PACIFIC LABOR MOBILITY, MIGRATION, AND REMITTANCES IN TIMES OF COVID-19 SUMMARY REPORT 1 SUMMARY Please insert a page (or two, depending on print layout) that features License: Creative Commons Attribution CC BY 3.0 IGO the disclaimer text below + the WB logo. If you have to add two pages Translations – If you create a translation of this work, please add the to balance out the doc, one could be plain blue with the logo and the following disclaimer along with the attribution: This translation was not second could be the disclaimer/copyright text: created by The World Bank and should not be considered an official © 2021 International Bank for Reconstruction and Development/ World Bank translation. The World Bank shall not be liable for any The World Bank 1818 H Street NW, Washington, DC 20433 content or error in this translation. 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Washington, DC 2 SUMMARY ACKNOWLEDGEMENTS 6 SUMMARY 8 SURVEY FINDINGS 11 Employment and Income Effects 11 Workers’ Satisfaction 14 Remittances and Household Effects 15 Cancelled Workers 18 Employers 19 Future Demand for Seasonal Labor, Challenges, and Government Support 21 The Pacific Diaspora 23 ANALYSIS 25 Remittances: The Macroeconomic Evidence 25 Prospects for Labor Mobility 26 Potential Policy Responses 27 REFERENCES 30 3 SUMMARY List of Figures Figure 1: Change in weekly earnings of seasonal workers after lockdown 12 Figure 2: Changes in weekly earnings of seasonal workers by workers’ profiles 12 Figure 3: Percentage reduction in weekly earnings of seasonal workers 13 Figure 4: Change in weekly earnings of PLS workers after lockdown 13 Figure 5: Change in remittances among seasonal workers 15 Figure 6: Income reduction associated with COVID-19 among households of current seasonal workers 16 Figure 7: Pre-departure costs compared to household and individual monthly incomes 18 Figure 8: Perceived reasons for labor shortage 19 Figure 9: Issues faced by seasonal workers during the COVID-19 crisis 20 Figure 10: Employer’s intention to recruit seasonal workers in 2021 21 Figure 11: Challenges for businesses to employ Pacific or Timorese workers next year 22 Figure 12: Support businesses wish to receive from the government 22 Figure 13: Monthly remittance inflows to Fiji, Samoa, and Tonga in 2020 25 Figure 14: Cumulative remittances to Fiji, Samoa, and Tonga in 2020 (year to date) 25 List of Tables Table 1: Satisfaction rating (out of 10) of working experience in Australia and New Zealand 14 4 SUMMARY Acronyms DFAT Department of Foreign Affairs and Trade GP Global Practice OECD Organisation for Economic Co-operation and Development PICs Pacific Island Countries PLF Pacific Labour Facility PLS Pacific Labour Scheme RSE Recognised Seasonal Employer SWP Seasonal Worker Programme 5 SUMMARY ACKNOWLEDGEMENTS This report is part of a broader analytical work The team is also thankful for helpful comments on program on labor mobility in the Pacific that the the survey questionnaires and support to contact World Bank has been undertaking with financial potential respondents from the Development Policy support from the Australian Department of Foreign Centre at The Australian National University. Affairs and Trade (DFAT). The report brings together The writing of this report was led by Dung Doan, analysis of primary data collected through a series of Matthew Dornan, and Kirstie Petrou. The core team phone-based quantitative surveys on Pacific seasonal included Thelma Choi, Robyn Kingston, Alexandra workers, their households and employers; Pacific Munoz, Kenia Parsons, and Soonhwa Yi. Yasser El- semi-skilled migrant workers; as well as qualitative Gammal (Practice Manager, World Bank) provided interviews with representatives of Pacific diaspora overall vision and guidance to the team. The surveys groups in Australia and New Zealand. The report on seasonal workers, employers, and households also draws on ongoing analysis undertaken by the were implemented by a team of consultants led by Social Projection and Jobs Global Practice (GP); the Dung Doan that included Crystal Ake, George Carter, Finance, Innovation and Competitiveness GP; the Glenn Finau, Patricia Fred, Robyn Kingston, Teaiaki Macroeconomic, Trade, and Investment GP; and the Koae, Felix Maia, Vani Nailumu, Randall Prior, Aoniba Poverty and Equity GP. Riaree, Seini Toufa, and Telusa Tu’I’onetoa. The The team would like to thank those who took part in interviews were conducted by Kirstie Petrou. Data the surveys and interviews. The implementation of on semi-skilled migrant workers were collected by the surveys and interviews benefited from valuable the Pacific Labour Facility (PLF) using a compatible support from the Fijian National Employment questionnaire, the design and implementation of Centre; i-Kiribati Ministry of Employment and Human which could not be completed without generous Resources; Tongan Employment Division of the and collegial support from the PLF. Ministry of Internal Affairs; Timor-Leste Embassy in The authors would like to thank Ganesh Seshan Australia; Vanuatu Department of Labour; Australian (Senior Economist, World Bank) and Jesse Doyle Department of Education, Skills and Employment; (Economist, World Bank) for constructive comments Australian Department of Foreign Affairs and Trade; and advice on earlier drafts of the report. New Zealand Ministry of Foreign Affairs and Trade; New Zealand Ministry of Business, Innovation and The team is thankful for administrative support Employment; Approved Employers of Australia; from Jeremy Webster (Team Assistant, World Bank), Horticulture New Zealand; New Zealand Apples and technical support from Shamita Afrin, Praveen Pears; and the Uniting Church in Australia. Leisande Chakkaravarthy, Rigel Colina, and Jane Hume of the Otto (Liaison Officer, World Bank) and Akka Rimon Sydney IT Help team (World Bank), as well as helpful (Liaison Officer, World Bank) provided valuable advice from Hamish Wyatt (External Affairs Officer, assistance to facilitate the implementation of the World Bank). The report was copy edited by Angela surveys with ni-Vanuatu and i-Kiribati workers. Takats and graphically designed by Heidi Romano. 