How governments use immigration to boost their economies

Van Linh Nguyen left Vietnam for a construction job in Japan. PHOTOGRAPHER: KEITH BEDFORD

People from abroad bring brains and energy, but there’s always the risk of a backlash.

By  Michelle Jamrisko, Jason Clenfield, Sandrine Rastello, and Matthew Bristow

From New Economy Forum

Governments the world over are grappling with how to make immigration work for their economies without fanning political flames. Nativism helped crystallize support for Brexit in the U.K. and almost cost German Chancellor Angela Merkel a fourth term. President Trump says the U.S. immigration system is “broken”—and while some of his opponents may grudgingly agree with that, there is little common ground on how to repair it.

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Featured in Bloomberg Businessweek, Nov. 4, 2019. Subscribe now. Find more stories at Bloomberg New Economy.

For inspiration on possible fixes, Americans might look north to Canada, which uses a points-based system to screen economic migrants—a group that makes up almost 60% of its immigrants. The method, which factors in criteria such as education and work experience, is a reason only 27% of Canadians regard immigrants as a burden on their country—the lowest percentage among the 18 nations surveyed in a Pew Research Center poll released in March.

That pro-immigration consensus is absent in Japan, where migrants make up less than 2% of the population. There, the government is treading cautiously as it rolls out a five-year residency permit designed to alleviate critical shortages of workers in several industries. By comparison, Latin America’s policy response to the Venezuelan exodus has been hasty and improvised and threatens to give rise to an underclass of undocumented workers. The stories that follow detail how Canada, Japan, and Colombia are dealing with immigration and include interviews with recent arrivals. —Michelle Jamrisko

Japan Nudges the Door Open

Mexicans toiling in America’s chicken processing plants, Indians sweltering on Dubai construction sites, Filipina nannies tending to the children of Malaysia’s middle class. They’re among the world’s estimated 164 million guest workers, according to the International Labor Organization. The jobs are often hard and sometimes dangerous, but the money these workers wire home—$480 billion in 2017, according to the United Nations—makes the risks worth taking. “Poverty in the sending countries is what keeps the whole thing going,” says historian Cindy Hahamovitch, author of No Man’s Land, a 2011 book about migrant labor programs.

Japan, a country that’s long resisted immigration, officially began issuing temporary visas to unskilled foreign workers in April. After years of insisting the country’s labor shortages could be solved by employing more women, delaying the retirement age, and using more robots, politicians grudgingly came to a realization that those steps wouldn’t suffice. Japan’s aging workforce is expected to shrink by 23% in the next 25 years, and job vacancies already outnumber applicants by more than 3 to 1 in such fields as construction and nursing.

The new program will grant five-year residency permits to as many as 345,000 low-skilled workers over the next five years. That’s a drop in the bucket compared with what’s needed, but in establishing a pathway for permanent residency, its significance goes beyond the math. In the past five years, the number of foreigners working in Japan has doubled, to almost 2 million. Many come with student visas or through a technical trainee program meant ostensibly to offer overseas development aid—back doors that have allowed Japan to import hundreds of thousands of low-paid workers on short-term visas, without having to acknowledge them as immigrants.

Critics of the trainee program say it’s susceptible to abuses by unscrupulous companies. In September three Vietnamese trainees sued their employer for failing to tell them their work hauling dirt in towns near the Fukushima Daiichi Nuclear Power Plant may have exposed them to radiation.

To placate conservative voters, Prime Minister Shinzo Abe has argued that the visa program “is not an immigration policy,” because the foreign workers won’t be there permanently. Less advertised is that the law will let some workers extend their visas indefinitely and eventually settle in Japan, assuming they can pass language and skills tests. The details are vague, but opening even the narrowest path to permanent residency—for carpenters and welders, not just bankers and software engineers—represents radical change.

Bureaucrats in five Tokyo ministries and at least 14 departments are still working out the nuts and bolts of the policy. By the end of August, the Immigration Services Agency had granted just 205 new visas, more than a third of which went to people already in the country. Kouichi Takeuchi, who runs GlobalPower Inc., a placement company, blames the slow start on red tape rather than obstructionism. “There’s mountains of paperwork,” he says. —Jason Clenfield

Van Linh Nguyen: Left Vietnam for a construction job in Japan

KI-Star Real Estate Co., north of Tokyo in Saitama prefecture, used to outsource construction work, but labor shortages drove prices too high. In 2013 the developer started bringing in carpenters from Vietnam, where labor is much cheaper.

