Migrants create jobs

Discuss the topic from the economist, rector of the Russian economic school (NES) Maxim by Boevym.

Everything about the influx of people in Russia, is surrounded by myths. The most persistent of them – the migrants of taking jobs from local residents. With rising unemployment, caused by the effects of coronavirus pandemic, this myth will be especially actively exploited. Why is it still a myth?

Maxim Buev: Is the main and very important myth. To give an analogy. The plumber-known material called “bentonite”. It’s a natural material that expands strongly when it enters the water. So it is used as a sealant or gidroizolyator. So, the inflow of migration is water, and the economy behaves as bentonite. She is expanding. The influx of migrants leads to the appearance of new works on the market. This is as true for Western Europe, and Russia. Where migrants work? In the service sector, in hotels, in construction. Moreover, the construction dominates. So the first blow from the influx of migrants assume just local builders. The idea is that their wages could fall.

Because came cheap labor?

Maxim Buoys: Yes. Indeed, the first effect of the arrival of migrants can be negative: declining wages. But overall as the economy expands, begin to grow and salaries. The growth of the economy overrides the initial negative effect on the inflow of migrants. In the end wins not only the whole population but also specific sector of the economy that took the first blow, in our case construction.

And competition in the labour market between migrants and locals?

Maxim Buev: we Have more migrants compete with migrants within the segment of the economy that accepts them. The locals we yards do not sweep, they wipers Tajiks are not competitors. It is the same with builders. I heard from a taxi driver, a Tajik, as he arrived in Moscow to look for work, went to the construction site, and he had to teach the Uzbek language, because the whole construction of the Uzbeks. He wanted to learn Russian and had to learn Uzbek. And this is a clear example that workers in the lower salary niche are more competitive. Yes, they squeeze out local, but not in unemployment and higher salaries. As the economy increases to the local population the possibility to take jobs with a higher salary.

in other words, local get a chance to do more skilled work and ultimately benefit from this?

Maxim Buev: Exactly. And the myth of displacement of local visitors coming from misconceptions about the same volume of work. Many people think that the influx of migrants causing unemployment, because the amount of available RA��from – fixed. Actually it not always so – in fact, immigration may increase the size of the economy, leading to creation of new jobs.

Now the economy is increasingly automatiseret, people get replaced by robots. The situation in which because of this, migrants and visitors? Who wins?

Maxim Buoys: Works which cannot yet be trusted to robots, usually associated with soft skills of man. Soft skills – the language, communication, knowledge of traditions. And when migrants come, residents have before them a distinct advantage. They speak the same language, they understand all the nuances, and for migrants this is an additional barrier. And therefore in the structure of the economy that require soft skills, migrants, as robots are not in the best position.

Migration increases the number of jobs?

Maxim Buev: Yes.

Why? It would seem that it should be the opposite.

Maxim Buev: will Try to explain. The migrant arrives, goes to work on the construction site. Take it. He makes his money. He needs to spend. But if money becomes more, and the effective demand increases. And around this demand creates new jobs. Because this demand should be satisfied. A migrant, it is much higher. Local have a place to live, a migrant is in need of a rented apartment. He rents it from a local. Consequently, those you receive additional income. Even if in the same apartment forty migrants live, they pay the landlord. Their owner can spend. And if he had not went to the hairdresser and had a haircut from a neighbor, now he will go to the hairdresser, where there will be additional demand for labour in the face of another hairdresser.

That is, the local win again?

Maxim Buoys: Yes. I know this from personal experience because I was in Moscow, we can say, a migrant from another region. I’ve lived in the UK and there was also a migrant. Migrants are people who generally want to work and are willing to take the risk. This is active labor. And they go to where you see the potential, where the economy is growing. By the way, in the last two years, when economic stagnation has become more apparent, the flow of migrants into Russia has declined greatly. It partly influenced the behavior of the exchange rate. We have the majority of migrants from three countries – Uzbekistan, Tajikistan and Ukraine. They come to earn money to send home, home. Therefore, when the ruble fell, the growth of migration has declined.

You could say that the influx of migrants is an indicator of economic growth in the region?

Maxim Buoys: Absolutely. And this is reflected in regional statistics. We in the far North go ed��nice. The majority of migrant flows to Moscow and the North-West.

More they go to Petersburg, Krasnodar Krai, Sverdlovsk, Samara, Irkutsk, Novosibirsk region. Why there?

Maxim Buev: If you look at the contribution of these regions to gross domestic product, we see that it is very significant. You are called to the Northern regions, which are famous for internal migration. There are many work shifts. All of these economically strong centres attract external and internal workforce. About Moscow and say nothing. If coming to us about 3 million migrants a year, half of them looking for a job in Moscow.

Unemployment among migrants is higher than among the local population?

Maxim Buoys: Between migrants above the competition. The locals have a natural advantage in language and culture. Therefore, it is easier to switch to some other work. If you absolutely do not know how, but to carry boxes, but they say in Russian, you can go to work, say, in the hotel at the reception. A migrant without the language to the path is closed. The advantage of the local – in the choice of other work. You always know that work there. And you know where to look. Because you grew up in this place. And the migrants no work here. She had them far from home.

Our statistics of unemployment takes into account the migrants?

Maxim Buoys: the Statistics include officially employed or seeking employment in the formal economy. Those who work illegally – whether local, migrants, – from the statistics fall out. Incidentally, this can increase the unemployment rate. Here is an example, imagine there are 10 people, 6 working and 4 of them are looking for work – come to the interview, etc. Unemployment is 40 percent: 4 to divide by 10. Now 2 of the workers lost their jobs, and 2 of job seekers found a job informally in the informal sector. The economy continues to 6 work and 4 unemployed. But the statistics only sees 8 people, 4 of them unemployed. The unemployment rate is now 50 percent: 4 to divide by 8. In the economy, nothing has changed, in terms of total employment. But the official unemployment rate increased. If migrants work illegally, and not included in the statistics of unemployment. In General, since the possibilities of migrants, as a rule, limited to selected sectors, it is expected that unemployment among them is higher than among the local population. In Europe, for example, migrants, according to statistics, much longer than local, looking for work, getting a lot more rejections before you start to work. Migrants narrower.

the Russian regions now have the opportunity to establish its own procedure in dealing with migrants. For example, in March last year, the authorities of Yakutia introduced at the CEthe BOJ in the region, the ban on the employment of migrants in 33 fields. In particular, gold mining in health care. Is this correct?

Maxim Buev: What caused these barriers, I don’t know. Perhaps there is some reason. If, say, the local population is waiting for a high-paying job, you should not give this work to visitors. And if no one in the queue is not worth it, so what to fear? The barrier must be economically justified.

From your point of view, the migration policy of Russia must become more liberal? Or it would be useful to tighten it?

Maxim Buoys: Let me get this straight: the migrants we need. And there will be a need, when, after a recession caused by a pandemic will start after some time of gradual economic recovery. Furthermore, without migration, we will not compensate the natural population decline, and economic growth also will not be. Someone will say: why do we have to do something for migrants, if not all do for local people? But in fact creating good conditions for migrants is primarily the creation of good conditions for the local population. Migration should be controlled, but control needs to be smart. How wonderful someone said, the smart control is not just stupid placing of the barriers, and the ability to meet with bread and salt and create conditions for work.

Maxim Buoys – economist, Vice-rector of Russian economic school. Is received his D. Phil in Economics (Oxford). In 2012-2017 was Dean of the faculty of Economics of the European University in St. Petersburg. Before joining the University I worked eight years in the financial sector in investment banking at N. M. Rothschild & Sons, ABN AMRO, Royal Bank of Scotland in the city of London.