The role of investors in shaping effective migration policy

This is Part II of a 3-part MCAF blog series that draws on material raised in a private investor roundtable with Dutch academic and author of ‘How Migration Really Works’ Hein de Haas. All comments below reflect MCAF secretariat perspectives and do not necessarily represent Working Group member views or any views of Professor de Haas. 

Investors can shape a more effective humane migration policy future

Beyond knocking down a number of  fundamental migration myths (see Part I), a key message from Professor de Haas was that investors must deepen their understanding of how migration policy really works, drawing on lessons from history. This is necessary in order to cut through the political noise around this vital topic, to be able to develop nuanced understanding that can inform dialogue with portfolio companies, policymakers and other stakeholders.

De Haas highlighted the EU’s evolution as an integrated labour market to illustrate the need to approach labour markets and migration with a macro research lens. Predictions around European labour market integration following the introduction of free movement of labour in 1994 included the end of external migration from Morocco and Latin America into Europe. In fact, what the creation of a common market did was spur growth that continues to draw in international workers up to the present. As migration policy shifts towards regional freedom of movement in North America, South American and parts of Africa and Asia, drawing on the European model, investors can draw on lessons from history to inform their contributions to policy development. While migration policy remains politically fraught, its importance in all large economies means that investors cannot ignore human mobility.

Want to reduce migration? Destroy the economy

De Haas highlighted that if politicians in G7 markets who claim to dislike immigration were serious about reducing human mobility, they could simply destroy their economy. This light-hearted remark highlights an important reality: immigration of all kinds happens in response to labour demand. Increased international migration happens most often following strong economic performance and increased demand from companies for new workers, as we see now in the US. The contradictions of existing policy - demonising migrants while relying heavily on them to support economic growth goals and fiscal stability in aging countries, cannot go on indefinitely. Investors must find their voice to speak for better policies to support economic goals and a strong and effective migration policy framework.

Stronger investor voices are needed to begin to address organised political hypocrisy

‘How Migration Really Works’ flags a key issue in G7 countries, where political rhetoric is at odds with the needs of the corporate sector. This leads to situations such as in the UK and Italy where xenophobic populist government leadership is accompanied by record-breaking levels of immigration to meet labour market needs. Italy’s Prime Minister Giorgia Meloni’s government recently committed to issuing 425,000 work permits to non-EU nationals by 2025 in response to company demands for workers. In the UK, post-Brexit demand for workers across all industries has seen net migration hit a record 745,000. In the US, according to the Congressional Budget Office, strong immigration could boost the economy by $7 trillion  over the next decade by expanding the labor force, and increasing consumer demand and the tax base [1]. This significant positive economic impact matters for investors. The cognitive dissonance of political leadership and the reality of labour market needs presents a challenge and an opportunity for large investors and universal owners.

Investors should re-assess the impact of increased border security on human mobility

One myth that MCAF is particularly interested in is the focus on the failed approach of border securitisation and the hardening of borders. De Haas’ research shows that when governments announce plans to tighten border security and limit international worker flows, more migrants come and seek to settle in advance of the harsher regulatory regime. Examples from Spain - where EU membership ended open migration pathways with Morocco - and Mexico, where hardened borders have led to reduced circular migration and more permanent settlement of families in the US - demonstrate how hardening of borders tends to increase permanent migration and relocation. 

When labour markets encourage seasonal workers, and borders are more open, people tend to move back and forth, and maintain family in their home country. When the walls and fences go up, and borders are hardened, people make the decision to permanently relocate and bring their families with them as they do not trust that borders will open up again. 

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[1] 'Immigration to Boost US GDP by $7 Trillion Over Decade, CBO Says' (08.02.2024): https://www.bloomberg.com/news/articles/2024-02-08/immigration-to-boost-us-gdp-by-7-trillion-over-decade-cbo-says