6 ACKNOWLEDGEMENTS SUMMARY Photo by © darrenjamesphotography.com SUMMARY Migration and labor mobility have historically played Australia’s Seasonal Worker Programme (SWP) and a critical role in providing employment, income, and New Zealand’s Recognised Seasonal Employer (RSE) skill acquisition opportunities for Pacific Islanders. scheme engage Pacific Islanders in low-skilled jobs in With limited formal job opportunities at home, a the agriculture sector under short-term contracts of large and growing number of Pacific Islanders have 6–11 months. In 2019, approximately 25,000 workers migrated overseas, mostly to Australia (28 percent found jobs in the schemes. For Samoa, Tonga, and of Pacific Islanders living in OECD countries), Vanuatu, seasonal workers employed through these New Zealand (32 percent) and the United States schemes accounted for 6.0 percent, 14.7 percent, and (30 percent). Although small in absolute numbers, 8.1 percent of the workforce in 2018–19, respectively. the relative scale of this migration is significant: In addition, since 2018, a small but growing number the Tongan diaspora of 53,247 people in 2019 is of Pacific Islanders have participated in Australia’s equivalent to half the resident Tongan population Pacific Labour Scheme (PLS) which offers non-seasonal (105,139); the Samoan diaspora of 124,400 people employment opportunities in low and semi-skilled is equivalent to 60 percent of the resident Samoan industries on contracts of up to three years. population. In addition to long-term migration, large numbers of Pacific seasonal workers participate annually in temporary labor mobility schemes. 8 SUMMARY Migrant workers (both temporary and permanent) This report employs data collected by the World make an important economic contribution to Bank through a series of phone surveys undertaken Pacific Island countries (PICs). Seven of the top ten in Australia, New Zealand, Timor-Leste, and five remittance recipients by share of GDP in the East Asia Pacific Island countries. Quantitative data were and Pacific region are in the Pacific. Tonga tops the list collected through four structured surveys between with remittance inflows equivalent to nearly 38 percent June and early September 2020 which covered: of its GDP in 2020. At the household level, remittances (i) seasonal workers working in Australia and New are an important source of income; in Tonga and Zealand during the pandemic outbreak (‘current Samoa, four out of every five households receive workers’); (ii) prospective seasonal workers who remittances from abroad. were forced to remain in their home country due to the suspension of international travels (‘cancelled The COVID-19 crisis caused significant disruptions workers’); (iii) households of current seasonal workers; to Pacific labor mobility and diaspora groups, with and (iv) employers under the SWP and RSE schemes. adverse consequences to their employment and The survey covered workers from Fiji, Kiribati, Samoa, earnings. Pacific diaspora communities have faced the Timor-Leste, Tonga, and Vanuatu. Data on the Pacific risk of becoming unemployed as host economies have diaspora were collected through semi-structured been affected by the pandemic. International travel phone interviews with representatives of diaspora restrictions aiming to curb the spread of the pandemic groups between May and August 2020. The report have left thousands of seasonal workers stranded in also uses data on PLS workers, collected by the Australia and New Zealand and suspended the arrival Pacific Labour Facility (PLF), based on a compatible of prospective workers for most of 2020. Although questionnaire implemented during the same time travel to Australia and New Zealand under the SWP, period. PLS, and RSE has now recommenced, numbers are significantly lower than the approximately 14,000 RSE workers and 12,000 SWP workers that travelled to New Zealand and Australia in 2018–19. 9 SUMMARY 10 SUMMARY Photo by © DFAT SURVEY FINDINGS Employment and Income Effects The crisis disproportionally affected female seasonal workers. Although male workers were more likely to The pandemic caused disruptions to the employment see their earnings drop than their female counterparts, of many seasonal workers. During the period from when they did, the extent of reduction in male workers’ March until August 2020, more than 30 percent of income was more modest than amongst females SWP workers and 54 percent of RSE workers spent at (although it was still substantial) at 48 percent as least one week without any work while more than two- compared to 58 percent (Figure 2 and Figure 3). Part of thirds of workers across both schemes reported having this gap may be due to the different jobs that women fewer work hours than they did during the period of and men typically occupy in horticulture. While men January and February 2020. Those who experienced tend to work outdoors, women are more likely to be reduced work hours on average lost 18 hours per week; employed in the packing sheds and were probably a 37 percent decrease from 48 hours to 30 hours per more impacted by social distancing requirements week. The overall change across all workers was also and manufacturing shutdowns. This reduction in negative, at 11 hours per week, with no noticeable income represents a significantly heavier burden on difference across the two schemes. female workers because they earned considerably Consistent with its impact on work hours, the crisis less than male workers despite working roughly the caused a widespread and substantial reduction in same number of hours, both pre- and post-lockdown. seasonal workers’ earnings on average. Overall, The magnitude of the income loss was also greater 68.4 percent of seasonal workers reported that their for first-timers, team members, and those employed earnings were lower than during the January–February by labor hire companies (as compared to returned period, while 16.7 percent experienced an increase workers, team leaders, and workers employed by in earnings. The income effects of COVID-19 varied direct employers), although the differences were less considerably across nationalities. Timorese, Samoan, pronounced than in the case of the gender gap. and i-Kiribati workers were most affected, with approximately 71.4 percent, 87.2 percent, and 77.8 percent, respectively, seeing a decrease in weekly earnings (Figure 1). Tongan and Fijian workers fared the best, with 57 percent and 62 percent, respectively, experiencing lower earnings. 