Restrictions on the international movement of labor are the largest distortions in the world economy, with estimated gains from the elimination of these barriers often in the range of 50–150 percent of world GDP. These barriers make increased migration the most effective mechanism to rapidly increase incomes of people from poor countries, since cross-border price wedges for similar labor are up to 1,000 percent. But the existence of these barriers also attests to the fact that increased international migration is controversial, with migrant-receiving countries worried about the costs of assimilating workers and their families, and migrant-sending countries worrying about the permanent loss of talented workers and the externalities they are presumed to create. Temporary or circular migration programs are seen as a way of overcoming such concerns and enabling poorer, less-skilled workers to benefit from the higher incomes to be earned abroad as part of a “triple-win”, whereby migrants, the sending country, and the receiving country all benefit.

There are several hundred of these bilateral temporal workers agreements worldwide, with the number increasing rapidly in recent years. Even a decade ago, it was noted that there were over 170 bilateral agreements amongst just the OECD countries, with a similar number within Latin America.

Labor mobility is particularly significant in the case of the GCC, which is host to around 15 million expatriate workers, generating US $80 billion in annual remittances and making the region the third largest source of remittances worldwide. Annually, the Gulf states provide around 1.5 million job opportunities, employing expatriate workers who in turn support an estimated 150 million dependents in their various home countries. However, little research has been conducted to identify and measure the impacts of this phenomenon on migrants' host countries or countries of origin.

In view of the importance of this issue to the Arab Gulf region and the world as a whole, and in keeping with the aim of the Emirates Center for Strategic Studies and Research (ECSSR) to inform the development of policies and strategies addressing contemporary challenges in this context, the Center hosted a conference under the title: Labor Mobility: Enabler for Sustainable Development in Abu Dhabi on May 14–15, 2013.

Held under the patronage of H.H. Sheikh Mansour Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, and jointly organized by the Ministry of Foreign Affairs, the Ministry of Labor, the ECSSR and the National Qualification Authority, the conference sought to motivate a higher level of participation by the GCC states in the global dialogue on migration and development, and to encourage greater engagement and cooperation among research institutions to generate more collaborative scholarship on this important issue.

In recent years, platforms for contributing to the international dialogue on migration have multiplied at the regional and inter-regional levels. These efforts underlie the now common understanding that migration is a transnational phenomenon which impacts countries of origin, transit, and destination, and that balancing divergent national interests along with the needs and rights of migrants themselves is essential for ensuring beneficial development outcomes for all. Embedded in a common understanding that migration and development are inexorably linked, and underscoring the need for the economic, social, and human rights of migrants to be safeguarded, regional consultative platforms allow for improved dialogue and cooperation amongst nations that face similar challenges around migration. In addition to enhancing the exchange of experiences and improving policy coordination, such efforts also play an important role by diffusing regional perspectives into the broader, global migration agenda.

This paper is intended to contribute to the ongoing debate on regional cooperation and policy harmonization on labor migration to the Gulf Cooperation Council (GCC) countries. The first section of this paper briefly reviews the general trends in migration to the region, highlighting the fact that the GCC demonstrates the highest density of migrants to nationals seen anywhere in the world. In the second and third sections the primary structural features of regional labor migration are discussed, in particular the impact of kafala arrangements and the transnational labor brokerage system that brings workers to the Gulf.

Bangladesh has come a long way since being labeled a “bottomless basket” in the aftermath of its independence in 1971 by the then US Secretary of State, Henry Kissinger. In recent years its gains in terms of social indicators such as child mortality and female education, its youthful population and its confidence from gaining a foothold in the global apparel market have all resulted in the country being classed among the ‘new-wave economies’ alongside Vietnam, Indonesia, Turkey, Mexico, Argentina and South Africa. As a recent report in the Guardian highlighted:

One of the important drivers of such positive change in Bangladesh is its vast reservoir of human resources, ready for deployment at home as well as in the international market to harness much coveted foreign currency. Even during the global financial crisis in 2007–2008, which also hit many emerging countries through falling western demand for their exports, the Bangladeshi economy has been particularly resilient, thanks to the remittances sent by its expatriate community.

This is not an isolated case of a positive portrayal of Bangladesh's success. In World Bank and World Trade Organization (WTO) rankings in 2010, Bangladesh was listed 21st fastest in terms of GDP growth.

Human beings have been mobile, moving and settling from one location to another since the very beginning of recorded human history. Probably the first significant successful movement of humans was that from Africa, through the Great Rift Valley, some 100,000 years or so ago. This was the movement that sent modern mankind, from its birthplace in Africa, to most of the rest of the world. Throughout history, movements of people have been caused by both ‘pull’ and ‘push’ factors. Pull factors are those which enticed humans seeking better living conditions elsewhere, or perhaps just curiosity or chance and happenstance. Push factors are the local home conditions—competition for food, conflict, disease, etc.

From the late 1800s through the early 1900s pearl diving and dates were the mainstays of the economies of many of what are today's Gulf countries—the UAE, Bahrain, Oman and the other Gulf Cooperation Council (GCC) nations. Even at that time there were large numbers of workers in these countries from other nations, many of them of African descent. Currently, of course, countries like the United Arab Emirates, Qatar and Saudi Arabia have large migrant populations, now largely from Asian nations like India, Pakistan and Bangladesh.

Today, with national boundaries firm and often controlled, a great deal of migration is due to economic factors; broadly defined by people in source countries migrating to destination countries due to economic and financial incentives.

