Delicate balance between labour crisis in the North, oversupply in the South

Illegal migrants from Africa sit on a Libyan coastguard boat as they arrive at a naval base in Tripoli after being rescued in the Mediterranean Sea, off the Libyan coast, on August 28, 2017. [AFP]

The glorious Global North empires are staring at a bleak future as the populations which powered their economies age and retire in droves.

The baby boomer generation born shortly after the war in 1946 and 1964 shaped the labour market in Europe and America for decades. But now, the earliest baby boomer is approaching 80, the youngest is clocking 60.

While these baby boomers will live longer up to an average of 82 years, they are increasingly taking a back role in their economies. In Biblical terms, the “keepers of the house are trembling” and “grinders ceasing because they are few.”

At an average of 1.53 babies per woman, comparatively fewer children are currently being born in this hemisphere. They are way below the 2.1 children per woman “replacement level” required to keep the populations stable without migration.

And it will not get any better soon. With the average age of Europeans at 44.4, the population is expected to keep shrinking until around 2100. In Germany, for instance, the government in its projections expect the working population to shrink by 2.8 million by 2060.

Labour agreements

Germany is not waiting for this eventuality to come to pass. Its top leadership, Chancellor Olaf Scholz and President Frank-Walter Steinmeier, have left Berlin, and hit the road running to strike labour agreements with countries in the South.

In contrast to ageing Europe, the populations in Sub-Saharan Africa, South Asia and Latin America are blossoming. Africa is now the undisputed king of the world labour market, with an average age of 19 years. An average African woman has 4.18 children, way above the replacement level of 2.1.

While Europe’s population will continue to recede until 2100, Africa’s is expected to continue soaring until around the same time. By 2050, Africa’s population is expected to shoot from the current 1.4 billion to 2.5 billion, almost twice the present numbers.

Because the numbers are growing more than the opportunities available, the younger populations are getting more and more restless, and desperate. Enrolment in education is increasing, but the economies of many African countries are unable to accommodate the numbers.

To absorb these numbers, Africa needs to create at least 15 million jobs a year, a tall order. Swamped by bad leadership, unfair trade practices, historical burdens, debt and disease, their younger populations are growing more desperate, leading to dangerous voyages in the Mediterranean to seek the vast opportunities of Europe.

“You need the labour, we have the numbers. The rules of supply and demand simply come into play here. You have the demand, we have the supply,” Public Service, Performance & Delivery Management Cabinet Secretary Moses Kuria told a labour conference last week, asking Germans to fast track the intake of Kenyan workers.

The conference, organised by Friedrich Naumann Foundation in Nairobi, was convened to discuss this conundrum of demand in the North, oversupply in the South, and how to craft a win-win solution to it.

While it is true that Africa alone has more than enough people needed to solve the labour gap in Europe, the politics of the whole thing is not as easy as the rules of supply and demand.

In Europe, far-right political parties are soaring in popularity, as the local population dread over-foreignisation of their country. After waves of refugee influx from the war in Syria, now Ukraine, and the unstoppable voyages across the Mediterranean waters, Europe’s populations are unwilling to take in more.

In Germany, for instance, the success of the Alternative fur Deutschland (AFD) party in the 2017 election underscored the role of immigration in defining local politics.

Riding on “we will get our country back” slogan, AFD was able to appeal to 13 percent of voters and carved its place as the third strongest party in German parliament, and the first far-right party to enter parliament.

The nexus between attitudes towards immigration and its attendant political consequences is explored by Otto, A.H and Huang J in their 2017 study; “The relationship between and success of far-right political parties in Germany.”

The attitudes of the populations there does not however change the circumstances. The fact of the matter is that the Global North on the whole, including Germany, needs labour help in the immediate and the long term.

A survey conducted in Germany and UK by the Nairobi-based “Global Partnership Hub” of the Friedrich Naumann Foundation affirmed this cold fact.

Labour crises

Human resources professionals drawn from the two countries interviewed earlier in July confirmed acute skills and labour shortages in their firms, and said they expect it to worsen. The results of the survey were presented at the conference by FNF East Africa Project Director Stefan Schott.

“The results in Germany mirror closely with the UK. 77 percent and 74 percent of companies in Germany and UK respectively can only fill vacancies with great effort or not at all. Problems are almost exclusively encountered in the recruitment of medium and highly qualified staff,” Schott told the conference.

In the 600 structured, computer assisted interviews conducted by IPSOS, the HR professionals expressed deep concerns on demographic developments of their countries in the next five years, 77 percent of the worries registered in Germany, and 66 percent in the UK.

In both countries, the HR professionals are having greater problems recruiting software developers, IT security experts and data analysts. They also say technical consulting skills, customer relations management, communication and marketing experts are also increasingly getting difficult to locate.

To cover for these inadequacies, companies are going flat out to retain the staff they have, often with better, more flexible working terms. They are also seeking to retain older workers much longer, and to tap into potential workers in traditionally less covered groups such as women or immigrants.

“As many as a fifth of respondents from the UK want to relocate jobs abroad. In Germany, 15 percent of those surveyed want to do so,” the survey revealed.

At the conference in Nairobi, participants drawn from academia, labour, government, union, media and politics discussed a model which appreciates all these concerns, but delivers for both sides.