11 SURVEY FINDINGS FIGURE 1: Change in weekly earnings of seasonal workers after lockdown 100% 80% 64.8 71.9 68.4 60% 40% 17.6 12.3 14.6 20% 17.5 15.9 16.7 0% SWP RSE Total Higher earnings Same earnings Lower earnings FIGURE 2: Changes in weekly earnings of seasonal workers by workers’ profiles Changes in weekly earnings of seasonal workers Changes in weekly earnings of seasonal workers by nationality by demographic profile 100% 100% Lower earnings Low 80% 80% Same earnings Sam 57.1 61.5 63.0 71.4 77.8 87.2 60.3 70.7 71.8 63.5 69.8 68.0 68.5 68.4 Higher earnings High 60% 60% 40% 40% 15.4 13.4 16.7 12 29.6 2.9 13.4 15.3 15 14.6 14.4 16.9 20% 20% 25.7 15.9 23.1 23.6 23.0 24.4 7.3 15.0 16.8 16.7 16.6 17.1 13.3 11.3 6.4 5.5 0% 0% Tonga Fiji Vanuatu Timor-Leste Kiribati Samoa Female Male Direct employer Labor hiring company First-timer Team member Team leader Returnee Higher earnings Same earnings Lower earnings 12 SURVEY FINDINGS FIGURE 3: Percentage reduction in weekly earnings of seasonal workers 0 0 % reduction -10 -10 -35.1 -20 -20 -48.1 -48.3 -48.5 -48.7 -45.1 -53.2 -51.7 -51.0 -53.8 -51.9 -51.7 -54.9 -30 -57.7 -30 -40 -40 -50 -50 -60 -60 -70 -70 Fiji Samoa Vanuatu Tonga Kiribati Timor-Leste Female Male Direct employer Labor hiring company First-timer Team member Team leader Returnee Note: The figures display average decreases in earnings among workers who reported experiencing a reduction in earnings between the pre-lockdown period of January–February 2020 and the month preceding their interview date. Unlike seasonal workers, semi-skilled Pacific FIGURE 4: Change in weekly earnings of workers employed under the PLS appear to have PLS workers after lockdown had a relatively more positive experience during 100% the pandemic. About 36.1 percent of PLS workers Low reported earning less than they did during the 28.6 36.1 pre-COVID-19 months of January and February 2020, 80% 38.3 Sam which is considerably lower than the proportion High among seasonal workers (68.4 percent) (Figure 4). 60% 28.6 This difference likely relates to the longer, non- 29.5 29.8 seasonal contracts on which PLS workers are 40% employed, as well as the concerted intervention of the PLF to redeploy, repatriate, and support 20% 42.9 34.4 31.9 workers who were stood down during the crisis. Redeployment and repatriation of seasonal workers, 0% in contrast, were largely arranged privately among PLS Male Female employers and hence might not have been as Higher earnings Same earnings Lower earnings effective. 13 SURVEY FINDINGS Workers’ Satisfaction Across nationalities, Timorese workers had the lowest satisfaction level at 6.9, which is likely related to the Despite the overall negative impacts of the COVID-19 fact that they experienced the most severe reduction crisis on incomes, seasonal workers remained fairly in earnings during this crisis. Across demographic satisfied with their experience in Australia and New groups, those who were hit harder by the crisis – Zealand and the majority (95 percent) wished to females, first-timers, team members – tended to be return next season. When asked how satisfied they less satisfied. Compared with data collected by the were with the scheme on a scale of 1 (not satisfied World Bank on SWP workers in 2015 (World Bank, at all) to 10 (extremely satisfied), the average score 2017a), satisfaction levels appear mostly similar, was 8.0 among PLS workers, 7.8 among SWP workers, with no clear pattern to changes. and 8.2 among RSE workers (Table 1). The variation between the two seasonal work schemes is minor when broken down by nationality; the only exception is that Tongan workers in the SWP scheme reported a markedly higher satisfaction score than Tongan RSE workers (9.2 compared to 7.1). Table 1: Satisfaction rating16 (out of 10) of working experience in Australia and New Zealand Nationality SWP RSE SWP 2015* Overall 7.8 8.2 N/A Fiji 8.2 8.3 N/A Kiribati 8.4 8.5 N/A Samoa 8.8 8.9 8.5 Timor-Leste 6.9 N/A 7.9 Tonga 9.2 7.1 9.9 Vanuatu 7.0 7.9 6.3 Male 7.9 8.3 N/A Female 7.6 7.6 N/A Returnee 8.2 8.3 N/A First-timer 7.1 7.8 N/A Team member 7.7 8.2 N/A Team leader 8.1 8.2 N/A * World Bank (2017a) 14 SURVEY FINDINGS FIGURE 5: Change in remittances among Remittances and Household Effects seasonal workers Remittances from seasonal workers decreased, 100% which is unsurprising given the reduction in work Lower hours and earnings. Nearly half of the surveyed 80% 42.4 workers reported that their remittances were lower Same 46.8 50.8 than the pre-lockdown months of January and Higher February 2020, while only about 21.3 percent reported 60% remitting more each time as compared to the pre- lockdown period (Figure 5). 40% 31.9 35.7 28.4 The decrease in remittances, however, was markedly 20% more modest than that in earnings, probably because 21.3 21.9 20.7 many workers adjusted their own spending and saving behaviors to cope with income impacts and maintain 0% Total SWP RSE the level of money sent home. While 68.4 percent of workers saw their earnings fall, only 46.8 percent Higher Same Lower reported remitting less. Moreover, although workers who earned more tended to remit more and vice versa, the correlation between the changes in earnings 100% and the changes in remittances was only moderate; Lower 37.7 59.4 percent of those earning less remitted less, and 80% 37.8 Same 48.6 44.8 46.9 only 30.9 percent of those earning more remitted more. In other words, 40.6 percent of workers whose 75 Higher 60% earnings dropped either maintained or increased their 41.3 17.2 remittances. When disaggregated by the change in 40% 51.0 24.4 earnings, the average changes in remittances were 32.1 also noticeably smaller, in both absolute and relative 20% 37.9 terms, regardless of whether earnings increased or 20.0 27 19.3 27.8 decreased. 