Social security facing increased mobility of the global workforce
Worldwide, there are over a billion internal and international migrants. One driving factor for migration is often the search for better conditions of work and employment, which for many is inseparable from access to social security coverage. As part of national and international efforts to ensure adequate social security rights for all workers and their dependants, a new ISSA Handbook on the extension of social security to migrant workers (1) underlines why meeting the social protection needs of increasing numbers of migrants is a growing necessity.
Among the billion-plus internal and international migrants globally, international migration represents over a quarter of flows. However, and linked to the megatrend of evolving labour market structures (www.issa.int/megatrends), the patterns of international migration are changing. Once predominantly regarded as a global South–North issue, there are now greater South–South migrant flows. Nonetheless, patterns of North–North migration and South–North migration remain significant.
Internal migrants moving within the frontiers of their country of origin constitute over 10 per cent of the world's population, and a significant 40 per cent of these are residents of Asian countries. In turn, substantial flows of rural to urban migration are seen in many countries. Most notably, this is the case in India and China. It is estimated that half of workers in urban China are rural migrants. In 2013, there were a total of 269 million farmer-turned migrant workers in China alone.
From a national perspective, covering migrant workers is essential if social security systems are to meet strategic national coverage objectives. Also, owing to their number and often marginalized position in labour markets, such coverage extension is important if the international community is to make progress towards achieving, at least, basic social security for all – over 70 per cent of the global population does not have adequate access to social security.
No less important is that rights to social security gained through previous contributions paid to one social security system are portable to another, either in the same country or abroad. The "portability" of social security thus refers to the ability of an affiliate to preserve, maintain, and transfer benefits between social security programmes, normally underpinned for international migrants by a bilateral or multilateral agreement.
Bilateral or multilateral agreements
According to the available data, there are large regional differences in the extent of such agreements – in 2009, the EU and Western Europe had 1,628 bilateral or multilateral agreements in place (including 1,034 intra-EU agreements), compared with 181 in East Asia and the Pacific, three in South Asia and 102 in Africa (excluding Reunion).
Specific examples of multilateral initiatives include the General Convention on Social Security of West African States (ECOWAS); the Conference interafricaine de la prevoyance sociale (CIPRES) of Central and West Africa; the Multilateral Ibero-American Convention on Social Security; the Caribbean Community (CARICOM) agreement on social security; Latin America's MERCOSUR SIACI agreement; the Unified Law of Insurance Protection Extension to Gulf Cooperation Council (GCC) Member States Citizens Working in other GCC Member States; and the Eurasia region's Baku Declaration and Framework Guidance Document.
The absence of such agreements between migrant sending and host countries is likely to act as a disincentive to workers to affiliate or comply fully with social security contribution requirements in particular. It may thus also incentivize informal forms of work and employment. Generally, the lack of portability increases the potential vulnerability of many migrant workers while they work in the host country and, at a later date, owing to the inability to transfer earned rights, when they return to their home country.
The public policy challenges of migration
Migration presents different policy challenges for migrant sending and receiving countries. For migrant-sending countries, the economic impact of the earnings of nationals working abroad can be significant – the remittances sent home by such workers exceed 10 per cent of gross domestic product (GDP) in a number of countries, including Nepal and the Philippines.
For migrant-receiving countries, there are many economic, demographic and social impacts of such flows, a number of which are beneficial including:
- Bringing a range of skills and competencies that may not exist or be in short supply in the host country.
- Migrant workers are often entrepreneurial and hardworking.
- Migrant workers are commonly in the cohort aged 20–39 and, on average, tend to be younger than the general population, which may help to rejuvenate the host country's demographic profile.
Social security and migrants
There are many reasons why national social security systems should extend coverage to migrant workers and their dependants. Over and above meeting their basic needs and social protection requirements, these include advantages for social security systems in particular and society in general:
- Social security systems provide essential benefits and services to help mitigate the risks faced by what are often vulnerable sections of the working population. There is an affirmed human rights reason for extending coverage to such workers.
- Wider social security coverage enhances social cohesion, facilitates economic growth and strengthens public support for social security schemes.
- Coverage of migrant workers may be seen as important for equity reasons by the non-migrant population (for example, in the case of overseas-posted workers).
- Migrant workers may help improve the demographic situation of a country and are often net contributors to the social security system over their lifetime.
- Covering migrant workers strengthens other efforts to formalize the informal sector, encourages and supports mobility of employees and provides safeguards to prevent the exploitation of migrant workers.
Administering social security for migrants
The inclusion of migrant workers in social security programmes can nonetheless pose a challenge to social security administrations. This is because the characteristics of migrant workers – short careers in the host economy, with frequent job change; often active in the informal sector; separated from dependant family members; and so on – are different from the majority of workers. In addition, migrant workers tend to be less subject to the typically assumed employer/employee relationship on which many social security systems were set up.
