Labor Mobility Strategy - Action Plan

1. Labor Mobility Strategy - Action Plan

2. UNDP and Labor Mobility Goal Maximize the developmental benefits of migration for poor countries, and mitigate its negative consequences. • Equal representation • Legitimacy • Local presence: Expertise and implementation capacity • Decentralized budgeting process • Access to country and regional funds Strengths and Capabilities

3. Migration in UNDP Priorities Purpose: Link global and national efforts to accomplish MDGs Task: Help countries build and share solutions to challenges Government capacity building Economic & social security Depletion of natural resources Natural disaster & refugees Health & education Human rights Women's empowerment Disease control Democratic governance Poverty reduction Crisis prevention & recovery Environment Energy HIV/AIDS Migration 3

4. Migration in National Development Strategies • Benefits of migration • Welfare gains • Economic benefits • Reduction in the incidence and severity of poverty • Technology transfer • Business cooperation • UNDP calls for public awareness and government attention • Skills • Remittances

5. Develop Key Skills within the Country • Challenges • Brain drain • South to North migration patterns • Benefits • Increase of skilled labor in origin country • Minimal short run impact of brain drain • Exchange of expertise from North to South 

6. Harnessing Remittances for Development • Poor countries receive relatively large remittances • Remittances are stable or even countercyclical cash flows • A 10% increase in remittances  3.5% decline in share of poor Challenges • Remittances can cause currency appreciation • Distorted labor market incentives • Leveraging remittances for capital markets and improved national creditworthiness

7. UNDP’s Areas of Focus Goal Strengths and Capabilities Informed dialogue Remittances

8. Remittances Reduce Transactions Costs • Pilot programs to reduce transaction costs • Guatemala – Canada Pilot • Evaluation using randomized techniques • Dissemination of results Streaminechannels • Share successful Credit Union Cooperatives model • REDUCE TRANSACTION COSTS: • Transaction costs for remittances are high. • According to a recent calculation, the average cost of sending money through a money transfer operator (e.g., Western Union or MoneyGram) is 11 percent of money transferred. • Empirical estimates show that a one-percentage point reduction in transaction costs • => raises recorded remittances by 20%. • UNDP proposes the following to reduce transaction costs. • Pilot programs • e.g. Guatemalan workers in Canada: • Farm owners help reduce transfer costs by bundling all of their worker’s remittances together every two weeks and sending the money in one single transfer, through a Canadian bank to a collective account, in a UN agency’s name, at a Guatemalan bank. • Evaluation using randomized techniques in partnership with research groups • UNDP will disseminate results of the pilot studies (more details on next slide) • STREAMLINE CHANNELS • Poor financial infrastructure + regulatory barriers in many developing countries • => Unreliable remittance services and high costs. • Solution: Credit Union Cooperatives (CUC). • => Not-for-profit financial cooperatives channel remittance money for expatriate workers that do not have access to depositary services • Action Plan: • Ten workshops to share experiences of successful CUC in 25 countries • => Partners in Mexico, Ghana, Guatemala • 2. Country offices will dedicate a 5% of program budgets for conducting • Workshops • Technical assistance

9. Remittances • Partnership with local wire transfer companies, city governments and NGOs • Pilots: • Special accounts • Channel funds to community projects • Training in heavy emigration areas: • Skills to potential migrants • Entrepreneurship to family members Encourage Productive use of Remittances • Encourage productive use of remittances: • UNDP is working to ensure funds received are used in the most efficient way to generate development in the origin country. Empirical studies have shown that better control over funds generate additional remittances, as migrants are more confident that their financial help will be put to good use. • Action Plan. • UNDP has identified Ecuador as a good target for pilot projects in this area. • Plan Details. • UNDP Ecuador will partner with local wire transfer companies to create special accounts where registered recipients can only draw a pre-defined monthly balance, and/or towards specific expenditures such as school materials, food, and clothing. • UNDP Ecuador will launch a pilot project to help channel remittance funds to productive projects in local communities, in partnership with city governments and local NGOs. • UNDP will train family members in heavy emigration areas in entrepreneurial skills in order to be able to leverage on the funds being sent by migrants. • UNDP Ecuador Pilot Project • Implementation: Feb – Oct 2009 • Evaluation: Oct’09 – Dec’10 • Cost: US$155,000

10. Informed Dialogue Global Dialogue • Lead planning for 2009 Conference on Migration • Prepare roundtables and working papers to inform discussion on migration • Enhance capacity in institutions/governments • Facilitate meetings of key local stakeholders • Identify local mobility policies that support MDGs • Create internet platform targeting diaspora Local Dialogue • Global Dialogue • There is a clear need for global dialogue on labor mobility and development, be it related to remittances, the loss of skilled workers, or broken families. The lack of such dialogue was recently referred to as the “missing piece of the migration mosaic” at the Manila World Forum on Migration and Development. • Lead planning for 2009 Conference on Migration • Prepare roundtables and working papers to inform discussion on migration • Local Dialogue • Enhance capacity in related institutions and governments in developing countries through collection of data, training professionals, social workers and legal/financial advisors to migrants. For example, the UNDP is supporting the development of a Ministry of Expatriates in Syria to facilitate linkages between Syrian expatriates and their home country. • Facilitate meetings of key stakeholders to shape policies and programs, on the base of sound information and impact evaluations. Sectors involved should include the private sector, educational institutions, civil society, and government. • Identify "development-friendly"labor mobility policies to help achieve the MDGs. UNDP’s ongoing work advising governments in their national development plans will also have labor mobility as an additional tool for these countries to take advantage when developing initiatives to alleviate poverty. UNDP is already working with the government of Ghana in this sense, and is closely advising Albanian and Salvadorian public policies in the same manner. • Create an Internet platform where migrants can exchange experiences, knowledge and legal advice. This platform will be construed on top of the already existing TOKTEN (Transfer of Knowledge Through Expatriate Nationals), a UNDP mechanism for taking advantage of successful migrant experiences through short-term voluntary consulting work under UN aegis in their home countries.

11. Implementation Challenges Potential Challenges Solutions • Gaining support from other organizations • Being effective in a non-binding/non-enforcing environment • Commit financial/non-financial resources • Use pilots to build support for specific solutions External • Managing project implementation timelines • Gaining local support for pilot programs and initiatives • Leverage previous successes • Work with countries who demonstrate initiative Internal

12. Action Plan Timeline

13. Transaction Costs – Detailed Action Plan Current remittances: USD4.1B (10.3% GDP) Aim: reduce average transaction cost from 11% to 7% on affected remittances Target: 8% of remittances in 3 years Semi-Elasticity of remittances to costs: [-14;-23] - 1 p.p. cost  + 14-23% remittances Long-term expected increase in remittances: 4.5% Potentially + USD 183,680,000 in 3 years Scale-up by GoG: 2011-2015 Reduce transaction costs and streamline channels UNDP Guatemala Pilot Project Implementation Apr – Oct 2009 Evaluation Oct’09 – Dec’10 US$85,000

14. Encourage Productive Use – Detailed Action Plan Special accounts Partners: local wire companies and commerce Channeling funds toward productive uses Partners: municipalities and NGOs Training in emigration areas Skills and migration process Entrepreneurship Encourage productive use of remittances UNDP Ecuador Pilot Project Implementation Feb – Oct 2009 Evaluation Oct’09 – Dec’10 US$155,000

15. Going forward… • GATS Mode 4 • Greater temporary movement of labor • Financial crisis and possible recession • Global reduction in labor demand • Terrorism and political conflicts • Tighter borders