant workers and their countries of origin and employers.

Saudi Arabia has announced a new contract-based system which will allow most foreign workers to freely enter and exit the country and to freely change employers one year into their first contract. This reform was introduced after an extensive policy dialogue between the World Bank and the Saudi government. Credit has been given to Crown Prince Mohammed bin Salman Al Saud who has been modernising the society and with it many of the outdated labour laws.

Experts say that granting labour mobility to migrants is a huge step forward but the Saudi government believes that the actual legislative change is only the first step.

It opens up an agenda for further reforms to complement this first step in two areas (1 Opening channels of information to foreign workers about the existing and emerging job opportunities (2) Recruiting channels for employers and (3) Matching channels for the benefit of both.

Managing unemployment

Mobility exposes foreign workers to risks, the most significant of which would be spells of unemployment between jobs. The Saudi government is considering encouraging migrant workers to open ‘Mobility Saving Accounts’ with contributions from employers and employers as monthly wages are paid.

According to a World Bank blog migrant workers (Michal Rutkowski and Johannes Koettl), it will be interesting to see how these reforms will impact Saudi businesses and Saudi workers.

Will there be disruptive effects, especially in the short run if the wage costs of migrant workers increase? Clearly, many Saudi firms were great beneficiaries of the restricted mobility of foreign workers. Restricting the rights of workers to freely choose their employers gave employers significant monopsony power. In economic terms, employers were able to levy considerable profits by employing workers at wages below their marginal value product of labour. At the same time, it discouraged businesses from capital investments, negatively affecting Saudi firms’ productivity. Will some of these businesses now have to close as the opportunity to extract profits from migrant workers decline? Will we see more capital investments as employers substitute away from labour?”

Legislation in New Zealand

On September 29, 2022, Associate Minister for Workplace Relations and Safety Priyanca Radhakrishnan introduced to Parliament the Worker Protection (Migrant and Other Employees) Bill to protect migrant workers from exploitation.

“With our borders open again, and near record low unemployment, migrant workers are returning to New Zealand, helping to grow our economy and bring new perspectives to our communities. Protecting migrant workers from exploitation is a priority for the government, and we will take a comprehensive approach to stamp out migrant exploitation,” she said.

It is important to educate migrant workers about their rights and protect them from exploitation.

India has asked the New Zealand government to provide mobility of labour to its migrant workers, which in essence would mean not only freedom to change jobs but also the ability to enter the country without cumbersome visa procedures. This could either mean bringing India under the Visa Waiver Countries List or granting Indian nationals visas on arrival.

New Zealand is currently rebalancing its immigration policy and we look forward to articulating with the government the needs of the economy and the need to optimise resources, of which India is the human capital of the world.

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