11.2 5.0 0% The decline in remittances from seasonal workers is a Fiji Kiribati Samoa Timor- Tonga Vanuatu Leste concern given that the domestic incomes of seasonal worker households had also declined since the Higher Same Lower onset of COVID-19. This could be linked to household members being laid off or having work hours reduced. Overall, 16 percent of seasonal worker households reported that a household member had been furloughed or laid off and 38 percent reported that a household member had their work hours reduced. Similarly, 57 percent of households that operate non- farm businesses saw their business income drop, and about a quarter (24.4 percent) of households engaging in agricultural activities, such as farming, fishing, or raising livestock, reported their agricultural income this season was lower or much lower as compared to last season (Figure 6). 15 SURVEY FINDINGS FIGURE 6: Income reduction associated with COVID-19 among households of current seasonal workers Changes in income from wages and salary Overall Scheme SWP RSE Fiji Kiribati Nationality Samoa Timor Leste Tonga Vanuatu 0% 20% 40% 60% 80% 100% Changes in income from farming, fishing, or raising livestock Overall Scheme SWP RSE Fiji Kiribati Nationality Samoa Timor-Leste Tonga Vanuatu 0% 20% 40% 60% 80% 100% Much higher Higher About the same Lower Much lower No income 16 SURVEY FINDINGS FIGURE 6: Income reduction associated with COVID-19 among households of current seasonal workers (continued) Changes in income from household business Overall Scheme SWP RSE Fiji Kiribati Nationality Samoa Timor-Leste Tonga Vanuatu 0% 20% 40% 60% 80% 100% Much higher Higher About the same Lower Much lower No income Remittances from overseas seasonal employment It is also important to note that in areas where accounted for a major share of seasonal worker subsistence farming is prevalent and the cash household income. In Timor-Leste, the average economy is limited, remittances were often the remittances received since March 2020 amounted primary source of income to finance goods and to 212 percent of household income in the month services such as school fees, health care services, or preceding the survey. In Vanuatu, where many housing renovation/construction. households reported reliance on subsistence In contrast to the substantial and negative changes agriculture and where economic activities have in remittances from seasonal workers, most PLS been curtailed by COVID-19 impacts on the tourism workers (71.2 percent) reported no change in terms of industry, remittances amounted to 101 percent the amount or frequency of remittances sent home. of household income. Only 18 percent of surveyed PLS workers lowered Remittances from SWP/RSE workers were the amount sent home each time. Moreover, while a fundamental to financing essential household decrease in remitting frequency was observed, the consumption. The main uses of remittances were extent of the decrease was significantly smaller than for everyday expenses, including food (91 percent among seasonal workers. In particular, the proportion of households), school fees and other educational of workers remitting twice a month or more fell by 5 expenses (51 percent), and health care (19 percent). percentage points from 41.0 percent to 36.1 percent; Qualitative feedback from surveyed households and only 3.3 percent had not sent any money home revealed that some daily expenses such as bus fares since March 2020. It appears that the milder disruption and lunches were also related to sending children in employment and income under the PLS translated to school, emphasizing the role of remittances in into more stable remittances during COVID-19. supporting investment in children’s education. 17 SURVEY FINDINGS Cancelled Workers In addition, more than one-third of cancelled workers (34 percent) had taken out loans to cover Workers who were unable to travel to Australia or their pre-departure costs, leaving them at increased New Zealand to participate in the RSE/SWP schemes vulnerability to financial hardship and future due to border closures and the suspension of the shocks. On average, self-reported pre-departure schemes experienced significant losses of potential costs amounted to 165 percent of workers’ average income. Household expenditure was 17 percent higher monthly earnings before COVID-19 and 112 percent of for households with workers currently abroad as household income during the crisis (Figure 7). About compared to the households of cancelled workers. 80 percent of those who borrowed (from either family, friends, banks, or commercial lenders) had not paid off their debts at the time of the survey, and of those who were yet to repay debts, only 26 percent had been making regular repayments. FIGURE 7: Pre-departure costs compared to household and individual monthly incomes 900 800 700 600 500 USD 400 300 200 100 0 Overall SWP RSE Kiribati Tonga Vanuatu Male Female First- Returnee No Yes timer Scheme Nationality Sex First-timer Trip leader vs. returnee Pre-departure costs Worker’s monthly income pre-lockdown Household monthly income during COVID-19 18 SURVEY FINDINGS Employers Employers attributed labor shortages to border closures and social distancing measures aimed at Border closures and public health measures aimed at limiting the spread of the pandemic (Figure 8). The curbing the spread of COVID-19 created major and most common causes pinpointed by both SWP and on-going disruptions to employers under the SWP RSE employers were delays and cancellations of the and RSE schemes. The suspension of international arrival of prospective workers and decreases in the travel in March 2020 effectively prevented the arrival number of local farm workers and backpackers, who of prospective workers and left many existing workers employers in the horticulture sector typically rely on stranded. during peak harvest seasons (in addition to seasonal COVID-19 