Migration flows to OECD countries rose slightly in 2018, with around 5.3 million new, permanent migrants, a 2% increase over 2017. Family and labour migration increased, while the number of asylum applications fell sharply, according to a new OECD report.
The OECD International Migration Outlook 2019 says that asylum applications decreased to 1.09 million in 2018, 35% fewer than the record high of 1.65 million requests registered in both 2015 and 2016. Most asylum seekers came from Afghanistan, followed by Syria, Iraq and Venezuela. Because of the drop in asylum applications, the number of registered refugees also declined, falling by 28%.
Migrants’ employment prospects continued to improve in 2018, building on the positive trends observed during the last five years. On average across OECD countries, more than 68% of migrants are employed and the unemployment rate has fallen below 9%. However, young immigrants and low-educated immigrants still struggle in the labour market.
Temporary labour migration increased significantly in 2017, reaching 4.9 million, compared to 4.4 million in 2016. This is the highest level since the OECD started reporting these numbers more than a decade ago. Poland is the top temporary labour migration destination, surpassing the United States. In the European Union (EU) and the European Free Trade Association (EFTA) area, workers “posted” by their employers to work in other EU/EFTA member states represented the largest single group for temporary workers, with almost 2.7 million postings.
“The significant increase in temporary labour migration is a sign of the dynamism in OECD labour markets but also of their integration,” said OECD Secretary-General Angel Gurría, launching the report in Paris. “Temporary migrants bring skills and competences that are needed by employers.”
Some temporary labour migrants stay for a few weeks, others for several years. The contribution of temporary migrants is sizeable in some OECD countries. In 6 out of the 20 countries with available data, temporary labour migrants add more than 2% to the resident employed population.
The Outlook also finds that OECD countries continue to adjust their labour migration programmes to improve selection and favour needed skills. A number of countries have also reformed their entry processes for migrants who are investors or have created new programmes for migrants developing start-ups. Some countries have introduced restrictions to family reunification procedures or streamlined their asylum procedures.
Family migration, where people migrate with, or to join, family members, increased by 9% and labour migration by 6%. 2018 also saw a sharp rise in the number of international students enrolled in tertiary education across the OECD, increasing by 7%, to over 3.5 million. The United States, the leading destination, however saw a decrease in student flows and a shrinking OECD market share.
Family migrants comprise 40% of total inflows, more than any other category. This broad category includes natives of OECD countries bringing spouses from abroad, but also immigrants arriving with accompanying family, or sponsoring their reunification. More than half of immigrants who have family did not bring their family with them at first.
Delays in reunification affect spouses and their integration prospects, especially for women. The report identifies a possible trade-off between stringent conditions on the integration of the principal migrant before family reunification is allowed and the integration of the spouse. Long delays can also hurt the integration outcomes of migrant children, reducing their host-country language proficiency and education outcomes.
Concerted Action Needed to Address Unique Challenges Faced by Pacific Island Countries
Small island developing states (SIDS) must position themselves to take full advantage of often limited, but nonetheless available, opportunities to improve standards of living and accelerate economic growth, according to the latest issue of the Asian Development Bank’s (ADB) Pacific Economic Monitor launched today.
The Monitor focuses on addressing the development needs and challenges of the Pacific SIDS, which in the context of this publication are the Cook Islands, the Federated States of Micronesia, Fiji, Kiribati, the Marshall Islands, Nauru, Palau, Papua New Guinea (PNG), Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu.
The Monitor notes that the geographic and physical challenges faced by SIDS manifest in elevated cost structures and heightened economic vulnerability that severely constrain development prospects. These are further compounded by fragility from thin institutional capacities for effective governance and increased climate change risks.
“Development challenges stemming from vulnerability and fragility, which are further amplified by climate change impacts, call for a differentiated approach to long-term development among the SIDS,” said ADB Director General for the Pacific Ms. Carmela Locsin. “Sustainable development financing as well as innovative, fit-for-purpose strategies for institutional strengthening are central to such an approach.”
