Labour market performance and migration flows - European ...

Chapter IFinal Reportconstruction workers. This could have a negative impact on the prospects for the expansion of highadded-value sectors incorporating new information and communication technologies for managingproduction systems. This could, in fact, give rise to a vicious circle: qualified workers migrate becauseof a lack of chances in the local labour market, and their migration becomes a serious obstacle to theemergence of high added-value, high productivity sectors, thus preventing the demand for skilledmigration to develop (see Section 2.4 on graduate unemployment).In Jordan, Egypt, Syria and Algeria, in contrast, there is no evidence for a real brain drain. InEgypt, the evidence suggests that a substantial proportion of Egyptian emigrants to OECD countriesare highly educated, with around 59% of total emigrants from Egypt in 2000 being so classed. Overall,migrants, both returnees and current, tend to be more educated than non-migrants (Wahba 2007). Butthe stock is so large that the emigration rate among the highly educated is quite low at only 4.6%; thissuggests that Egypt is not experiencing a brain drain problem. From another perspective, given theeducational mix of the migrants, there have not been apparent bottlenecks in the Egyptian labourmarket that persisted. The emigration of skilled workers did not have negative impact on the labourmarket since they were either unemployed or worked in the public sector where wages are not flexibleand as such emigration does not affect wages, but might have reduced the public sector wage bill. Ofcourse, although Egypt is not losing an important proportion of its educated workers and thereby is notfacing a brain drain, Egypt continues to lose human capital which it has invested in and educated,since education is free in Egypt. This may still be an issue of concern. However, this cost may beoutweighed by the potential gains from remittances and the reduction in pressure on the labour marketgiven the high unemployment rate in Egypt among the educated.In Jordan, despite the high outflow of skilled workers, there remains a significant number of skilledunemployed workers available who hold qualifications relevant to the needs of the labour market.Although many employers perceive a lack of skills in the Jordanian labour force, the educationalprofile of the unemployed shows that the problem is often not a lack of relevant qualifications, but alack of appropriate skills among those holding such qualifications. By combining the data from DIOCand the US Census Bureau, an estimate of 12,600 Jordanian migrants 28 employed in skilledoccupations in OECD countries can be calculated. 29 This is an extremely small figure compared to the225,000 Jordanians employed in skilled occupations in Jordan 30 and thus it can be assumed thatmigration to OECD countries is not leading to a brain drain, especially taking into consideration the40,000 unemployed Jordanians with university degrees in Jordan itself.5.3 Remittances and the Prospects to MigrateRemittances can stimulate productive investments (Orozco, 2000; Woodruff and Zenteno, 2007), easethe provision of credit and the development of financial and equity markets (Giuliano and Ruiz-Arranz,2009; Billmeier and Massa, 2009), although these positive developmental contributions are notindependent of the economic and institutional frameworks of recipient countries. Giuliano and Ruiz-Arranz (2009) use data from approximately one hundred developing countries over the period 1975-2002and they show that remittances provide an alternative way to finance investment in countries with poorfinancial systems. Remittances can help to overcome liquidity constraints in countries where creditmarkets are inefficient or non-existent. Aggarwal et al. (2006) use a sample of 99 countries and theyargue that remittances promote stock-market development, and Gupta et al. (2007) reach the same28 For all countries excluding the US, this refers to Jordan-born migrants falling under the ISCO classifications ‘Professionals’ or ‘Legislators, senior officials and managers’. For the US, thisrefers to Jordan-born migrants falling under the classification ‘Management, professional and related occupations’.29 Excluding Germany, for which the relevant data is not available.30 DoS (2007) Employment Survey 2006 Annual Report.73