also led to a significant shortage of Pacific workers). seasonal labor, especially in New Zealand. Nearly half of surveyed employers – 43.2 percent in Australia and 56.7 percent in New Zealand – reported experiencing at least one month of labor shortages between March and August 2020. FIGURE 8: Perceived reasons for labor shortage Increase in demand for your products 0.0 5.3 Ov 2.8 RS 10.5 Existing workers left due to COVID-19 11.8 11.1 15.8 Delay/cancellation in approval of 11.8 SW SWP/RSE places by Government 13.9 26.3 11.8 Increased cost recruiting farm labour 19.4 36.8 29.4 Delay in arrival of Paci�ic workers 33.3 42.1 Decrease in number of 35.3 backpackers/local seasonal workers 38.9 47.4 47.1 Cancellation of Paci�ic workers due to arrive 47.2 0% 10% 20% 30% 40% 50% Percent of employers Overall RSE SWP 19 SURVEY FINDINGS While the lack of farm labor was significant and Redeployment was mostly organized privately by required business adjustments, the labor shortfall employers, but required government approval and appeared to be seasonal. As most existing workers in Australia, involved Commonwealth government were stranded beyond their seasonal employment support to approve visa conditions. About two-thirds contract, 46 percent of direct employers – both those of employers redeployed their workers through private having experienced labor shortages and those having arrangements with workers’ new employers. Employers not – had to reduce hours for their workers, mostly incurred the major share of the costs of contract because there was less work available after the harvest extension and redeployment. season had passed its peak and/or employers wanted Providing pastoral care to seasonal workers became to keep their workers employed longer. This explains more demanding during the crisis. Surveyed the apparent paradox of workers being provided with employers reported worsening behavioral issues reduced working hours, while employers at other times as workers struggled to cope with social isolation suffered from worker shortages. and boredom (due to less work), concerns about Movement of workers between employers helped to their families (especially among workers who had address over/under-supply of labor, but only partially. children at home), and uncertainties surrounding their Approximately 41 percent of employers with stranded employment, income, repatriation, and COVID-19 workers (or 36.5 percent of all surveyed employers) health concerns (Figure 9). This was confirmed in re-deployed at least some of their Pacific/Timorese discussions with diaspora groups, who reported employees, with redeployment being moderately increased strain and mental health issues amongst more common among RSE employers (44 percent) seasonal worker groups with whom they had contact. compared to SWP employers (39 percent). Employers voiced dissatisfaction with the lack of support from governments of both sending and host countries to workers during the pandemic. FIGURE 9: Issues faced by seasonal workers during the COVID-19 crisis SW 79.7 Concerns related to 90.0 welbeing of family back home 72.7 77.0 Isolation and anxiety due to travel restriction 76.7 77.3 RS 73.0 Concerns related to infection risk 70.0 75.0 Ov 59.5 Concerns related to the expiration 46.7 of visa and employment contract 68.2 39.2 Concerns related to lack of work 33.3 43.2 28.4 Other 30.0 27.3 14.9 Problems with accommodation 13.3 15.9 1.4 Unaware of any issue 0.0 2.3 0% 20% 40% 60% 80% 100% Percent of employers Overall RSE SWP 20 SURVEY FINDINGS Future Demand for Seasonal Labor, FIGURE 10: Employer’s intention to recruit Challenges, and Government Support seasonal workers in 2021 Despite challenges posed by the COVID-19 100% 1.4 2.3 0.0 N pandemic, demand for seasonal workers remained strong. The vast majority of employers (98 percent) 80% 40.5 34.1 50.0 N Percent of employers wanted to employ seasonal workers from the Pacific/ E Timor-Leste again next year; about 50 percent of all 60% 6.8 8.1 employers wanted to increase recruitment – demand E 10.0 was particularly strong among labor hire companies 40% (with 80 percent hoping to increase their intakes). 56.8 This is likely to be partly the result of a reduction in 50.0 20% 40.0 the number of backpackers, who account for about three-quarters of seasonal farm labor in Australia and 0% are unlikely to be able to return for some time. Robust Overall SWP RSE demand from seasonal employers presents a reason Expect to employ more Pacific workers to be positive about the future of Pacific labor mobility Expect to employ fewer Pacific workers (Figure 10). The same advantage might be evident in No change in number other areas, such as semi-skilled work under the PLS, No response although the rate of domestic unemployment will impact this prospect. Challenges remain if Pacific labor mobility programs are to resume at meaningful scales. Uncertainties surrounding border openings and international travel, obtaining approval from the host country’s In line with these challenges, employers voiced strong government to hire seasonal workers, as well as demand for government support. The top three areas testing and quarantine requirements for arriving where the vast majority of surveyed employers felt workers were the top three challenges that employers that support was needed were: timely and consistent were worried about. Also high on the list were guidelines related to visa, contract conditions, and concerns about increased costs to bring seasonal redeployment; facilitation of communication with workers to host countries, weaker participation by governments of sending countries to recruit workers; workers, and potential restrictions on hiring foreign and transparent and fast processes to apply for workers in favour of domestic ones (Figure 11). recruitment approvals (Figure 12). Arrangements that have brought Pacific seasonal workers to Australia since September 2020 have set the foundation for further worker arrivals as the pandemic continues. At the same time, these arrangements have varied between Australian states, and it remains to be seen whether there will be a process whereby different arrangements are harmonized in areas such as cross-border logistics and financing of flights, quarantine, testing, repatriation, and medical care should workers become infected with the virus – particularly as the number of workers and diversity of job placements increases, returning to pre-pandemic levels. 