Between 2050 and 2080, member countries of the Organisation for Economic Co-operation and Development (OECD) will need at least 400 million new workers to maintain their current pension and health schemes. By 2050, the prime working-age populations of OECD countries will have shrunk by more than 92 million people, while their populations over 65 years old will have grown by more than 100 million people. This means to maintain their current (and already historically low) ratio of prime working-age to 65+ people in the year 2050, OECD countries are currently facing a gap of more than 15 million workers per year, or a total of 400 million workers over 30 years. This gap has significant implications for pensions and health schemes, which were built on “pay-as-you-go” support based on large ratios of workers to retirees.
This situation should be viewed as an opportunity: estimates project that there will be close to 1.4 billion new working-age people in developing countries by 2050, of whom around 40 percent are unlikely to find meaningful employment in their home countries. These individuals can make up for the labor force shortages in OECD countries. Such an arrangement would be a powerful tool toward poverty alleviation: workers who find jobs in richer countries can expect to increase their income by 6 to 15 times. These income gains make mobility more powerful in fighting poverty than even gold-standard development interventions.
However, the question looms of how labor market needs of this scale can be met. There are currently 119 million people moving from developing to OECD countries – meaning current labor mobility systems would face a significant challenge in closing even a portion of the gap of 400 million workers or more. Currently the mobility space is highly fragmented, with little support for migrants or integrated oversight. Fragmented support is a key driver of poor outcomes seen in current labor mobility systems (such as high costs of migration, poor quality of employment, and lack of vetting on labor standards, visa fraud, and overstay) and if not addressed would likely further exacerbate these issues. Actors (including governments, employers, and service providers in what we call the “mobility industry”) tend to operate exclusively in a national context, at best coordinating with partners on the other side of the corridor, but often acting unilaterally.
The failure to act on labor mobility is a classic example of a collective action problem – each stakeholder would benefit from a system through which actors cooperate to better facilitate labor mobility; however, they also face risks from and constraints on cooperation – resulting in a system where unilateral small-scale action is the prevalent practice. The costs of such a system manifest themselves as constraints and risks, and can be grouped into three key categories: operational, political and reputational, and financial.
Scaling labor mobility in response to the demographic need requires first mitigating these constraints, in order to shift the cost-benefit analysis of key stakeholders. In looking at existing institutions with a mandate relating to labor mobility, we see that this support is currently missing. This leaves critical unanswered demand for support in an era when labor mobility is increasing and desperately needed. This gap means missed opportunities for employers, workers, and origin and destination countries alike.
While there is significant attention on migration in the international community, existing support is not sufficient to shift the cost-benefit analysis of stakeholders (and thereby change the dynamics of the system). We identify three functions that may meaningfully address the constraints noted above: brokering, technical support, and advocacy. Brokering functions seek to address the highly fragmented nature of the labor mobility space. Technical support functions target constraints around capacity and good practice. Advocacy functions target constraints relating to political and reputational risks. In the current system, these functions are either missing or provided only to a subset of the necessary actors.
We propose a new organization, Labor Mobility Partnerships (LaMP), which will offer these functions to governments, the private sector and employers, the mobility industry, financiers, and civil society. LaMP aims to be the first organization that actively works to increase rights-respecting labor mobility, ensuring that workers can access employment opportunities abroad. The long-term goal is to plug labor market gaps in OECD countries while unlocking billions in income gains for people who fill needed jobs.