Who\’s afraid of free Labour Movement?

Rich countries are hypocrites that demand free movement of goods and capital but do not want free movement of labour, and this inequity must end. So said developing countries at the G-15 meeting in Kuala Lumpur this week, after having said the same thing at the Commonwealth summit last week. Similar criticism has been made endlessly by several Indian newspapers (including The Times of India). Alas, this betrays hypocrisy on the part of the critics as deep as that of the criticised.

According to the critics, free labour movement is a major North-South issue. The rich North has a comparative advantage in the supply of capital and goods, and so wants to maximise the scope for their deployment. The poor South has a comparative advantage in labour, but is prevented from deploying this \’resource by visa restrictions. Economic theory says that global efficiency is best achieved if labour as well as capital i» free to migrate. Yet the global economic system, fashioned by the rich North, has ensured that only, capital and goods can migrate, not people. So the US can invest in Third World countries but India cannot send computer personnel, doctors, or other skilled workers to countries of the North. How unfair.

The argument usually ends at this point, and sounds very powerful. Yet it collapses the moment you extend it to South-South relations. The fact is that opposition to free movement of labour is as strong in countries of the South as in the North.

Consider the sub-continent. If India really believes that the free movement of people is an economic blessing, it should open its borders to all Bangladeshis and Pakistanis. You will doubtless have noticed that it has not done so. The commerce minister might argue at the WTO that India favours the free movement of people, but the home minister will permit no such thing. Even a very limited migration of Bangladeshis into Assam has seriously endangered the Assamese sense of identity, led to the rise of secessionist outfits like ULFA, and posed a major security threat to the nation.

The migration of Nepalese into neighbouring areas has created major problems. The locals in Sikkim were overwhelmed by Nepalese migrants long ago. Bhutan is determined to avoid that fate, and so is expelling Nepalis. Meghalaya is paranoid about a Nepali takeover, and at one point refused to have a railway line on the ground that this would bring in ever more Nepalese. Non-resident Indians have long pleaded for dual nationality, for which they are prepared to pay sums that could total a billion dollars. Yet India has steadfastly refused because dual nationality would permit a large number of Pakistanis to claim Indian citizenship, and this it will not allow.

Nor are our neighbours any keener on opening their borders to Indian migrants. Pakistan would not for a minute tolerate the prospect of millions of Indian labourers descending on its territory, and nor would Bangladesh. Sri Lanka has already sent back tea plantation workers from Tamil Nadu. The Indo-Nepal Treaty of 1950 provides for open borders and free movement of people. But the Nepalese Foreign Minister recently demanded renegotiation of the Treaty to restrict Indian migration into Nepal. Now, the Nepali flow into India is far larger than the other way round. But the Nepali Foreign Minister held that India was a large country that could not be threatened by a big Nepalese inflow, whereas Nepal was a small country that could not withstand even a modest inflow from India.

In sum, the attitude of countries of the South is exactly the same as those of the North. Under SAARC, the countries of South Asia are prepared to gradually free the movement of capital and goods in the subcontinent, but they are absolutely and totally against the free movement of people. Whatever economists may say about labour and capital being two analogous factors of production, politicians see them as totally different. This is as true in the South as in the North. Malaysia and Singapore are catching and expelling illegal migrants from India and Bangladesh. Forget what Malaysia may have to say at a Kuala Lumpur meeting of the G-15. Its actual procedures show that it is a stem opponent of free migration.

Poor Filipinos and Thais have infiltrated Japan, Korea and Taiwan in search of jobs. They are being identified and expelled.

The Gulf countries permit millions of migrants on a regulated basis for limited periods. This amounts to the most liberal import of labour anywhere in the world. Yet even here movement is not free. It is strictly regulated, and the migrants have to leave at the end of their contracted period.

Why are countries so reluctant to permit free labour movement? Because it changes the composition of the population, and this has major political implications. Local people feel their culture and identity is threatened. Economists are unable to measure the value of culture and identity. This leads them to assert that the free movement of people is an economic blessing. Their calculations blissfully ignore what they cannot measure.

Note that the movement of goods and capital also have an impact on local culture and identity. The entry of Kentucky Fried Chicken or Coca Cola is seen by some poor countries as a threat to local culture. Multinationals entering a country may elbow out local companies. Hence there has, historically, been resistance to opening up. However, the inflow of foreign goods and capital increases consumer choice and creates fresh factories and jobs. Countries that have opened up have done well economically, and so the advantages of free inflows have gradually come to be viewed as greater than the disadvantages.

Maybe this will happen one day in respect of the inflow of people too, but not as long as national identity remains important to people, which may be for centuries. Meanwhile it makes sense to gradually change attitudes by introducing fixed-term contracts for the exchange of skilled labour. These are the least intrusive forms of labour exchange, and hence the most acceptable politically. So India certainly needs to press for greater access for its skilled personnel. But it needs such access to other Third World countries as well as to the US. Indians could usefully provide skills to Indonesia, South Africa and Argentina no less than the US.

Finally, note the element of racism in migration policy everywhere. It is easier for a white European to gain admission into the USA than a brown Indian. An Arab finds it easier to get into Kuwait than an Indian. China will admit overseas Chinese, but not Africans or Indians. Taiwan has absorbed many Indians of Chinese origin, many of whom once inhabited the Chinese quarter of Calcutta. But Taiwan will not accept Hindus or Muslims from Calcutta. This drives home the lesson that free movement of people is not a North-South issue.

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