Van Linh Nguyen, a tool repairman from Hanoi, was the first hire. The 32-year-old now manages a crew of 46 Vietnamese men. “I want him to join management,” says Mamoru Sonobe, the head of KI’s construction business.

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That idea is more plausible now that Japan has cracked open a path to permanent residency. Nguyen has a visa that lets him work in the country for the next five years. (He may later be able to convert it into one that lets him settle.) He spoke with Bloomberg Businessweek at a KI office near its headquarters. Excerpts, translated from Japanese:

When I finished high school, I went to a trade school in Hanoi, learning how to fix tools. My teacher got me a job at a repair shop. I slept in a little loft above the store. I worked hard at the job for about two years, but when I asked for a raise, my boss ignored me. I started to feel restless.

I didn’t know anything about Japan. But my friend had worked for Suzuki in a town near Mount Fuji. He said he made 130,000 yen [about $1,200] a month, which was more than 10 times what I made. My friend told me if I wanted to try working in a foreign country, there were a lot of choices. You could go to Taiwan or South Korea, but Japan paid the best.

I applied to a temp agency that promotes international exchange. I paid them 1.5 million yen for Japanese classes and getting to Japan. I borrowed the money from my parents’ brothers and sisters and from the bank. It was the biggest investment the family had ever made and took me two years to pay back.

I was really scared when I joined KI. I was alone, with just Japanese people around me. I could hardly understand or speak the language. But I worked with them every day, and they were nice to me.

I started by learning how to read blueprints. I’d translate all the words into Vietnamese, put them in a notebook, and memorize them. After about five months of studying in the office, I started to work on job sites. People had to show me everything. Now, except for concrete work, I can basically do anything it takes to build a house. I’ve built about 50 so far.

One of our clients is a Vietnamese engineer who’s been here a long time. I didn’t know we were building the house for a Vietnamese guy. I went by the job site and realized who the buyer was. I want that to be me someday.

The president is always saying, “Keep going, we want you to become a permanent resident and stay with the company.” Eighty percent of me wants to stay in Japan. It’s easy here, it’s convenient. There are hospitals, convenience stores, the roads are safe. There’s no crime.

Making the Grade in Canada

Canada welcomed 321,040 immigrants last year, the largest number since 1913. Almost 60% were economic migrants chosen for their potential to put down roots in a land where winter temperatures routinely drop below freezing.

Canada wasn’t always selective about who it took in. After a couple of decades of unchecked immigration from postwar Europe, concerns began to build that the new arrivals weren’t contributing to the economy, says Stephanie Bangarth, an associate history professor at Western University in London, Ont. In 1967 the government introduced a point system that graded aspiring residents on criteria such as age, language proficiency, and skills.

The framework has endured, though rules have been amended many times to reflect changing priorities. According to a recent report from the Organization for Economic Cooperation and Development, Canada’s approach is “widely seen as a role model for successful migration management.” Australia and New Zealand have point-based systems of their own. Legislation co-sponsored by Republican Senators Tom Cotton of Arkansas and David Perdue of Georgia would introduce one in the U.S.

Daniel Béland, director of the Institute for the Study of Canada at McGill University in Montreal, says Canada’s method has made immigration less divisive an issue than in other countries. “There is strong support for economic immigration, that it’s important for the country, demographically and economically,” he says. “The debate is more about how many immigrants and how we can tweak the point system.”

Like many developed economies, Canada faces the prospect of low fertility rates and retiring baby boomers. If immigration were to stop entirely, the labor force could lose 100,000 workers a year starting in 2026, according to a report by the Conference Board of Canada, an Ottawa-based research group. Already, more than 580,000 jobs in the $1.7 trillion economy are unfilled.

Immigration has become especially critical to Canada’s technology industry. To build bigger companies, the country needs the sharpest minds, says Chris Arsenault, a general partner at Inovia Capital Inc., a Montreal-based venture capital firm. “Canada has a golden opportunity. We have always integrated different cultures well; we have always been a force in terms of immigration,” he says. “Now we should give it a tech flavor to attract people who have a high capacity to evolve fast.”

That’s already happening under a 2015 revamp to the point system that introduced an expedited pathway called Express Entry. Candidates fill out a short online questionnaire that determines whether they meet minimum requirements. If they do, they complete a detailed profile, which generates a score that’s used to rank the applicant pool. (The maximum is 1,200, but in practice the cutoff has been closer to 460.)