21 SURVEY FINDINGS FIGURE 11: Challenges for businesses to employ Pacific or Timorese workers next year 68 Getting approved allocation to hire workers 73 64 66 Uncertainties related to 57 border opening and travel 73 55 Compliance with quarantine 73 and testing requirements 43 31 Government restrictions on 23 hiring foreign workers 36 27 Higher costs to recruit and 27 bring workers to Aus/NZ 27 23 Fewer workers want to come 23 23 15 Ensure compliance of social 17 distancing among workers 14 9 Uncertainties related to 10 demand for your business 9 7 Higher costs to provide 3 health and pastoral care 9 4 Mental health of workers is 0 affected by social distancing 7 1 Foreign workers carry higher risk of 3 bringing COVID-19 to the workplace 0 0% 10% 20% 30% 40% 50% 60% 70% 80% Percent of employers Overall SWP RSE FIGURE 12: Support businesses wish to receive from the government 80.0 Timely, consistent guidelines related to 77.3 visa and contract conditions/re-deployment 81.8 76.4 Facilitation of communication with governments of sending countries to recruit workers 77.3 75.8 69.1 Transparent, fast process to apply for allocation of workers 63.6 72.7 56.4 Facilitation of coordination among employers to re-deploy workers when needed 50.0 60.6 38.2 Other 27.3 45.5 32.7 Provision of better post-arrival brie�ings to help workers prepare for life in their host country 36.4 30.3 0% 20% 40% 60% 80% 100% Percent of employers Overall SWP RSE 22 SURVEY FINDINGS The Pacific Diaspora Whereas this would once have entitled them to Australian social security benefits, this changed in More than half of the Pacific diaspora members 2001 when the Social Security Act 1991 was amended. interviewed believed that COVID-19 had impacted Now, while New Zealand citizens can still travel to their community’s employment either through job Australia to live and work, they do not have rights as losses or reduced hours. In the wider Australian Australian citizens or permanent residents unless they population, the biggest job losses by early 2020 were apply for either citizenship or residency (Faleolo, 2019). in food and accommodation services (17.2 percent), As a result, many Pacific Islanders in Australia who hold followed by arts and recreation services (12.7 percent).1 New Zealand citizenship are not eligible to receive Census data confirm that in both Australia and New government welfare payments. Many people within the Zealand, a large proportion of Pasifika2 employment is study communities, particularly Tongans and Samoans, concentrated in low and medium-skilled occupations fell into this category and thus could not access the including laborers, machine operators, drivers, as well JobKeeper payment. as sales, clerical, and administrative workers. These occupations have high physical proximity scores and Pasifika community members noted that youth are not easily transitioned to online or work from home sometimes drop out of education so that they can settings, meaning they were more likely to be affected financially contribute to their household, and that this by lockdowns and social distancing measures. issue had been exacerbated by COVID-19. In Pacific communities, older children in large households may Pasifika community members reported that be under pressure to provide financial assistance to government payments had provided some insulation the household, which can lead to early school leaving from the real impacts of COVID-19-related job losses. (Ravulo, 2015). Community representatives in Australia In Australia, the JobKeeper payment was introduced and New Zealand described how it was not uncommon to allow businesses impacted by the pandemic to for young people to end their schooling and find work continue paying their employees’ wages. Under to help pay the bills. Youth generally moved straight JobKeeper, eligible businesses received $A 1,500 into low-skilled jobs such as process or laboring work. per employee every fortnight between 30 March As COVID-19 had increased financial strain on some and 28 September 2020, after which slightly lower households, community representatives noted that payments were introduced based on whether more youth were dropping out of formal education or employees were employed on a full- or part-time training to help support their family financially. This basis (Australian Government, 2020). The JobKeeper trend may lead to longer-term economic impacts payment ended on 28 March 2021. In New Zealand, through reduced earning capacities with potential the wage subsidy performed a similar function, with flow-on effects for remitting. employees receiving $NZ 585.80 per week if they normally worked 20 hours or more and $NZ 350 The impacts of the pandemic on remittances from the per week if they normally worked part-time. Many diaspora varied across groups. In Fiji and Vanuatu, the diaspora members felt that the ‘real’ economic economic impacts associated with a lack of tourism, impacts of COVID-19 would not be felt until after along with the devastation wrought by Cyclone these government payments ended. Harold, meant Fijian and ni-Vanuatu communities in the study were remitting more than in the past. Diaspora members reported that not all Pacific Others noted that remittances had been affected by Islanders were eligible to receive government job losses amongst the diaspora, with those who were payments, while other barriers, such as difficulty struggling financially reported to be sending ‘COVID- in understanding the social security system, also 19-remittances’; money was still flowing but the presented challenges to accessing COVID-19 welfare amounts were smaller than they once were. payments. Many Tongans and Samoans have migrated to Australia via New Zealand and still hold New Zealand citizenship. 