Labor Mobility Strategy - Action Plan

UNDP and Labor Mobility

Goal Maximize the developmental benefits of migration for poor countries, and mitigate its negative consequences.

Strengths and Capabilities

• Equal representation• Legitimacy• Local presence: Expertise and

implementation capacity• Decentralized budgeting process• Access to country and regional funds

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Migration in UNDP Priorities

Democratic governancePoverty reductionCrisis prevention & recoveryEnvironment EnergyHIV/AIDS

Government capacity buildingEconomic & social securityDepletion of natural resourcesNatural disaster & refugeesHealth & education Human rightsWomen's empowermentDisease control

Purpose: Link global and national efforts to accomplish MDGs Task: Help countries build and share solutions to challenges

Migration

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Migration in National Development Strategies

Benefits of migration Welfare gains Economic benefits Reduction in the incidence and severity of poverty Technology transfer Business cooperation

UNDP calls for public awareness and government attention Skills Remittances

Develop Key Skills within the Country

Challenges Brain drain South to North migration

patterns

Benefits Increase of skilled labor in

origin country Minimal short run impact of

brain drain Exchange of expertise from

North to South 

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Harnessing Remittances for Development

Poor countries receive relatively large remittances Remittances are stable or even countercyclical cash flows A 10% increase in remittances 3.5% decline in share of poor

Challenges• Remittances can cause

currency appreciation• Distorted labor market

incentives• Leveraging remittances for

capital markets and improved national creditworthiness

UNDP’s Areas of Focus Goal

Strengths and Capabilities

Remittances Informed dialogue

Remittances

Reduce Transactions Costs

Streamine channels

• Pilot programs to reduce transaction costs• Guatemala – Canada Pilot• Evaluation using randomized techniques• Dissemination of results

• Share successful Credit Union Cooperatives model

REDUCE TRANSACTION COSTS:Transaction costs for remittances are high. According to a recent calculation, the average cost of sending money through a money transfer operator (e.g., Western Union or MoneyGram) is 11 percent of money transferred. Empirical estimates show that a one-percentage point reduction in transaction costs

=> raises recorded remittances by 20%.UNDP proposes the following to reduce transaction costs. Pilot programse.g. Guatemalan workers in Canada: Farm owners help reduce transfer costs by bundling all of their worker’s remittances together every two weeks and sending the money in one single transfer, through a Canadian bank to a collective account, in a UN agency’s name, at a Guatemalan bank. Evaluation using randomized techniques in partnership with research groupsUNDP will disseminate results of the pilot studies (more details on next slide) STREAMLINE CHANNELSPoor financial infrastructure + regulatory barriers in many developing countries

=> Unreliable remittance services and high costs. Solution: Credit Union Cooperatives (CUC).

=> Not-for-profit financial cooperatives channel remittance money for expatriate workers that do not have access to depositary servicesAction Plan:Ten workshops to share experiences of successful CUC in 25 countries => Partners in Mexico, Ghana, Guatemala2. Country offices will dedicate a 5% of program budgets for conductingWorkshopsTechnical assistance

Remittances

Encourage Productive use of Remittances

• Partnership with local wire transfer companies, city governments and NGOs

• Pilots: Special accounts• Channel funds to community

projects• Training in heavy emigration

areas: Skills to potential migrants Entrepreneurship to family

membersEncourage productive use of remittances:UNDP is working to ensure funds received are used in the most efficient way to generate development in the origin country. Empirical studies have shown that better control over funds generate additional remittances, as migrants are more confident that their financial help will be put to good use.Action Plan. UNDP has identified Ecuador as a good target for pilot projects in this area. Plan Details. UNDP Ecuador will partner with local wire transfer companies to create special accounts where registered recipients can only draw a pre-defined monthly balance, and/or towards specific expenditures such as school materials, food, and clothing. UNDP Ecuador will launch a pilot project to help channel remittance funds to productive projects in local communities, in partnership with city governments and local NGOs. UNDP will train family members in heavy emigration areas in entrepreneurial skills in order to be able to leverage on the funds being sent by migrants. UNDP Ecuador Pilot ProjectImplementation: Feb – Oct 2009Evaluation: Oct’09 – Dec’10Cost: US$155,000

