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International Labour Movements INTERNATIONAL LABOUR MOVEMENTS CHAPTER 10 International labour movements Introduction b. Movement of labour as part of international contracting – for example, specialized labour in 10.1 International labour movements have connection with turnkey projects. increased due to, among other things, opening of borders and markets, cheaper transportation and c. Movement of workers for short-term work the growing practice of international contracting. within MNEs. This development poses challenges both to d. Work of foreign persons directly employed, measurement and to analysis of the national when they operate as a sole proprietor. Such accounts, many of which are described in the case persons may for example perform short-term work studies annexed to this chapter. for households or small firms, and may not be registered. 10.2 The types of employment differ and may involve employers or contracting agencies in other e. Unregistered work of foreign persons who countries - some persons may even have contracts were originally given permission to work in the with agencies in more than one country or be country for a limited period, but remain in the intermittently employees and self-employed. country after the permission expires. Consequently international labour movements 10.5 The most common measurement cover more than the movement of persons seeking problems and their impact on the national employment with an employer in another country accounts and the balance of payments are – what is often called “labour migration”. presented below. Possible solutions are suggested, Movement of both foreign workers in an based on experience in various countries. employer/employee relationship and foreigners who work in another country in some self- 10.6 The increase in international labour employed capacity is included in international movements also means that the analysis of labour labour movements, and these categories include input and productivity in the national accounts has people who are treated statistically as part of the become more complicated, and additional labour force in the country in which they are analytical tools may be necessary in order to working, as well as people who are part of the understand economic developments. A labour force in their country of origin (that is, they presentation of data linking labour statistics and are considered to be resident there despite national accounts is proposed, using a social working abroad). accounting matrix framework. This presentation should facilitate the assessment of the impact of 10.3 Identifying the types of employment may international labour movements on the national be difficult. A distinction is made between accounts – including the impact on productivity, employees (people in an employer/employee wages, workers’ remittances, household relationship, whose earnings are treated as expenditure, GDP and national income. The compensation of employees) and workers who do presentation could be in a satellite account or a not have an employment contract, who are labour account integrated into the national deemed to be self-employed producers of services. accounts. In addition, not all employment is registered, so that there may be severe problems of coverage and Background classification in statistics on employment of persons from other countries. 10.7 In recent decades international labour movements have increased following the opening 10.4 Among the specific measurement of borders and markets (for example as a result of problems encountered are: the establishment and enlargement of the a. Employment through international hiring European Union, or of various bilateral or agencies, which makes the measurement of labour multilateral international agreements on trade and compensation and remittances difficult. 161 IMPACT OF GLOBALIZATION ON NATIONAL ACCOUNTS movement of persons), cheaper transportation and "Trade in services through presence of natural easier international communication. persons (mode 4) and labour mobility may be distinguished by the type of contracts underpinning 10.8 On the one hand the opening of markets the transactions. While employment contracts are has led to increases in outsourcing abroad and related to labour mobility, mode 4 is defined by the global manufacturing, which do not necessarily fact that it is a service contract that takes place involve international labour movements, and may between the supplier and the consumer of the indeed reduce the movement of labour. For service (i.e. trade in services). example call centres of American car rental firms, telephone companies, or software and computer The absence of clear operational criteria for the services enterprises may be placed in India, the statistical measurement of mode 4 and what are Philippines or other foreign countries, so that the commonalities and mainly the differences with customers in fact get services directly from the concepts of labour mobility (short-term and employees in another country. However, there may long-term) adds a difficulty for using appropriate be a flow of workers if the global manufacturing information when focusing on one aspect or the involves goods and services that are not easily sent other. The use of inappropriate indicators for across borders – construction, personal services – measuring mode 4 trade in services (i.e. or involves services where there is a danger of compensation of employees and workers’ leaks or spill-over of knowledge (R&D, innovation), remittances data drawn from the balance of which may put at risk the revenues of the payments) is an illustration of confusions around enterprise. There may be a problem of coverage of definitions, be it legal or their translation into such movement, since the individuals may be hired statistical concepts. by a foreign employer, and also may receive all or As a consequence reliable and internationally part of the compensation for their work in another comparable information for short-term labour country. mobility and trade in services (mode 4) is lacking. A 10.9 Other issues that may be linked to global crucial issue to distinguish between the two aspects activities are services rendered by foreign self- is the difference between employment and services employed persons, for example lawyers, architects contracts, in particular for self-employed and for or accountants. The services may be contracted to labour services provided via employment agencies. a foreign enterprise which is an MNE, so that it may For the latter an additional difficulty may be to be difficult to estimate the value of the services establish the type of services provided (e.g. rendered to the compiling economy. agricultural services, mining services, accountancy).“ 10.10 One main problem in these connections is the need to identify whether there is an 10.12 If the activity is within an MNE and employer-employee relationship between the involves transfers of services within the firm, there foreign worker and an entity in the country in may be special problems of estimating the value of which he or she is working. If there is no employer- such services, since the payment for the services is employee relationship (that is, a service contract is not necessarily in terms of market prices – the the basis for the provision of labour), the problem of transfer prices, which may differ widely transactions will be recorded under imports of from market prices, is discussed elsewhere in this services by the country in which the work is being guide, especially in Chapters 2, 7 and 8. done, and exports of services by the country in 10.13 On the other hand the opening of which the worker (or his employer if he was sent by borders has led to an increased movement of him) is resident for statistical purposes (this is persons seeking employment in foreign countries. called mode 4-type trade in services in the Manual In particular, people in occupations where on Statistics of International Trade in Services, 2010 expertise can easily be transferred to foreign (MSITS 2010)). If there is an employer-employee countries, such as construction, nursing, and caring relationship, remuneration of the labour will be for the elderly, where the skills are not country- recorded as compensation of employees in the specific and language is of secondary importance, income account. seek employment abroad to obtain improved 10.11 This problem has been explained in income and living standards. Significant parts of depth in an issues paper prepared for the May such labour may not be registered, and may not be 2009 meeting of the Group of Experts on the covered in regular statistics. Some of the persons Impact of Globalization on National Accounts are hired by employment agencies, and may be (Magdeleine and Maurer, 2009). Thus: compensated partly abroad, so that the measurement of labour compensation, remittances 162 INTERNATIONAL LABOUR MOVEMENTS and trade in services becomes difficult. Other (12 months) except in cases where the movement migrants may work for short periods as self- to that country is for purposes of recreation, employed plumbers, decorators, cooks, etc. for holiday, visits to friends and relatives, business, households or small enterprises, and this work may medical treatment or religious pilgrimage. For not be registered. In many cases such persons may purposes of international migration statistics, the arrive as registered foreign workers, but choose to country of usual residence of short-term migrants is stay on after the work permit expires and engage in considered to be the country of destination during unregistered work. the period they spend in it”. 10.14 The problems are not confined to short- 10.19 In connection with short-term term international labour movements. Thus if movement, it should be made clear that foreign persons are unregistered and stay longer than a business travellers are defined in population year in a country (which is the usual criterion for statistics as “foreign persons granted the classification as resident), they may not in practice permission to engage in business or professional be classified as residents and covered in the activities that are not remunerated from within the population statistics.
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