1. https://www.abs.gov.au/statistics/labour/earnings-and-work-hours/ weekly-payroll-jobs-and-wages-australia/latest-release 2. Pacific Islander migrants. 23 SURVEY FINDINGS 24 SUMMARY Photo by © darrenjamesphotography.com ANALYSIS Remittances: World Bank estimates of the reduction in remittances The Macroeconomic Evidence to the Pacific region were consequently revised downwards from 16.9 percent in April 2020 to At an aggregate level, remittances to Pacific Island 4.3 percent in October 2020.3 This better-than- countries have been more resilient than expected, expected performance is not unique to the region, despite a severe and abrupt decrease when the having also been observed across Asia, Latin America, pandemic first affected the region. A sharp drop in and Africa (Caron and Tiongson, 2021; Lopez-Calva, aggregate remittance inflows was observed in Fiji, 2021; Oxford Economics, 2021). Samoa, and Tonga during February–April 2020; yet between May and September 2020, inflows recovered with year-to-date and monthly remittances returning 3. Data on aggregate remittance flows to the Pacific region during the to positive year-on-year growth (Figure 3 and Figure 4). second half of 2020 were unavailable at the time of this report. FIGURE 13: Monthly remittance inflows to Fiji, FIGURE 14: Cumulative remittances to Fiji, Samoa, Samoa, and Tonga in 2020 and Tonga in 2020 (year to date) 60% 30% Tonga Ton 40% Samoa Sam 20% Fiji Fiji 20% 10% 0% 0% -20% -40% -10% Feb Mar Apr May Jun Jul Aug Sep Mar Apr May Jun Jul Aug Sep Samoa Fiji Tonga Samoa Fiji Tonga Source: Reserve Bank of Fiji and Central Bank of Samoa. Source: Reserve Bank of Fiji and Central Bank of Samoa. 25 ANALYSIS Three major factors could explain why remittances The country’s GDP growth is forecasted to be remained steady despite the pandemic and its 4.75 percent over 2021 and 3.5 percent over 2022.4 economic impacts: (i) migrants abroad have not New Zealand also recorded a stronger-than-anticipated suffered from extensive job losses to the degree rebound, with positive growth of 0.4 percent in Q3 expected, and some have actually benefitted 2020. In the United States, the US Federal Reserve temporarily as a result of COVID-19 stimulus payments is projecting 6.5 percent GDP growth in 2021. In the from host governments; (ii) remittances tend to be medium term, vaccination of populations in host driven by altruism, increasing when the situation in countries coupled with the fact that many PICs remain the migrants’ country of origin worsens – as is clearly ‘COVID free’ means that there is some prospect of the situation in PICs as a result of the pandemic; renewed travel between the Pacific and major migrant (iii) a diversion from physical transportation of cash hosting countries. across borders to sending through remittance service There is also reason to be optimistic about Pacific providers could have also contributed to the sustained labor mobility programs. Demand for seasonal labor in remittance flows. The latter explanation is certainly the horticulture and viticulture industries in Australia plausible given existing evidence from Pacific seasonal and New Zealand has remained strong despite the workers, whose practice of carrying a large amount pandemic. Significant shortages of seasonal labor of cash home at the end of a working season is well have been reported in both Australia and New Zealand, documented (Maclellan and Mares, 2006; Brown et al., with an estimated shortage of 26,000 workers in 2021 2015; World Bank, 2017b). in Australia and 11,000 over March–April 2021 (the apple season) in New Zealand. The demand for Pacific seasonal workers in Australia in particular is likely to Prospects for Labor Mobility remain robust in the foreseeable future, given the fact that the annual cohort of 140,000–200,000 working The study concludes that migrant labor could play an holiday-makers, who make up about three-quarters important role in supporting the recovery of Pacific of the seasonal workforce in Australia, has largely Island economies in the aftermath of COVID-19. left the country due to the pandemic. It was reported The devastated tourism industry and the broader in February 2021 that only around 40,000 working economic slowdown from the pandemic have further holiday-makers remained in Australia. Incentives put tightened the already limited supply of formal jobs in place by governments in Australia and New Zealand in PICs, making employment overseas an even more to encourage domestic workers to take up seasonal important source of income and livelihood. In Tonga work appear to have had limited success in easing the and Vanuatu, for instance, the total number of workers shortage. Affirming these trends, about 98 percent employed under the SWP, RSE, and PLS schemes in of employers surveyed by the World Bank expressed 2018–19 well exceeded the number of formal jobs the intention to continue employing SWP/RSE workers created annually, which were roughly 325 and 1,260 in 2021, with about half of them wanting to increase respectively (World Bank, 2017a). In Kiribati, seasonal recruitment. In the Australian context, the absence of and PLS employment in 2018–19 was equivalent to working holiday-makers, if prolonged, could potentially nearly a quarter of the number of formal jobs created set the foundation for Pacific labor mobility schemes to domestically per year. expand should numbers not be restricted as a result of There are reasons to be optimistic about prospects travel restrictions (and the related issue of quarantine). for Pacific Island migrant workers despite ongoing In the short term, nonetheless, numbers will remain travel restrictions. The Australian, New Zealand, and below pre-COVID-19 levels, with challenges relating to US economies are slowly recovering from the crisis ongoing travel restrictions, limited quarantine places, and now have moderate growth prospects. In the flights and testing arrangements needing to absence of lockdowns, employment in Australia has be addressed. recovered faster than anticipated, with the number