THE TIMES KUWAIT REPORT
From the earliest days of human history people have migrated from place to place in search of better food and shelter. Although today migration is largely driven by people seeking enhanced work and economic opportunities, or to escape natural or man-made calamities, at its core the motive behind all human mobility remains the same — to find better food, shelter and safety.
While many people around the world choose to migrate so as to pursue more gainful economic opportunities, hundreds of millions of other migrants do not have the luxury of this choice. They are forced to flee from either conflicts, persecutions, terrorism, and human rights violations, or increasingly to escape from adverse effects of climate change, such as devastating floods, fires, droughts or famine.
Regardless of the reasons behind their mobility, migrants and displaced people represent some of the most vulnerable and marginalized groups in society. Global migrants also continue to be the victims of xenophobic attacks and popular backlash usually fueled by divisive rhetoric from populist politicians aiming for electoral gains.
Setting aside the alleged negatives, it is important to keep in mind that despite the challenges they face, migrants spur development in host countries through their knowledge, networks, and skills. They also contribute to the growth of local, regional and global economies, and help build stronger, more resilient communities.
It is no different in Kuwait, where political and social demonization of migrants has continued unabated over the years, with sharp increases in such anti-migrant comments witnessed during economic downturns, election periods, and during the recent COVID-19 pandemic. In response to this popular demand and political pressure, the government has taken a number of appeasement measures, including increasing the pace of retrenching migrant workers in the public and private sectors in line with its workforce Kuwaitization policies.
Lawmakers have also added their legislative weight to reducing and removing migrants from the labor pool and the economy by introducing various measures to deter and discourage foreign migration. Among various steps implemented in recent years are increasing utility prices for expatriates, limiting subsidies to citizens, increasing healthcare fees, and planned withdrawal of access to public hospitals for migrants, as well as proposals to tax expatriate remittances.
International remittances by migrants — defined as financial or in-kind transfers made by migrants directly to families or communities in their countries of origin — are among the most tangible links between migration and development. These annual remittances are larger than the foreign direct investment (FDI) and official development assistance (ODA) received by low- and middle-income countries.
According to the latest data from the World Bank’s ‘Migration and Development Brief’, officially recorded remittance flows to low- and middle-income countries (LMICs) are expected to increase by 4.2 percent in 2022 to reach $630 billion. This follows an almost record recovery of 8.6 percent in 2021. The top five recipient countries in descending order for remittances in 2021 were India ($89 billion), Mexico ($54 bn), China ($53 bn), the Philippines ($37 bn), and Egypt ($32 bn).
Migrant remittances to their country of origin has been a frequent bone of contention and debate among parliamentarians in Kuwait’s National Assembly. Last week, once again, a handful of MPs tabled a proposal to tax all foreign remittances from Kuwait at a uniform rate of 1 percent of the value of the transaction. With a ball-park figure of around KD5 billion remitted by migrants from Kuwait in 2021, the proposed tax would have netted the government an additional KD50 million in revenue.
While the KD50 million is nothing to sneeze at, there is one aspect that the learned lawmakers did not perhaps take into consideration. The remitted amount was not a charity or subsidy of the state to the migrants, it was money earned through the sweat and toil of these workers over a year. And, more importantly, the outcome of every fils from this labor flowed to the state in the form of an increase in economic productivity.
From Economics 101: Wages or salary paid to an employee represents the productivity that an employer receives in exchange for the amount paid. Let us do the mathematics behind this statement. For example, if an employer paid an employee KD100, it is because the worker generated the equivalent of KD100 in productivity. To remain a viable enterprise, employers usually pay a worker less than what they generate through their productivity, so at a minimum, to pay a worker KD100 the employer would have accrued KD110 in productivity terms.
To extrapolate from the above result, the KD5 billion that migrants remitted in 2021 came from providing, at the least, KD5.5 billion in productivity gains to the economy. No one will doubt that the KD500 million in productivity gains beats the KD50 million from taxing remittances. Think about this for a while… Meanwhile, it also helps to remember that the call to tax remittances comes despite calls by the UN, the World Bank and other institutions for lowering global remittances fees.
World Bank studies show that lowering remittance fees by 2 percentage points would potentially translate to $12 billion of annual savings for international migrants from LMICs. Incidentally, this US$12 billion is higher than what Kuwait or other Gulf Cooperation Council (GCC) states deliver as ODA to LMICs. Maybe, the lawmakers do need to take a refresher on Economics 101.
