Development Centre

Public policies can boost the contribution of immigrant workers to South Africa’s economy, says new ILO-OECD Development Centre report

 

Pretoria, 26 July 2018 - Immigration has been part and parcel of South Africa’s history and made a significant contribution to the country’s economy. A joint report by the OECD Development Centre and the International Labour Organisation (ILO), How Immigrants contribute to South Africa’s economy, provides new insights and makes policy recommendations to enhance immigrants’ contribution.

 

The study provides an unprecedented analysis of immigrant workers’ contribution in three areas of the South African economy: labour markets, economic growth and public finance.

 

It shows that immigrants are well-integrated in the labour market. Immigrant workers are more likely to be employed than native-born population, which is consistent with the country’s very low employment rate. Immigrant workers are frequently found in occupations with high growth rates. Levels of education are more polarised at the lower and higher ends of the educational spectrum than for the  native-born.

 

The analysis also assesses whether the presence of foreign-born workers has benefited or harmed the employment opportunities of native-born workers. It suggests no significant effects of the presence of immigrant workers on native-born employment at the national level. However, at the sub-national level, the presence of immigrant workers has both negative effects (lower employment rates) and positive effects (higher incomes) for the native-born population. In addition, the presence of new immigrants, who have been in South Africa for less than ten years, increases both the employment rate and the incomes of South African-born workers.

 

According to the report’s estimates, the contribution of foreign-born workers stands at around 9% of gross domestic product (GDP), and immigrant workers can bump the South African income per capita up by as much as 5%. This could be due to the higher average educational attainment of foreign-born workers, the higher share of foreign-born individuals in the working-age population, as well as increases in total factor productivity resulting, for example, from increased specialisation of the labour force.

                                                                         

According to the report, immigrants also have a positive net impact on the government’s fiscal balance. This is because they tend to pay more taxes, especially income and value-added taxes. In 2011, the per-capita net fiscal contribution of immigrants ranged between 17% and 27%. Native-born individuals, on the other hand, contributed -8%.

 

Policy recommendations

 

The report points to three main areas of policy interventions to boost the economic contribution of immigration. Those are already present in the South African government’s 2017 White Paper on International Migration, which acknowledges the positive contribution immigrants can make to the economy:

  • Adapting migration policies to labour market needs requires effective information systems, not only fed by regular data and information on foreign-born and native-born workers, but linked to institutional arrangements.
  • Fighting discrimination. Specific measures to counter discrimination in the labour market and the workplace should be encouraged, with special consideration for the vulnerable position of low-skilled workers. Measures could range from awareness raising on social and cultural differences and stereotypes, to monitoring incidents and enforcing labour standards on equal treatment of foreign-born and native-born workers.
  • Investing in immigrant integration requires a coherent whole-of-government approach, which addresses all dimensions of immigrants’ integration and builds on a strong collaboration between government departments and the involvement of social partners.

 

 

Background information

South Africa’s migration policy in the apartheid era hinged around the “two-gate policy”: the front gate welcomed individuals meeting the requirements of the apartheid state, while the back gate was used to facilitate a steady flow of cheap labour on a temporary basis. In the post-apartheid era, the necessity to provide jobs for the native-born became pressing, while the management of migration flows from neighbouring countries and further afield became more challenging.

 

Press contacts

For more information or to obtain a copy of the report or request an interview, journalists are invited to contact:

  • Guebray Berhane (guebray@ilo.org; Tel: +225 87905779) at the ILO Regional Office for Africa
  • Bochra Kriout (bochra.kriout@oecd.org; Tel: +33 (0)1 45 24 82 96) at the OECD Development Centre’s Press Office

 

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How immigrants contribute to South Africa’s economy is part of the joint International Labour Organisation - OECD Development Centre’s comparative project on Assessing the Economic Contribution of Labour Migration in Developing Countries as Countries of Destination, co-financed by the European Union. The nine other countries covered by the project are: Argentina, Costa Rica, Côte d’Ivoire, The Dominican Republic, Kyrgyzstan, Ghana, Nepal, Rwanda and Thailand.

Find out more about the project: http://www.oecd.org/dev/migration-development/eclm.htm and http://www.ilo.org/eclm.

 

 

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