of people in employment in March 2021 surpassing the pre-COVID-19 level and demand for labor expected 4. Statement of Monetary Policy (May 2021), Reserve Bank of Australia to more than offset the potential job losses that could https://www.rba.gov.au/publications/smp/2021/may/pdf/statement- result from the withdrawal of the JobKeeper benefit. on-monetary-policy-2021-05.pdf 26 ANALYSIS Potential Policy Responses Employer retention and promotion: Support should extend to employer retention (for example, wage Policy interventions to protect Pacific migrant workers subsidies) and employment promotion. Extension of from the impacts of COVID-19 have been limited in employment retention and promotion services to low- both home and host countries. In host countries, skilled temporary and seasonal migrant workers could temporary migrant workers have been ineligible address a number of ongoing challenges, such as for most COVID-19 related benefit payments, while the risk of absconding and illegal employment. More diaspora communities have had differential access broadly, employer promotion services could facilitate to these payments based on factors such as visa and the efficient reallocation of labor between employers citizenship status. Most (though not all) labor sending and sectors. In Australia and New Zealand, permission countries have provided no support to temporary to switch employers has been granted to workers migrant workers or their households. In Tonga, under the SWP, PLS, and RSE schemes. However, targeted financial support to families of seasonal results from the survey of employers suggests that workers unable to return home was provided, however, in the case of the SWP and RSE, redeployment had it appears that coverage at the time of the survey largely been arranged by employers themselves. was low, with fewer than 10 percent of interviewed Additional support such as that provided under the Tongan sending households reporting having PLS (and internationally, under the Korean Employer received the benefit. In other sending countries, Permit Scheme) could help facilitate such job migrant households have received some form of matching. social assistance as part of broader social assistance programs, yet the incidence varies widely, from Social and health services: There are a range of 86.7 percent of surveyed Timorese households social and health services that should be available receiving some assistance from the government, to to migrant workers. These include: (i) access to 7.5 percent in Vanuatu (the latter primarily taking the COVID-19 testing and treatment; (ii) support for the form of a school fee waiver). None of the sending provision of COVID-19 compliant accommodation and households in Fiji, Kiribati, or Samoa reported workplaces; (iii) outreach activities aimed at migrant receiving social assistance. communities; (iv) support for mental health services; and (v) paid quarantine for newly arriving low- and Based on the current situation, a number of potential semi-skilled migrant workers. In addition, the report policy responses are outlined, drawing on global argues that given the ‘COVID free’ status of many PICs, experience during the COVID-19 pandemic. These there is a strong case for waiving quarantine periods include: for workers and/or enabling on-farm quarantine with Social safety nets: Destination governments should, testing. In October 2021, New Zealand was set to begin where possible, extend social assistance to migrant quarantine free travel for RSE workers arriving from workers and diaspora populations who have lost Samoa, Tonga, and Vanuatu. employment or livelihoods as a result of COVID-19. Repatriation support measures: Many Pacific seasonal Migrant sending countries should also support workers remain stranded in Australia and New populations stranded overseas. This has occurred to Zealand. Looking forward, as labor mobility resumes a limited extent in PICs in response to the pandemic. at a meaningful scale, coordination between labor Tonga, for instance, has provided a one-off payment sending and host countries is needed to establish to students, seasonal workers, and seafarers who are repatriation protocols and ensure adequate quarantine overseas. capacity for returning workers. In some PICs, limited quarantine capacity has acted as a bottleneck for both the return of current workers and sending of new workers. Some countries have been able to utilize existing infrastructure (such as hotels for repatriation quarantine), however, others have not had this option. The expansion of quarantine facilities in such cases should therefore be a priority, and is potentially an area where development partners could provide support. 27 ANALYSIS Reintegration support: The return of migrant workers as a result of COVID-19 potentially presents an additional source of pressure on the domestic labor market in PICs. At the same time, the suspension of overseas employment for migrant workers is detrimental to the economic wellbeing of their households, given that remittances are a major source of income. Employment and income support such as one-time cash benefits, loans, and provision of employment in public construction projects could help returning workers and their families to cope with these changes. Improved understanding of what kinds of migrant workers are returning home could help governments design adequate and appropriate assistance. Worker registry: Establishing a database with contact information for current and prospective temporary migrant workers, along with their families, would help to facilitate regular communication and outreach efforts, particularly during times of crisis. Policy interventions targeting seasonal and PLS workers by either the host or sending governments, such as repatriation, taking stock of workers’ employment status, and providing mental health and economic supports, would benefit from such a database. The database would also support future sub-population studies that are of interest to Pacific labor sending countries. 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