Rich Nations Face a Post-Covid World Without Cheap Migrant Labor

in the past few months. It's a reminder that stay at home orders means something different if you're one and more than a hundred and fifty million my group workers around the world whose home and family might be a long way away. There are another group at the sharp end of this COVID crisis. The sectors they work in, hospitality, construction, domestic service have been taking the brunt of the collapse in the economy, and many, like Mikhaela, have headed for home.

Others stay in their adoptive countries but find themselves second class citizens without access to government support and healthcare. Either way, the COVID crisis for migrants is going to have big economic effects for both their adopted country and the communities they left behind. We're getting into a few different pieces of that massive global story today. In Dubai in the United Arab Emirates, the population could fall ten percent this

year due to expat workers heading home. I'll be talking to Bloomberg's Middle East economy reporter Abir abu Omar about what that means for the Gulf economies economic model, where foreign workers do nearly all the work. We'll also talk about whether the many migrants still stuck in Dubai without

work are getting any help from the government. Then our head to Singapore to talk through the economics of global migrant flows with Bloomberg opinion columnist Dan Moss, also what it means for countries like the Philippines to have the flow of earnings from migrant workers suddenly dry up. But first let's hear a bit more about that Romanian story from one of the people who helps run our economics and government coverage in Central and Eastern Europe, Andrew Dagny. Andrew,

tell me a bit more about this story. How many migrants are we talking about that have been going home to Central and Eastern European countries. The countries we looked at specifically for this story were Romania, Ukraine, Serbia, and a little bit at Bulgaria. Romania had the biggest inflows.

About one point three million people came back Ukraine that the numbers there have always been a little bit difficult to calculate, but there are several hundred thousand probably in Serbia were also talking a significant portion of the population. I think, um six percent of the population, the fifth of the workforce, about four thousand workers. Romania the populations about twenty million people, so one point one point three

is obviously a significant addition to that. The Serbs were even more that was that was six percent of the population. So it's it's a lot of people. Let's hear a bit more from Mihaila now, who was in Italy and then has come has come home my whole thing. I'll ever return because living among strangers is hard. After nine years, my boys stayed with my mom all this time, and this was the hardest thing I ever did, to live far away from him. But we'll see what happens. It

would be great if I managed to stay. I need to see if I managed to get a job here. I hope I'll make it here in Romania. First of all, we managed totally differently with the money I made in Italy. My son now has a computer close. We managed to renovate the house everything we need. I don't think I would have managed to do all these things with the salaries here. But we'll see. People say things have changed in Romania as well. Let's see what happens in the

next few months. We wait for now. So she sounds like she might stay home now. The government's happy to have all of these people coming back, has been their attitude. The circumstances are obviously not ideal. They would have preferred these people if they were going to go abroad, that they worked over there, they studied over there, and they brought back the skills and education that they garnered in

Western Europe. But at the same time, they've been struggling, like most of use in Europe, with acute labor shortages for several years now. So these workers are are welcome. For the short term they will they will obviously be boosting the unemployment numbers due to the lockdown and the extended effects of that. But once the economy start to start to open up again and start to grow. Eastern Europe has generally been a much faster growing region than

Western Europe. Then the government's hoped to harness these people who have come back, or at least a share of them, and use them to build future growth. And I guess one of the big differences with this crisis is it is affecting everywhere. I mean what we've seen in the past, particularly in Europe actually, where countries have faced a deep recession.

I remember this and that the global financial crisis that some of the countries in the in the Baltics saw a massive outflow of workers when their economy shrank, which helped sort of ease some of the burden on their economies. If everyone is being hit now at the same time, you're not going to get immigration as that kind of safety valve. But I guess it's true. It seems to be the case that these Central and Eastern European countries so far have been hit less hard by COVID. Is

that right, Yes, that's also true. They were very fast to lockdown and the that's only in terms of their healthcare hit then it's been far, far, far less than we saw in Western European countries. The economic hit is in many cases similar. I think that the best performance probably in the in the EU this year is going to be the Polish contraction, which is I think to

be about between three and four percent. But obviously they're all they're all taking a hit, yes, economically, and there's going to be we're going to talk about this later in the program, but there's a there's a there will be a hole where all those remittances used to be. I mean Mihailo and all the millions of people who were in different parts of Western Europe sending back their salaries.

I mean that is an extra that is an extra burden for these economies at a time when they are dealing with a global recession, even if they're not facing as much problem from COVID. Yes, that's also true. But these governments are hoping that the flip side of the coin, the the increased labor force and the increased ability to generate economic output, is going to It's going to counter that.

Ukraine had a record remittances of twelve billion dollars in two thousand nineteen, but it's also seen huge, huge outflows of people who are I think more than a million people alone in Poland and they've been a huge source of labor for some of the Eastern European countries in the European Union. Ukraine's looking to certainly utilize these people. They have about three d thousands who returned during the lockdown.