The Abu Dhabi conference, “Labor Mobility – Enabler for Sustainable Development”, brought together national and international experts in a regional debate propitiously timed to complement the Global Forum on Migration and Development (GFMD) 2013 and offer practical multi-stakeholder inputs into the 2013 UN High Level Dialogue (HLD) on International Migration and Development. The conference yielded some important policy messages about foreign labor dynamics in the GCC region, including the need for governments and research institutions to create a coherent, regional research agenda and a collaborative framework to deal with the issue. GCC states have become major global players in labor mobility and could help advance a global development agenda based on better-informed, coherent and protective governance of labor mobility. This introductory section distills the key points raised in the conference and reflected in the papers reproduced in this volume, and the messages to be taken forward from the conference, both for regional policymakers and researchers and to the second UN High Level Dialogue.

Foreign Labor in the GCC benefits both Origin and Destination Countries

The employment of overseas contract labor is a critical policy issue for the GCC region. Foreign workers are required to meet the huge demand for labor in sectors such as construction and the services industry, and the scale of migration to the Gulf states makes the region a major player in the global migration and development field.

Labor migration to the Gulf Cooperation Council (GCC) countries has enormous effects on the region, on the countries migrants come from, on the migrants themselves, and on their families. Migration is one of the major ways in which the GCC interacts with the rest of the world; but research on the effects of this phenomenon is extremely scarce. What little research does exist on GCC migration is primarily descriptive and anecdotal, allowing little inference about the systematic effects of migration. It is also highly critical and principally originates outside the region; almost none of this research is carried out by institutions based in the Gulf. Gulf-based think tanks are missing a major opportunity to engage in policy research on labor migration from a regional perspective.

In this paper I summarize the importance of the migration phenomenon, I measure the extreme scarcity of research capable of elucidating the systematic effects of Gulf migration on the GCC and the rest of the world, and offer an example of a new research approach. I close by suggesting parts of a new research agenda that Gulf-based policy research institutions should claim, support, and advance. Gulf institutions can seize this opportunity and broaden the spotlight of research to illuminate more useful questions.

The past several decades have brought significant changes to aviation and communication thanks to tremendous advances in technology. Both have helped people move. Aviation has helped people reach new destinations at a faster rate and with less hassle, allowing greater mobility. Better communications have opened new opportunities for workers who are now not just aware of openings outside their immediate reach, but also have the chance to be considered for these jobs. Empirical evidence suggests that migrant stock almost doubled between 1960 and 2000, reaching 165 million. The International Organization for Migration (IOM) estimates the current number of international migrants to be around 214 million, or what would be the fifth most populous country in the world. With such large numbers, one would expect important consequences, and one direct consequence of migration is the amount of money migrants send back home. The latest remittance inflow estimates have surpassed US $500 billion.

Figure 3.1 highlights total world remittance inflows between 1970 and 2012, showing a consistent and continuous increase in nominal remittances, with a slight dip during the 2008 financial crisis.

While remittance flows are large and have increased over time, their further importance is derived from their size relative to aid flows. Figure 3.2 compares remittance inflows to net official development assistance and aid to low- and middle-income countries over a period of 40 years (1971–2011). The figure shows that for several low- and middle-income countries, remittance flows are larger than official aid.

The global recession of 2009 affected destination countries the world over, including those of the GCC. Regional variations in the expected response of remittance flows to an economic crisis abroad lead to an interesting question: why do the remittance receipts of some countries fall markedly during cyclical slowdowns or contractions in the major country/region of destination for their migrants, whereas no such decline is observed in the receipts of other developing countries facing similar external shocks? This paper argues that the key to answering this question may lie with the synchronism – or lack thereof – of upturns and downturns in the level of economic activity over the business cycles of countries at each end of a migration corridor, coupled with the predominant motive behind the remitting decisions of migrants.

Migration of natives who seek and find employment abroad reduces the high unemployment rates typically encountered by surplus-labor countries in the developing world. It also helps boost the household income of the families emigrant workers leave behind, as they remit part of their earnings abroad back home. The total remittances these emigrants send back to their countries of origin often reach sizable amounts, helping to relax the hard currency constraints facing these countries.

Official remittances receipts have become a more important source of foreign exchange than private debt and portfolio equity flows, official development assistance (ODA) receipts, and even foreign direct investment FDI for many developing countries.

The World Bank classifies India as one of the top emigrating countries, where migration is a reality for a large section of the population—11.4 million Indians in 2010. India also figures in three of the top five migration corridors in the South Asia region: India–United States, India–Saudi Arabia, and India–United Arab Emirates. The major destinations of migrants from India are: the UAE, Saudi Arabia, Oman, Kuwait, the United States, Bangladesh, Nepal, the United Kingdom, Canada and Sri Lanka. India also ranks first in the list of top remittance receiving countries, (US $69.8 billion) followed by China ($66.3 billion), and the Philippines ($24.3 billion) in 2012. With a favorable demographic dividend, the International Organization for Migration, IOM predicts that India is likely to emerge as one of the largest migrant-sending countries by 2050, by which time the number of international migrants is expected to reach 405 million.

According to the World Bank, the UAE registered the highest migrant stock, followed by the United States and Saudi Arabia. Twelve countries from around the world are listed as having more than 200,000 Indian migrants. Most of the Gulf countries figure in this list, along with the UK, Canada and Australia.

Estimates made by the Centre for Development Studies (CDS) place the Indian migrant stock at 12 million in 2011, based on earlier work conducted at the time of the global financial crisis.