Informed Dialogue

Global Dialogue

Local Dialogue

• Lead planning for 2009 Conference on Migration

• Prepare roundtables and working papers to inform discussion on migration

• Enhance capacity in institutions/governments

• Facilitate meetings of key local stakeholders

• Identify local mobility policies that support MDGs

• Create internet platform targeting diaspora

Global DialogueThere is a clear need for global dialogue on labor mobility and development, be it related to remittances, the loss of skilled workers, or broken families. The lack of such dialogue was recently referred to as the “missing piece of the migration mosaic” at the Manila World Forum on Migration and Development.Lead planning for 2009 Conference on Migration Prepare roundtables and working papers to inform discussion on migrationLocal DialogueEnhance capacity in related institutions and governments in developing countries through collection of data, training professionals, social workers and legal/financial advisors to migrants. For example, the UNDP is supporting the development of a Ministry of Expatriates in Syria to facilitate linkages between Syrian expatriates and their home country. Facilitate meetings of key stakeholders to shape policies and programs, on the base of sound information and impact evaluations. Sectors involved should include the private sector, educational institutions, civil society, and government. Identify "development-friendly" labor mobility policies to help achieve the MDGs. UNDP’s ongoing work advising governments in their national development plans will also have labor mobility as an additional tool for these countries to take advantage when developing initiatives to alleviate poverty. UNDP is already working with the government of Ghana in this sense, and is closely advising Albanian and Salvadorian public policies in the same manner. Create an Internet platform where migrants can exchange experiences, knowledge and legal advice. This platform will be construed on top of the already existing TOKTEN (Transfer of Knowledge Through Expatriate Nationals), a UNDP mechanism for taking advantage of successful migrant experiences through short-term voluntary consulting work under UN aegis in their home countries.

Implementation Challenges

• Gaining support from other organizations

• Being effective in a non-binding/non-enforcing environment

External

• Managing project implementation timelines

• Gaining local support for pilot programs and initiatives

Internal

• Commit financial/non-financial resources

• Use pilots to build support for specific solutions

• Leverage previous successes

• Work with countries who demonstrate initiative

Potential Challenges

Solutions

Action Plan TimelineACTION ITEMS

Organizational Preparation-Finalizing strategy-Securing necessary resources

Remittances-Launch pilot on productive use of fundswith UNDP Ecuador-Conduct pilot studies in w/ banks-Conduct consensus building workshops-Conduct evaluation on UNDP Ecuador pilot-Partner with JPAL for evaluations

Informed Dialogue-Complete projects with Governments of Ghana and Albania-Prepare roundtables and working papers on current mobility issues-Create Internet platform to facilitate infoexchange-Organize 2009 Conference on Migration-Prepare roundtables and working papers on current mobility issues-Facilitate local meetings in 5 countries-Build local capabilities related to mobility-Organize 2010 Conference on Migration

Q1/10 Q2/10 Q3/10 Q4/10Q1/09 Q2/09 Q3/09 Q4/09

Transaction Costs – Detailed Action Plan

Reduce transaction costs and streamline channels

UNDP GuatemalaPilot Project

ImplementationApr – Oct 2009

EvaluationOct’09 – Dec’10

US$85,000

• Current remittances: USD4.1B (10.3% GDP)

• Aim: reduce average transaction cost from 11% to 7% on affected remittances

• Target: 8% of remittances in 3 years• Semi-Elasticity of remittances to costs:

[-14;-23] - 1 p.p. cost + 14-23% remittances

• Long-term expected increase in remittances: 4.5%

• Potentially + USD 183,680,000 in 3 years

• Scale-up by GoG: 2011-2015

Encourage Productive Use – Detailed Action Plan

Encourage productive use of remittances

UNDP EcuadorPilot Project

ImplementationFeb – Oct 2009

EvaluationOct’09 – Dec’10

US$155,000

• Special accounts• Partners: local wire companies and

commerce

• Channeling funds toward productive uses• Partners: municipalities and NGOs

• Training in emigration areas• Skills and migration process• Entrepreneurship

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Going forward…

GATS Mode 4 Greater temporary movement of labor

Financial crisis and possible recession Global reduction in labor demand

Terrorism and political conflicts Tighter borders