They're looking at a pretty large scale road construction projects and they're offering discounted loans also so they can start their own businesses. Well, it is. It's a fascinating side of this when we have all these discussions about deglobalization, will people after this crisis be less inclined to send production overseas while they start bringing jobs home? And actually

it's the people who are moving first. We have these millions of people all coming home before we have a change in the global economy necessarily, Andrew, thanks very much, no problem than So that's one perspective on the global migrant story. But now let's get a completely different angle on this. Talking to our Middle East economy reporter into

I Abia abu Omar. Anyone who's been to Dubai or other parts of the United Alberta Emirates knows these economies are utterly dependent on migrant labor to build every apartment block service every hotel room, but they don't. Those migrants, they don't get really any rights in return, and if they lose their jobs, they're supposed to go immediately home. So what has been happening to them since the onset of the COVID crisis? Hi, Stephanie, So yes, you're right.

I mean in Dubai, the foreign population, made up predominantly from blue collar workers, makes up more than nine of the city's population. Of that's a huge number. And then the UAE in general more than eighty percent of the population is made up of expats um. So since the start of since the start of this outbreak, these people have been suffering. These people have been asking to go back home because in part because companies are laying off

people with absolutely no safety net in place. So when we talk about what is different for these people, it's the fact that in this part of the world, there is no safety net. Uh, they don't get any kind of residents, they don't get any kind of remittance after they're laid off, and so the only expectation for them

is to go back home. Now, with with the flights being suspended and with no option to go back home, some of these people are living on as little as two hundred dollars a month UM and waiting for you know, charity charities to get to get back to them with with food, especially now that we're in Ramadan, which is a month where UH Muslims in the region fast UM. So these people are just literally living by what they

can get day by day. And we've heard reports about countries in Southeast Asia who are not even accepting UH they're people back UM. Hundreds of thousands of India and Pakistanian workers, which make up the majority of the expat population here, have asked to go back home. UM and India and Pakistan India mainly was saying that you know, we we can't accept we can't accept our people at

this moment. Are we going to see just this big change in the structure of the Gulf economy is coming out of this if they if we don't know what happens to these workers when this kind of crisis hit. Absolutely, absolutely, I think so. And that trend has been on the rise since the outbreak. UM gained momentum in the region.

You have a lot of big officials who weren't necessarily as vocal before coming out and saying a population shrinkage could have a devastating economic implication for Gulf countries that are very much dependent on these expat workers. But when you have an expat worker that you expect to work and you don't and you don't necessarily provide um any kind of stability, those people are going to leave. And

it's and it's not just blue collar workers. It's it's teachers, it's engineers, it's it's businessmen who are thinking they can't sustain this kind of living um if they're laid off. And what's different about the model in the UAE or in the Gulf in general, is that most of these countries have taken a more monetary policy change, so there has not been any kind of uh, direct fiscal um spending for for these workers. So we don't see any kind of wage guaranteeing, we don't see any kind of

fund that is dedicated for those people. Uh. The only thing we're seeing is the central banks are are giving lenders some kind of space to to ease their feast is their interest rates, to to give better better interest on loans. But that's not what the people are asking for, and that's definitely not what the people who are going to leave, are asking for people want direct measures that help them during this time, and we're not seeing that

happening yet. And I've noticed that that the economies that were always they're so dependent on the oil revenues and we've seen obviously the collapse in the oil prices, and so countries like Saudi Arabia this week actually announcing big cuts and spending, which is the opposite of what everyone else is doing, because they didn't save in the good times when the oil price was was higher. And I guess the short term question is just what is going

to happen to all these people. I mean, there's such a large number of people who sound like they are trapped in the region. And the support that government is offering. I noticed when they are giving any help to workers or companies, it's all for citizens, much more than for for others. Are you starting to see these migrants on the street, what's going to happen to them? What those people want is some kind of direct measure that would help them at least get by, get by on a

daily basis. I mean, a lot of people on social media pages are becoming more vocal about their struggle. A lot of people on um. I heard that a lot of people on on Reddit, a very popular website in the UAE, are asking for food and are asking for a place to stay. And in this kind of environment, you never saw, you never saw something like that happening before, but it is happening now. And so no government wants to see people coming out going out of their of

their countries. But it looks like the model that the government here is taking is more is more like, yes, we let those people leave. We won't compromise or sacrifice the system that we've been going by since but for decades. And if they leave after this ends, we'll just get more people, which is which is a more costly process and in more time consuming process. But it doesn't look like they're going to change the way they're they're thinking now.