Rather than rehashing time-worn calls for Kuwaitization and taxing migrant remittances, it would be far more productive for the state to retain the productivity of migrants in the workforce, especially considering the relatively poor productivity of many public sector entities. And, more profitable than taxing remittances would be to create increased opportunities for workers to spend their money in Kuwait, whether through investments in the local economy, or by providing more entertainment venues where migrants could spend some of their discretionary money.
If any evidence of this multi-pronged approach to retaining productive migrants and some of their earnings within the local economy were needed, parliamentarians need look no further than neighboring United Arab Emirates, Saudi Arabia, and increasingly Qatar. Despite migrants in these countries spending in the local economy, the UAE and Saudi Arabia were the second and third largest countries for remittance outflows in 2020, after the United States in the first spot globally.
International Organization for Migration (IOM), the United Nations migration agency, defines a migrant as any person who is moving or has moved across an international border, or within a State, away from their habitual place of residence. This definition is regardless of the person’s legal status; whether the movement is voluntary or involuntary; what the causes for the movement are; or what the length of the stay is.
In its latest biennial World Migration Report for 2022 the IOM estimates that at the start of 2021 there were approximately 281 million migrants worldwide living in a state other than their country of birth. To put this staggering statistics in perspective, the 281 million global migrant cohort represents more than the entire population of Indonesia, the fourth most populous country in the world.
Since international migration is a global phenomena, no state can manage migration effectively and sustainably in isolation. In 2018 the UN General Assembly overwhelmingly approved the Global Compact for Safe, Orderly and Regular Migration (GCM) — the first-ever UN global agreement on a common approach to international migration in all its dimensions. The GCM offers the opportunity and guidance to actualize human mobility and seize the opportunities it presents.
Kuwait is a signatory to the GCM since 2018 and in May of this year, Kuwait also participated in the first International Migration Review Forum (IMRF), convened at the UN Headquarters in New York, to discuss challenges faced in implementation of the GCM. During the IMRF, Kuwait reaffirmed its commitment to achieving the goals of GCM in line with its national priorities and policies, and to support the IMRF declaration.
Unfortunately, many of the principles contained in the GCM remain either ignored or only partially addressed through national legislation.
Kuwait’s legal framework for migration dates back to the 1959 Aliens Residence Law, which continues to govern the residence and employment of migrants. The law forms the basis for the Temporary Contractual Workers (TCWs) system based on a policy of ‘kafala’ or sponsorship of foreigners by Kuwaitis. Much of the human rights violations perpetrated against migrants have been attributed to this ‘kafala system.
Due to several obvious as well as inherent reasons — including stymied efforts at improving productivity of national workforce, and prevailing reluctance to integrate the so-called ‘stateless’ bedouins into the population — it is inconceivable how Kuwait will be able to meet its ongoing and future goals such as Vision 2035 for a New Kuwait, without relying on its productive foreign workforce, despite the negative comments and attitudes towards such workers.
Migrants worldover are often exposed to abuse and exploitation, and have limited access to essential services, including healthcare, education, and to legal redress of their grievances. They are also considered by many in the host country population as a burden on the state’s resources, as infringing on the traditional cultures and social mores of society, and they are frequently blamed for rising criminal activity in a community.
It is true that some migrants may follow different faiths or display cultural practices that are at variance from those practiced by the native population. However, there is no evidence that migrants associated or implicated in law-breaking activities are more inclined to criminal behavior than locals engaged in similar anti-social patterns. Moreover, many migrant destination countries are likely to become dependent on immigrants in the near future to replenish the domestic workforces that continue to fall as birth rates among locals decrease and the aging population increases.
In December 2000, the United Nations General Assembly (UNGA) proclaimed 18 December of each year as International Migrants Day. The day aims to raise awareness on the challenges that migrants around the world face, and to highlight the important contribution they make to countries and communities where they live and work, as well as to their countries of origin.
As we approach a quarter-century of commemorating the annual International Migrants Day, the latest World Migration Report by the IMO points a stark picture on the plight of migrants and the huge increase in their numbers in recent decades. The surge in global refugee numbers points to both a proliferation of conflicts and humanitarian crises, but also the failure of political leaders and policymakers to resolve the underlying and persistent issues driving migration.