This is the 28th issue of the Monitor, the ADB Pacific Department’s flagship economic publication, which was launched in 2009 to provide more regular economic reporting on the Pacific islands. It reveals that a weak external environment is translating into a softer 2019–2020 outlook for the Pacific through subdued exports. The subregional outlook is for average growth of 4.0% in 2019 before moderating to 2.5% in 2020, largely reflecting weaker prospects in Fiji and a return to low growth in PNG as the ongoing recovery from last year’s major earthquake fades.
The Monitor includes country articles as well as policy briefs. Country articles feature analyses of labor productivity and youth unemployment in Fiji, fishing revenues in Kiribati and Tuvalu, and how various SIDS manage unconventional revenue streams. Other articles focus on recent fiscal adjustments in PNG, sustaining tourism-led growth in the Cook Islands, improving the business environment in Palau, Samoa’s ability to rebound and build resilience after disasters, and urbanization issues in Tonga.
Topical policy briefs in the report further examine the common development challenges faced by SIDS. The first policy brief discusses the structural constraints to long-term development among SIDS and highlights the crucial role of sustainable development financing to overcome these. Another policy brief mapping fragility in the Pacific shows that although some progress has been made over the past decade to strengthen institutional capacities among SIDS, there is still work to be done. Other policy briefs outline key takeaways from some Pacific atoll nations at the frontlines of climate change, and explore poverty reduction challenges in small island developing states, with special reference to PNG.
The Pacific Economic Monitor is ADB’s bi-annual review of economic developments and policy issues in ADB’s 14 developing member countries in the Pacific. In combination with the Asian Development Outlook series, ADB provides quarterly reports on economic trends and policy developments in the Pacific. The Monitor welcomes contributions of policy briefs from external authors and institutions.
Weak Outlook in GCC Due to Muted Oil Prices & Global Trends
Economic growth in the Gulf Cooperation Council (GCC) was significantly weakened in 2019 due to muted oil prices and excess oil supply, according to the new World Bank’s Gulf Economic Update released today. As a result, overall real GDP growth in the GCC is estimated to drop to 0.8% this year compared with 2% last year. While most GCC countries retained strong external positions in 2019, the ongoing slowdown in China and the continued global trade war are hindering their efforts to boost non-oil exports. Meanwhile, resurgent geopolitical risks are raising risk perceptions, which could hurt prospects for investment.
This issue of the Gulf Economic Update, titled “Economic Diversification for a Sustainable and Resilient GCC”, explores ways in which GCC countries can pursue diversification that is environmentally sustainable and resilient to global megatrend. Many countries in the region have pursued ‘traditional diversification’, meaning diversifying away from hydrocarbon production but towards heavy industries that still depend on fossil fuels. The emissions-intensive nature of ‘traditional diversification’ has increased the GCC countries’ exposure to disruptive low-carbon technologies, international policy efforts to address climate change, and negative public perceptions of fossil fuels and their derivatives.
“As GCC countries strive to diversify their economies, they should ensure that diversification strategies are aligned with environmental sustainability goals,” said Issam Abousleiman, World Bank Regional Director for the GCC. “Ensuring that the Region’s diversification efforts are climate-friendly is critical not only for environmental sustainability but also to help the GCC invest in sources of growth that are resilient to global technology and policy impacts.”
The report suggests three ways to help align diversification strategies to environmental sustainability objectives.
First, ensuring that diversification strategies take an ‘asset diversification’ approach; one that moves beyond the concept of diversifying output and broadens the composition of a country’s national wealth to include human capital, in addition to natural and produced assets.
Second, GCC countries can hedge the risks of traditional diversification by liberalizing energy and water prices, scaling up investments in renewable energy and carbon capture and storage to help mitigate the impacts of climate change. Energy subsidy reform and increased investment in renewable energy are already underway in the Gulf.
Third, the GCC must establish effective environmental management institutions and practices to ensure that the region protects its fragile ecosystem and reduces environmental cost of industry as it invests heavily in new sources of economic growth.