Applicants from the age of 20 to 29 garner a top score of 110 points in the age category. In the education section, a master’s degree is worth 135 points out of 150. Work experience in Canada is worth as many as 80 points. And proficiency in English, French, or both carries a maximum of 160 points. A job offer from a Canadian employer or a sibling already in the country earns extra credit.

Every two weeks or so, the government discloses how many people in the pool will receive an invitation to apply for residency. Invitees have 60 days to submit supporting documents. Their files gets processed in about six months. Last year, 17% of the invited candidates worked as software engineers, IT analysts, or computer programmers. Almost half were from India, with the next largest groups of candidates coming from China and Nigeria. (It’s worth noting that prior to the introduction of the point system those admitted where overwhelmingly white.)

Canada’s system isn’t perfect. Stories abound of doctors and engineers whose credentials aren’t recognized by Canada’s professional associations and are unable to work. Quebec province—home to a fifth of the population—runs its own selection process and recently reduced immigration targets. Meanwhile, some rural areas have a hard time luring immigrants.

Employers in Manitoba were looking for lower-skilled workers than those favored under the federal framework. So about two decades ago, the province secured the right to devise its own, says Ben Rempel, assistant deputy minister for immigration and economic opportunities in Manitoba. “Yes, we wanted nurses and doctors, but we were also interested in carpenters and welders and industrial butchers,” he says. “So we had to find ways of matching employers to people who weren’t looking at Manitoba as the back door to Toronto, Vancouver, Montreal but had a good reason to come and stay here.” It worked: The province of 1.3 million people has welcomed more than 137,000 immigrants under that program since 1998. —Sandrine Rastello

Osman Ansari: Awarded permanent residency four years after emigrating from Pakistan

Osman Ansari works as a project manager at fintech company Koho Financial Inc. in Toronto. The 30-year-old came to Canada in 2015 from Karachi to study. Achieving permanent status was, he says, a “bumpy road.” It should have taken six months, but it took 11, because he had issues proving he could support himself. (Ansari wasn’t working at Koho when he applied for residency, and he doesn’t have any immediate family in Toronto.) Now that he’s in Canada for good, he ultimately wants to work as a business strategist to help tech companies grow. Excerpts from a conversation with Bloomberg Businessweek:

I’m coming from Pakistan, where we’ve basically been in a state of war since Sept. 11. I love Pakistan, it’s my country, but I wanted to live in a place where I would have peace of mind.

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The initial plan was to go to the U.S., because a lot of my family lives there. But there’s lots of horror stories coming out of America about immigration. The cost of grad school is insane. I started researching what’s best for me in terms of immigration, in terms of job prospects, and Canada stood out.

I got accepted to anMBA program. I applied for my study permit. It came in about two months, no problem. I moved to Toronto. I remember exactly the time and day: My airplane landed at 5:07 p.m. on Aug. 30, 2015.

Within a month, I fell in love with this city. I loved the school, I loved the people that I met there. I’m coming from a city that’s primarily a desert, so the variation in temperature—you go from +40C to −40C—was something that took a lot of getting used to.

I graduated in 2017. I qualified for a three-year work permit. I started working at a tech startup right after, but due to funding issues, I was let go. From January to December 2018, I was applying for jobs, I was interviewing, I was going on coffee chats. I was working a minimum-wage job. You have people graduating from Canadian schools who have lived and worked here their whole lives, and then you’re opening the market to immigrants as well. There’s going to be significant competition.

I applied for permanent residency in September 2018. Once you send in your application, you don’t have 100% transparency on where it is. I got approval in August 2019. I sat and stared at the email for 10 minutes because I couldn’t believe what I was seeing. It was relief, immense joy, and the feeling one gets when something he’s worked so hard for is realized, all rolled into one.

I’ve grown up more in this place than I would have in any other. It’s shown me what I’m made of. You can be who you want to be, what you want to be, and where you want to be—no one is going to bother you. I’m staying here for as long as I’m on this planet.

Venezuela’s Exiles

More than 4 million Venezuelans have fled their homeland in recent years to escape hunger and violence. Every day an additional 5,000 join an exodus that, at its current pace, is set to surpass the 6.3 million refugees created by the Syrian civil war.

