Donald Trump recently proposed a new US immigration system that uses points, drawing inspiration from the existing Australian and Canadian versions. The stated motivation is the desire to ensure that the United States opens its economic doors to the "highest quality" prospective migrants. Should the Arabian Gulf countries consider a points-based system?
Points-based systems are designed to admit prospective immigrants based on a combination of professional, educational, and socio-demographic criteria, such as years of work experience, postgraduate degrees earned, and age. The primary alternative is an employer-driven system, whereby employers identify the workers they need according to their own criteria, subject to some government regulations.
The Gulf countries basically operate an employer-driven system. But the Gulf versions differ from those seen in some western countries in two notable ways.
First, the regulations are lax by international standards. Under the prevailing US H1B system, employers have to formally demonstrate that US citizens are unable to satisfy the company's labour requirement. In contrast, in the Gulf countries, a routine medical examination is arguably the strictest requirement.
Second, the Gulf countries' guest-worker system is designed for migrant workers to work for a certain number of years before returning to their home country. Unlike the US, the system does not include a structured path from temporary work visa to permanent residency, with an eventual offer of citizenship.
Despite this, many guest workers stay for many years, having a profound effect on the labour market and society. Would a points system help Gulf countries realise more desirable outcomes?
A 2011 Migration Policy Institute paper by researchers Demetrios Papademetriou and Madeleine Sumption explains the pros and cons of points and employer-driven systems, lending useful insights to all stakeholders.
______________
Read more:
[ The economics of succeeding at university ]
[ When family ties and good governance come into conflict ]
______________
The key advantage of points-based systems is that policymakers can easily revise the criteria to maintain control over the inflow of migrants. Moreover, the criteria are in principle based on the factors that yield demonstrated economic and social value to the host country. The criteria's transparency is also advantageous, since it helps curb corruption from all sides in the application process.
The transparency also has a downside, however, which is that it leads to an underemphasis on valuable but unquantifiable traits, such as soft skills (diligence, courtesy). Moreover, harmonising the criteria across people from different countries can be very challenging – a PhD does not imply the same level of intellectual achievement in all countries, as some have corrupt or weak educational systems.
More importantly, points systems potentially generate unemployed migrants, as they do not typically require job offers. Governments try to combat this by focusing their criteria on skills that are perceived to be in short supply, but civil servants are notoriously poor judges of the economy's needs and are slow to propose required modifications.
This underlies support for employer-driven systems, which are by definition based on the economy expressing a need for particular kinds of workers. The main criticism is that companies might abuse such a system by using it to access the cheapest labour possible, undercutting the wages that nationals might feel that they deserve, and by using it to exploit migrant workers' temporary residence, as based on workers' attachment to their employer.
In an effort to capture the advantages of both systems, some countries, such as the UK, have started to develop hybrids, where workers must satisfy points criteria and have a job offer in hand. Should the Gulf countries consider adopting features of the points system?
As a general point, the ease of employing migrant workers has been a major contributor to the rapid growth experienced by Gulf countries, as the pool of local talent has been insufficient for the needs of labour markets.
However, the needs of the Gulf economy in 2017 differ to those in 1967. In particular, the economic visions stress the importance of improving the skills of citizens. A key mechanism for improving citizens' abilities is knowledge transfer from migrant workers: observing and learning from skilled, foreign colleagues.
In the past, this channel has been hamstrung by the absence of a path to permanent residency and/or citizenship for foreigners: skilled migrant workers have understandably avoided building the skills of nationals, as they rationally fear for their own jobs. This is not a problem in western countries because they have the security of eventually being permanent residents at least, meaning that employers will not discriminate against them. Therefore, in the quest for more rapid knowledge transfer from migrant workers, Gulf countries should consider making permanent settlement a concrete possibility for foreigners; in fact, Saudi Arabia's Vision 2030 includes an explicit analogue to the US' green card system.
If this direction is pursued, then features of a points system may become valuable. For example, in certain growth sectors, requiring evidence that the migrant worker can improve the skills of locals. Potentially more important is the social domain: speaking Arabic; knowledge of social norms; respect for local customs. Critically, there must be an emphasis on continually evaluating the effectiveness of the chosen system, and on making prompt revisions when necessary.
We welcome economics questions from our readers via email (omar@omar.ec) or tweet (@omareconomics)
