publication February 5, 2018

Labor Migration Can Help Boost Afghanistan’s Growth

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Photo Credit: Rumi Consultancy/ World Bank.


. As in the past, this will likely spur illegal emigration to neighboring countries and beyond.

Various Asian countries have used managed labor migration to secure temporary and legal jobs for their surplus labor. Such provisions have helped migrant workers earn higher wages, send remittances back to their families, save for future investments, and gain work experience and upgrade their skills.

The report Managed Labor Migration in Afghanistan: Exploring Employment and Growth Opportunities for Afghanistan explores how managed labor migration can help create jobs for Afghans and boost economic growth. Specifically, the report investigates the supply and demand sides of managed migration flows, their impact on remittances sent back home, and how formal labor migration opportunities can help migrants acquire skills abroad or at home. The report provides policy scenarios of a managed migration approach for Afghanistan for the period up to 2030, and explores their potential economic outcomes. 


KEY FINDINGS
 
  • Migration in Afghanistan has been an important phenomenon during the last decades, driven by a complex combination of protracted conflict, food insecurity, natural disasters, and socioeconomic factors. .
  • Since 1990, the nature of migration in Afghanistan has changed drastically. In 1990, conflict-induced migration accounted for 95% of all migrants from Afghanistan. As of 2015, this had shifted dramatically to where labor migrants comprised about 50% of the Afghan migrant group. .
  • Employment in Afghanistan is precarious and economic growth has become limited after a decade of high growth fuelled by high levels of foreign investments. Currently, the Afghan labor market is under significant stress in terms of unemployment (20%), and vulnerability of jobs. This leaves Afghanistan’s biggest resource for economic growth – a growing labor force due to a very young population - underutilized both internally and externally.
  • In this context, migration is an important instrument to sustain livelihoods, with 16 percent of households having a family member that has previously lived or is currently living abroad. There also exist strong pull factors for migration, with large income gaps of three and a half time higher in Iran and ten times in countries such as the United States. 
  • Afghanistan Central Statistics Organization reports remittances of 1.7 percent of GDP, but due to the extensive use of informal channels (including hawalas), this figure underestimates the real value, which could be up to 10 times higher based on surveys in sending countries. Regardless of its size, remittances in Afghanistan serve as a buffer against income shocks. Overall, although a relatively small share of families benefits from remittances, they provide a vital source of income, averaging $1,680 annually (more than half of their income), and are usually consumed through basic needs.
  • The Afghan population is expected to grow dramatically in the next decades, doubling its size from 28.4 million in 2010 to 56.5 million in 2050. This is estimated to result in an average of 400,000 new entrants to the labor market each year. It is projected that of the 400,000 annual labor market entrants, only 200,000 will be able to find jobs in Afghanistan. This leaves the remaining 200,000 with two options: find jobs outside of Afghanistan or become self-employed.
  • Significant pressure to migrate and a lack of legal channels to do so, have made current Afghan migration largely irregular. Afghani migration is essentially informal, mostly unskilled and often illiterate, and absorbed by neighbouring countries Iran and Pakistan where employment chances are diminishing. As a result, Afghan labor migrants typically hold precarious jobs, earn low wages that limit remittances back home, and have limited possibilities to develop new skills when abroad to improve their employment prospects when returning home.
  • Unmanaged migration contrast with a vision of managed migration in which Afghan labor migrants receive the minimum skills at home, move to richer countries through formal channels for an agreed period, have a guaranteed job and salary, can send back much higher remittances, and have a chance to upgrade their skills prior to their return home.
  • The promises of a managed migration for Afghanistan and the world are substantial.    Return migration could also bring back investment resources, higher professional skills, and an entrepreneurial spirit to spur domestic growth.

RECOMMENDATIONS

  • To cope with the strong projected migration pressures over the coming years, the Government of Afghanistan needs to be proactive in opening legal channels for Afghan migrants. To succeed, managed migration will require identifying and working with potential host countries. Both the Afghan government and civil society need to establish the necessary administrative requirements and professional conditions and convince donors to help prospective migrants acquire sufficient levels of literacy and skills.
  • The most immediate opportunities for new regular migration channels are with Turkey and Gulf countries. However, in the medium term, the Government of Afghanistan may take actions to increase the likelihood of opening even higher value corridors by proactively developing a migration management system. Well-managed labor migration may be established with other countries, including richer OECD members, provided this approach replaces unmanaged migration to Europe, Asia and the Americas. To that end, the Ministry of Labor, Social Affairs, Martyred and Disabled (MoLSAMD) and the Ministry of Foreign Affairs (MoFA) need to conduct joint routine market research and marketing activities to identify new entrance points into destination labor markets, and build a coherent migration management system.
  • . The report identifies existing gaps in Afghanistan’s labor migration system, which will require decades of development to support managed migration. Given the complexity of these processes, and based on the experience in established sending countries such as Sri Lanka and the Philippines, it may take 20 to 30 years to build a fully functioning system. A labor sending system is a lengthy and highly uncertain process, often depending on external economic and political forces. Afghanistan will need a steady, long-term, and proactive approach to building its labor-sending system, while taking advantage of new opportunities to expand access abroad.