Government representatives from Venezuela’s neighbors have met repeatedly to address the influx of migrants, which has strained resources and stoked tensions across a region where economic growth has been subpar in recent years. But South American nations have so far failed to come up with a coordinated response. Instead, national governments have moved to toughen immigration controls. “Increasingly, what we’re seeing is a race to the bottom, where countries jockey over tighter and tighter restrictions in a contest to shift the burn from one country to the rest,” says Geoff Ramsey, a Venezuela expert at the Washington Office on Latin America, a research and advocacy organization focused on human rights.

Colombia, which shares a 1,400-mile border with Venezuela, has been hit hardest by the refugee crisis, receiving 1.6 million Venezuelan migrants, who now make up about 3% of the population, up from virtually none five years ago.

The Colombian government estimates it’s paid $1.5 billion—a figure equal to 0.5% of gross domestic product—to care for the exiles. A refugee fund set up by the World Bank, the United Nations, and the Islamic Development Bank approved a $31.5 million grant for Colombia in April. Meanwhile, international donors have pledged $340 million in humanitarian aid to help Venezuelan migrants in Colombia and elsewhere. However, those figures pale next to the more than $23 billion that countries and multilateral organizations committed to help Syrians fleeing their war-torn country in the first five years of the exodus, according to UN data.

Some 600,000 Venezuelans in Colombia have been issued permits that allow them to work and access health care. However, the government virtually stopped handing these out in December of last year—except to deserting Venezuelan military officers—according to Jessica Bolter, an analyst at the Migration Policy Institute, a Washington-based think tank. Therefore the majority of Venezuelans residing in Colombia are undocumented.

Many find work either in the informal or gig economy. Thousands work as couriers for Rappi Inc., a Bogotá-based startup that’s developed a delivery app. Teleperformance SE, a Paris-based company that runs call centers and other customer relationship services, employs about a thousand Venezuelans on contract in Colombia, according to Juan Carlos Hincapie, who heads operations in the country. No one in Colombia ever objects to dealing with someone with a Venezuelan accent, says Hincapie: “We have been brother countries for all our lives.”

Venezuelans have traditionally regarded Colombia as a poor and violent place, so refugees with skills and money still try to go elsewhere if they can. But for others, this is home for now. —Matthew Bristow

Nohemí Suárez: Fled the crisis in Venezuela and is living in Bogotá

A migrant from Venezuela’s Monagas state, Nohemí Suárez has been in Colombia since 2017. In her native country she studied industrial engineering and was employed in the oil industry. In Bogotá, the 29-year-old—who recently renewed her permit, allowing her to stay until 2021—waits tables and makes deliveries for Rappi Inc. She talked with Bloomberg Businessweek in Rosales, an area with many restaurants, where she frequently hangs out outside a bakery-pizzeria waiting to go on a delivery run. Excerpts, translated from Spanish:

I work from 7 a.m. to 4 p.m. as a waitress, and then I come to this neighborhood, and I leave at 10. In the restaurant, I work from Monday to Saturday, then one Sunday on and one Sunday off. I work every day for Rappi. I would say that most Rappi workers in Rosales are Venezuelans.

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I made the decision to leave Venezuela when we saw that we couldn’t afford breakfast, lunch, or dinner. I send money to my mother back home. My goal in emigrating is to help those back there—not for me to be eating well and thinking about my family without anything to eat.

In Venezuela, in about 2013 or 2014, I started to feel that the situation was no longer normal. There was no rice; things were missing from the shelves. Then cash began to run short—you’d go to the bank, and there was no cash.

Most of my friends have gone. They’re dispersed across the world. We talk via WhatsApp. Everyone says that as soon as Venezuela is fixed, they’ll go back. No one thinks of staying here, even if they’re doing well. Everyone has this feeling for their homeland.

I grew up under Hugo Chávez and his Bolivarian Revolution, and my mother was a strong follower of Chavismo. She was annoyed when I started to have a different opinion about politics. But I’ll say this: Under Chávez, things weren’t like this. Maybe it’s my ignorance talking, but I believe that if Chávez were alive, this wouldn’t be happening. Everything started to fall apart when he died.

I’ve lost a great deal. I’ve lost sharing time with family, and as the years go by, I’ve lost my youth. I would have liked to keep working in my profession and have my house and my family and have a stable life in my own country.

I’m not the Nohemí I used to be—the Nohemí who went out with her friends, who’d go out with her work colleagues. Here my life has become a monotonous routine. I don’t have any social life, because on my free day I want to rest.

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