From what we're seeing now, I think that's that's fascinating. And I see that our Middle East economists, the ad OLD was talking about the population of Dubai falling by at least ten percent this year just with those UM migrants leaving. But you don't think it's going to change anytime soon. Aber Abu emma Ama, thank you so much for joining us. Thank you so I'd like to bring all of this together now with Dan Boss, Bloomberg opinion columnist covering Asian economies out of Singapore and Dan there

are obviously two sides to this migrant story. There's the countries that depend on large amounts of migrant labor to keep their economies functioning, and then there's the communities back home that rely on the money those migrant workers send back. You think the COVID crisis has kind of blown a hole through both economic models. The export and import of labor STEPH is one of the biggest casualties of the

COVID induced downturn. There's a lot of attention has been given to what's happening to semiconductor sales, what's happening on container ships. The export of people that allows many wealthy countries to basically function is at risk. Let's take two economies in Asia that are equally dependent on this transaction. The seller of the labor, the Philippines, and the buyer of the labor Singapore. About a third of Singapore's workforce

is comprised of foreigners. The bulk of those foreigners live in purpose built dormitories where conditions are cramped and where living conditions have been getting some scrutiny. These are the folks that enable Singapore, famous for its efficiency and its Swiss watch like economic life, to function. They drive the subways, they deliver the mail, they build the buildings. So imported labor makes Singapore Singapore. For the Philippines, it provides a

huge source of foreign revenue. It supplements the very very basic and inadequate safety there that the government there has developed. That broader model is at risk. You know, we obviously have been talking in the developed economies about are we now going to be more concerned about the rights for gig worker as who have all been lost their jobs and have lost their rights in in response to the crisis. Do you think we'll see that kind of change in

the attitude towards migrant workers coming out of this. Well, the model as it's currently been constructed is in jeopardy. Some form of this model will survive, probably with some shading around the edges. And that is because both the vent or country and the purchase a company in many ways, are equally dependent. You know, when I was in the Philippines meeting families of foreign workers in January, you know, stuff.

They were all acutely aware of what the Saudi government was up to in its efforts to reconfigure its economy. They knew more about what was going on with the oil price that week than I did. That's how big the remittance thing is in their lives. The degree of this may change, some of the contours may a time. I feel like too many people are winning on either

side of this labor transaction for it to vantage. But in order to keep those those migrant workers coming to their economies, do you think the likes of Saudi Arabia or indeed Singapore are going to have to rethink the idea that the moment you lose your job, you're out. Among the things that are going to have to be rethought, how do these folks live and interact with the local

economies in their host nation. The majority of the surge in infections that Singapore has seen have come from purpose built dormitories where migrant workers who are employed in everything from construction to food and beverage and other things live. It's highly conceivable that these kind of cramped accommodations will just go and it would be a condition of employment that the quality of the housing be raised. You know, if you're stuck in a place because you're quarantined, you've

kind of got the worst of all world. Staff. You can't go home and get a job at home because you can't leave. This is not specific to Singapore. Few our lines are flying from anywhere right now. But because of lockdown or circuit breaker conditions in the host country, you're not on the job either. You're you're stuck. Sand is in the gearbox of this critical component of the

global labor market. When you talk about countries like the Philippines where ten percent of the population any given time might be working abroad, do you think that's fundamentally distorted the economy or started the way even the families work in that country, having I know you've spent time there, Uh, no question. In January, I went down to a community in an area called lagoon Er. It's about two hours drive south of Manila. One municipality had the nickname Little Italy.

Why because so many people had gone to Italy there to find jobs. So, you know, I visited with an NGO worker. You know a number of families and these houses were quite nice. There were multiple generations living there under the one roof people were quite candid this standard of living would be inconceivable without the remittances coming in.

I spent some time with one person who was the child of what the Filipinos called o FW's overseas Filipino workers, absolutely ement that she and her husband, come hell or high water, would not work in separate countries from each other. Too much of the social fabric just gets afraid. And you know, in times of downturn, someone who's working as a made in Dubai or Hong Kong or Singapore might be supporting an entire village, not just an extended family.

You know the problems which be set domestic arrangements in the West. Families divorce, people become estranged from each other. I mean, this is rife in the overseas worker community. Ironically, an NGO who took me to some of these families, her husband spent eighteen years doing construction in Saudi Arabia, quite lucrative, supported the family. Just one problem, she found out he had been unfaithful and that was the end of that. Now, can all these things happen anywhere, any place,

any time? Sure? What's not true is that any place, anywhere, any time an entire social fabric depends upon That's what's at stake in domestic social and economic relationships in the labor vend or country. Dan Bos, thank you very much. Thank you, Steve, good to be here, Thanks for listening to Stephanomics. We'll be back next week with more on how COVID nineteen is turning the global economy upside down. Remember you could always find us on the Bloomberg terminal, website, app,

or wherever you get your podcasts. For more news and analysis from Bloomberg Economics, follow as Economics on Twitter. This episode was produced by Magnus Hendrickson, with special thanks to Mihaela Danela, Andrew Timu, Andrea Dodik, Andrew Langley, Abir Abu Omar, and Dan Moss. Scott Lamm is the executive producer of Stephanomics and the head of Bloomberg podcast is Francesco Levy m H