The model proposed by a policy paper co-authored by Schott and journalist Alphonce Shiundu on behalf of FNF recommends wider deployment of digital grids to balance between the migrations fears of the North and the Southerner’s hopes for decent, well-paying jobs for its young people.

Dubbed “Globalisation 2.0, a new concept for sharing skills and labour between the Global Ssouth and North”, the model proposes to meet the acute labour demands of the North and the implosion of joblessness in the South, right in the middle.

In the plan still at conceptual level, countries in the South will leverage on digital networks to get their young people working digitally for formal jobs in the North, without having to physically immigrate to those countries.

The concept goes beyond the much more flexible “gig economy” arrangement as well as the traditional business process outsourcing (BPO) industry which have been going on for years. According to Prof Karl Heinz Paque, the global chair of the FNF board, migration only appears to be a solution until many other factors are put on a weighing scale.

“Leaving your home country is always difficult. Those who have to do it anyway out of necessity usually pay a high price by having to leave family and friends behind. However, the integration of many people is also a challenge for the destination countries,” he said.

After the large waves of refugees in recent years, the willingness to take in more people is limited. The alarming electoral success of populist and far-right parties in many European countries is largely a result of the fear of a supposed foreign infiltration, he told the conference.

“We therefore want to discuss a model that enables the advantages of a division of labour between North and South while avoiding the disadvantages of migration.  I am referring to virtual cooperation via digital networks,” Paque added. 

The economist professor says the conditions for this have never been better, especially after the pandemic when many companies realised that all their employees need not actually sit in the same space for work to move.

In the aftermath of the pandemic, companies realised that technology was offering more solutions than they were willing or able to appreciate. It is this reality that FNF is pushing actors at political level to begin appreciating. Germany Deputy Ambassador to Kenya Alexander Fierley says as far as his country is concerned, the urgency is more than real. As of now, the country is grappling with nearly two million unfulfilled vacancies.

“There is a real risk that our social security systems will collapse. We have a reproduction rate of 1.53 children per woman. That is by far too low to keep our economy and our social welfare system running. For instance, today 3 employees are paying for one pensioner. In 2050, two employees will have to pay for one pensioner,” he told the conference. 

Because there are certain jobs which require physical presence of the employers, and which too are increasingly getting hard to fill in Europe, Fierley suggested a parallel approach – digital cooperation and legal immigration of skilled workers.

Germany has already reformed its immigration laws, giving people from other countries who want to work, study or engage in vocational training in Germany far much better prospects. Kenya is also working on a Bill to regulate migration of its labor force.

Kuria feels that the FNF and other players engaged in these labour conundrum discussions are dragging their feet. They are preaching to the converted, he told the conference.

“As we speak, I have thousands of graduates from our National Youth Service (NYS) training waiting on the line. We need to move to the next level of action, not just talk about it,” he said. 

The FNF policy paper says sharing labour and skills digitally presents much more benefits to both sides than physical migration. It not only addressed the migration fears of the North, but presents an economically better, multiplier effect on Global South economies.

Whereas the UN estimates that people working abroad send home 15 percent of their income, the FNF model proposes to push this to 100 percent, in addition to other benefits such as local taxation, and involvement of the laborers in other social development aspects of their countries.

But the model is also fraught with challenges as was discussed in the conference. First, it is not entirely new as various aspects of it such as the gig economy and BPO are already happening.

Second it works on a number of assumptions such as sound digital infrastructure in the South, adequate skilling and education of South populations, and sound support structures for the grids.

For instance, recent developments in Kenya have suggested that while many Kenyans have access to education, they are not particularly skilled in basic aspects of education such as communication and language.

Many Kenyan nurses hoping to land placement in the UK failed basic language proficiency tests, pointing much more to quality aspects of training than access to education.

“In addition to the sheer quantitative challenge, it is also a question of improving the quality of education to enable potential employees to compete internationally. It would be mutually beneficial for both sides if education policies are enacted with consideration to the demands of the international labour market,” the policy paper recommends.

Legal frameworks

Other aspects that need to be worked on include creation of reliable legal frameworks which adequately define labour and social standards. This will aid in taming malpractices such as over-exploitation, intellectual property theft and other ills associated with labor.

At the conference, Prof Thomas Straubhaar, a Swiss economist and professor of migration at Hamburg University, told the conference of the three epochs of globalisation 1.0 which is the past, de-globalisation which is the present and globalisation 2.0, the future.

“What Globalization 2.0 is proposing to do is to reduce uncertainty of the present age, to improve the resilience of markets, riding on digitalisation to reduce costs of global transactions. What is in dispute is how to regulate this new world, how to distribute the benefits and how to get the people to begin to appreciate the emerging fact that human capital is the new capital,” he said.

[Nzau Musau, a senior projects manager with Friedrich Naumann Foundation co-edited the paper “A new model for the globalisation of the world of employment” alongside Ralf Erbel]

Business
Over 200 business leaders convene in Nairobi to chat new leadership strategies
Business
Treasury mulls budget cuts if Finance Bill 2024 fails
Business
Anti-budget push could yield fruits that poison Ruto, IMF relationship
Business
Manufacturers have their way as MPs drop disputed levies