The global labor market is in a precarious situation. With unemployment in many developing regions of the world reaching unprecedented levels, the debacle surrounding the availability of work opportunities elsewhere continues to rage on. The issue of labor migration, particularly to the more affluent regions of the world has continued to divide opinions and threatens the long-term stability and sustainability of the developing world.
Table of Contents
Introduction
The motivation for writing this piece comes from a video by Vusi Thembekwayo that I saw posted on X. For context, Vusi is one of the most influential entrepreneurial consultants to come out of Africa, and he possesses a wealth of knowledge in the fields of capital investment and entrepreneurship and is a mogul in the field of marketing as well.
In the video, he describes how developing economies arrive at an unfortunate tipping point where, once their labor force is trained well enough, many of these countries end up exporting it to the developed countries, mostly in the global north. The reason for this, Vusi argues, is that there are limited job opportunities that fulfill the skill set of this labor force. That coupled with the fact that much of the developed world has more lucrative working opportunities and is going through a labor shortage means that it will always attract the skilled labor force from elsewhere globally.
My intrigue on the subject was further expounded on when I got the chance to partake in the International Migrants Debate, organized by the International Organization for Migration, Kenya at the University of Nairobi on 8th December 2023. I was part of the team representing the Technical University of Kenya in the debating competition between various Kenyan university campuses, which we won by the way.
Of particular interest, however, was the subject matter upon which the various debating rounds were built. The impact of migration on the social-economic organization was made apparent by the presentations made during and beyond the debating rounds. The whole conversation on migration deserves its own piece, but the trends on migration are skewed towards the movement of a skilled labor force from the developing regions to the developed world.
The Labor Market of the Developing World
So, two questions. Why is it and what does it all mean? For the first question, the most obvious answer could be in sheer numbers. It is no secret that much of the global population today exists in the developed world. According to the UNCTAD Handbook of Statistics Report of 2017, 6.1 billion of the 7.5 billion people live in the world’s developing regions. Furthermore, much of the developing world’s population is also relatively young with the median age in Africa, for example being about 19 years of age.
Globalization has enabled the acquisition of skills for this developing population, and access to education has been a priority for many of the developing countries of the world. Consequently, the demographic for the developing regions of the world is one comprised of a young, well-abled, and adequately skilled population.
The most valuable export for the developing world and particularly, regions such as sub-Saharan Africa has been its young workforce. In fact, despite the aforementioned efforts towards raising a skilled population, the education sector in many of these developing countries is still a long way off from the quality education offered in the developed world.
Why the Labor Workforce is Leaving
Unsurprisingly, many young people will leave their homes in the developing world to pursue higher education in the developing countries upon the completion of which they will choose to settle and work in these countries as well. This has been the path taken by many over the decades, and many only return to their countries of origin to retire in their old age.
Nonetheless, this may not seem like a bad thing on the surface. I mean, it is a good thing when a close relative gets a lucrative opportunity to move abroad since it means that they will be in a position to remit income to their families back home. These remittances offer a source of foreign exchange that benefits the developing economies. In Kenya, for example, diaspora remittances accounted for an annual turnover of about $4 billion in 2022, a substantial amount of revenue not only for the population but for the government as well. So, what is wrong with that?
According to Vusi, the biggest reason for the movement of labor away from these countries stems from the denial of opportunities for productivity in developing countries. Contrary to public perception, the developing world can provide adequate employment and entrepreneurial opportunities for much of its workforce.
Growth, particularly in sub-Saharan Africa especially during the turn of the century has managed to attract investment both globally and domestically. Foreign Direct Investment (FDI), a key indicator of economic performance and confidence grew from an average of about $942 million in the 1970s to about $38.7 billion in the 2010s in the region. Despite being a small sliver of global FDI spending, accounting for only about 2.5% of global FDI spending, it is indicative of a burgeoning economic standing in the region.
One may argue that the size of these economies may not be enough to support the massive labor force of the developing world. Hypothetically, even if these economies were to be structured in such a way that they operated at maximum efficiency, there would be no escaping the inherent reality of the forces of supply and demand. Talented labor will always go to where there is demand for it, and where it is assured of stable and substantial compensation for offering skills. However, an intentional effort towards fixing the economies of the developing world would go a long way towards plugging the leak and giving these developing nations control over how much of the export of their labor.
The export of labor from the developing world is reaching unprecedented levels, and the developed world is feeling the effects, as the number of migrants, refugees, and asylum seekers flocking to the developed region of the world is unsustainably high. Countries such as the United States are recording record-high numbers of migrants, with about 2.8 million people expected to cross into the country in 2023 alone; with a huge number crossing through the southern border through Mexico.
Labor and The Global Migrant Crisis
The migrant crisis is representative of a larger, structural, and exacerbated global crisis. Migrants do not move because they want to, but because they need to. Moving to a new country, with an entirely new culture and especially one that has a particularly harsh stance on refugees, is a harrowing experience and an unfortunate one for anyone who has to make it. Despite the lure of the presence of opportunities in the developed nations, only a small number of immigrants will make it in their countries of immigration, and many will end up stuck in a perpetual cycle of poverty, even in the developed world.
What then are these systemic issues that are the heart of immigration and the movement of labor force from the developing world? Economic mismanagement in all its various forms is the obvious explanation. The failure, stagnation, and collapse of many developing economies can be traced back to the mismanagement of their economies. A failing economy has limited opportunities and whenever that happens, there is nothing to hold back the labor force from leaving to seek better working opportunities. So, to sum up, Vusi’s argument, labor does not leave the developing world out of a desire to do so but because there is an almost intentional gravitation towards denying them work opportunities.
In a Nutshell…
In recent days, Kenyan President William Ruto has been on a clarion call in his visits and tours in developing countries, almost pleading with countries such as Saudi Arabia and India to import Kenyan labor. Creating jobs for the Kenyan youth domestically, which had been at the heart of his campaign is proving to be a larger task than he could have anticipated.
While that might seem like a viable solution in the short term, exporting labor vastly and negatively affects the exporting economy in the long run. What happens to these workers once their productive days abroad are over? Won’t they move and settle back in their countries of origin as unproductive members of society hence undoing any employment gains garnered during their working days? Furthermore, workers moving abroad creates even more overdependence on the developed economies, as developing nations such as Kenya have to rely on revenue generated in these countries for economic sustenance. Worst of all is the brain drain that comes from the export of labor.
When talent leaves, it is not just good talent that leaves, it is the best of the bunch that does. For example, Ivy League Universities are normally quick to swoop in for the top candidates that emerge after the annual secondary school examinations, offering them scholarships to some of their most prestigious programs. Once their studies are done, it is highly unlikely that they will return to Kenya immediately and many will choose to work in the USA.
Therefore, at the end of the day, Kenya’s best labor remains abroad, working to build and develop the economies of the countries they live in. How then will a country such as Kenya catch up to her developed counterparts when she has chosen to hand out her most ingenious labor force to the developed world?
For an in-depth analysis of why young, Kenyan labor is in search of better working opportunities elsewhere, read here.
Leave a Reply