Box 1. Challenges to extending coverage to migrant workers
- Difficulty in predicting the numbers and characteristics of migrant workers. Studies show migrant workers are typically the first affected in economic downturns and the volatile flows of such workers pose challenges to social security administrations in terms of management and planning.
- Migrant workers represent a heterogeneous group – from poor and vulnerable, very often female, workers in informal-sector activity to high-earning, professionally-mobile employees.
- Often very different cultural and linguistic backgrounds that make coverage efforts particularly difficult.
- The separation of such workers from dependant family members, which increases the challenges of appropriately covering the worker and his or her family.
- Information gaps regarding the personal situation of migrant workers; their personal information may not be entered in national data systems and they may not use the same support groups as host-country citizens.
- Migrant workers are often active in the informal sector and have generally shorter working careers. This has implications for their benefit entitlements (for example, in systems with relatively high minimum service requirements – i.e. period of residence or contribution effort), the portability and transferability of benefits, and the role of the employer in collecting and paying social security contributions.
- The administrative requirements related to the coverage of such workers is often significant; this may include the requirement to coordinate with other agencies, often abroad via the terms of bilateral or multilateral agreements, to manage the often complicated personal and contribution records of migrant workers and the need to communicate in different languages.
- Due to their more fragmented work histories, migrant workers often accrue significantly lower levels of retirement benefit than their non-migrant worker equivalents. This may be due to periods without coverage, "back ended" accrual rates or failure to meet minimum service requirements. While some issues may be addressed by multilateral agreements, the adequacy of retirement benefits remains a key challenge.
- Bilateral agreements are most commonly found between countries with organized labour migration programmes, thus potentially marginalizing or excluding migrant workers from countries with weaker formal links to the host country. Some agreements, such the Ibero-American Multilateral Convention on Social Security, signed by Spain, Portugal, and 12 Latin American countries, may address the exportability of the payment of benefits, but not the full portability of rights.(2)
- Those who move under the protection of a bilateral or multilateral social security arrangement between their origin and host country;
- Those who have access to social security benefits without bilateral agreements;
- Those without access to old-age pensions and other long-term benefits, but with access to non-portable short-term benefits such as health care; and
- Those engaged in the informal economy with very limited access to social security in the host country.
Measures to facilitate migrants' coverage
In response to the challenges, a number of policy, administration, management, communication and home-return measures can improve the coverage of internal and international migrant workers.
- Extending coverage to migrant workers by including them in the definition of workers covered by social security legislation or by adapting benefits and contribution structures. Concerning the latter, such measures include reducing vesting requirements and waiting periods and simplifying contribution calculations.
- Setting up voluntary plans for workers abroad (e.g. Albania, El Salvador, India, Mexico, Sri Lanka) with benefits tailored appropriately to their situation (e.g. retirement savings, medical expenses, travel grants and family benefits).
- Ensuring the accrued rights of migrant workers are safeguarded and that the transferability and portability of benefits are guaranteed.
- Improving portability among schemes in the same national jurisdiction and in different countries through the harmonization of benefit rules and setting down the procedures for recognition, transfer and payment of accrued benefits as well as ensuring appropriate coordination between different social security institutions to ensure the effective management and administration of cases.
- Improving the adequacy of benefits for migrant workers provided by compulsory and voluntary schemes through effective financing mechanisms and by creating incentives/removing disincentives to encourage migrant workers to participate in programmes.
- The role of multilateral and bilateral agreements is particularly important. Such agreements should reflect a number of principles including equality of treatment of migrant workers, that the social security benefits of the worker (e.g. a contributory old-age pension) should be paid by a social security system in one country only, that his or her acquired rights are protected and that the mechanisms and financing of the payment of benefits from different sources is detailed and carried out effectively. The success of such agreements depends on the administrative and management capacities of the social security institutions involved.
- Working closely with stakeholders and migrant worker organizations to support affiliation efforts.
- Setting up mobile offices and simplified procedures and sign up requirements to encourage affiliation.
- Assessing the implications of, and putting into practice, bilateral and multilateral agreements, including record keeping, information provision, payment mechanisms and coordination with agencies nationally and in other countries.
- Effective use of ICT to record, track and calculate entitlements and facilitate coordination with other social security systems and stakeholders.
- Measures supporting family members, including tailored benefits and administrative support (for example, the emission of two ID cards allowing the migrant worker and the dependant spouse to claim benefits even when in different geographical locations).
- Cultural education on social security targeted at migrant workers and at the local population and provided in different languages and delivered using the most appropriate communication channels which addresses individual needs at different life stages.
- Offering support to migrant workers when returning home (this may be in the form of travel grants and facilitating reintegration into home-country social security systems and the labour market).