GCC Countries Outlook
Bahrain: Bahrain’s economy is expected to grow at a moderate rate of 2% in 2019 and average 2.3% over 2020-21, driven by the non-oil sector. Nonoil GDP growth will be driven by an increase in manufacturing output and higher levels of infrastructure spending.
Kuwait: Kuwait’s growth rate is expected to dip to 0.4% in 2019 before picking up to 2.2% in 2020, as the OPEC production cuts expire, and 2% in 2021, as the government increases spending on oil capacity enhancements and infrastructure to boost the non-oil sector.
Oman: Oman’s growth rate is projected to accelerate from an estimated 0% in 2019 to 3.7% in 2020 and 4.3% in 2021, supported by rising natural gas production. The potential boost from the diversification investment spending would continue supporting growth in the medium term.
Qatar: Qatar’s economy is projected to grow by a modest 0.5% in 2019 before accelerating to 1.5% in 2020 and 3.2% in 2021. Growth will be driven by a boost in gas production as the new Barzan Project starts operations as well as by the non-oil sector supported by the government’s investment program targeting infrastructure and real estate.
Saudi Arabia: GDP growth rate will likely slow to 0.4% in 2019 driven OPEC’s oil supply reduction drive, before rising to 1% in 2020 and 2.2% in 2021.
United Arab Emirates: GDP growth rate is projected to stabilize at 1.8% in 2019, before accelerating to 2.6% in 2020 and 3% by 2021, driven by government stimulus and a boost from hosting Expo 2020.
Tax revenues have reached a plateau
Tax revenues in advanced economies reached a plateau during 2018, with almost no change seen since 2017, according to new OECD research. This ends the trend of annual increases in the tax-to-GDP ratio seen since the financial crisis.
The 2019 edition of the OECD’s annual Revenue Statistics publication shows that the OECD average tax-to-GDP ratio was 34.3% in 2018, virtually unchanged since the 34.2% in 2017.
Major reforms to personal and corporate taxes in the United States prompted a significant drop in tax revenues, which fell from 26.8% of GDP in 2017 to 24.3% in 2018. These reforms affected corporate income tax revenues, which fell by 0.7 percentage points, and personal income tax revenues (a fall of 0.5 percentage points).
Decreases were also seen in 14 other countries, led by a 1.6 percentage point drop in Hungary and a 1.4 percentage point drop in Israel. In contrast, nineteen OECD countries report increased tax-to-GDP ratios in 2018, led by Korea (1.5 percentage points) and Luxembourg (1.3 percentage points).
In 2018, four OECD countries had tax-to-GDP ratios above 43% (France, Denmark, Belgium and Sweden) and four other EU countries also recorded tax-to-GDP ratios above 40% (Finland, Austria, Italy and Luxembourg). Five OECD countries (Mexico, Chile, Ireland, the United States and Turkey) recorded ratios under 25%. The majority of OECD countries had a tax-to-GDP ratio between 30% and 40% of GDP in 2018.
Corporate income tax revenues continued their increase since 2014, rising to 9.3% of total tax revenues across the OECD in 2017. This is the first time corporate income tax revenues have exceeded 9% of total tax revenues since 2008.
In contrast, the share of social security contributions in total tax revenues continued the consistent decline seen in recent years, dropping to 26% in 2017, compared to 27% in 2009. Other tax types have not exhibited a clear trend in recent years.
This year’s report contains a Special Feature that reconciles data on environmentally related tax revenues in Revenue Statistics with the OECD Policy INstruments for the Environment (PINE) database. This exercise provides higher-quality data for policymakers and researchers in this important policy area.
The Special Feature shows that environmentally related tax revenues accounted for 6.9% of total tax revenues on average in OECD countries in 2017, ranging from 2.8% in the United States to 12.5% in Slovenia and Turkey. As a share of GDP, environmental taxes account for 2.3% on average, with country shares ranging from 0.7% in the United States to 4.5% in Slovenia. The largest share of ERTRs is derived from energy taxes, both on average and in nearly every OECD country, accounting for nearly three-quarters of ERTRs, according to the report.
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