I spent the past few months piloting a labor mobility project. I'm sharing what I learned here to help EA-minded entrepreneurs in the space get up to speed quickly.
Migration is an vast space. Migration occurs between thousands of origin-destination country pairs, across dozens of industries. There are refugees, economic migrants, family migrants. Every region in each destination country seems to have its own rules. I hope this post will help other entrepreneurs get up to speed faster than I did.
The opportunity in skill-trade migration
OECD countries are facing labor shortages in skill-trade workers in fields like construction and healthcare. For example:
- There is a global gap of 7 million workers in green energy alone.
- Canada has 40k+ job vacancies in construction work.
- The UK’s NHS has over 100k+ unfilled jobs.
The driver is straightforward demographics: There are less young people in rich countries to do these jobs.
In rich regions working age to old age ratio has halfed since 1960 and is expected to half again by 2050.
In a growing number of cases, governments are realizing the labor needs and are making visas available for workers in critical fields. For example, the UK does not cap visas for skilled workers. But obviously, there are a lot of frictions in hiring a worker from abroad, such as validating certifications, getting visas, booking flights, and establishing trust from both the employer and the employee that this job will work out.
The market to solve these problems is tens of billions of dollars. Increased skill-trade migration will be a huge trend over the next 30 years. Significant new businesses will be built in skill-trade migration.
It is also an area where there is enormous impact to be had.
- The migrant benefits by 3-10xing their income, gaining new skills, and improving their quality of life.
- The origin country benefits from remittances (typical migrant sends $1k+ home per year) + a stronger incentive for human capital investment.
- The destination country fills critical labor gaps.
Learnings from looking into the space
Over the past few months, I explored the possibility of starting an organization facilitating migration of nurses or construction workers from Africa to the UK and Canada, and had 50+ conversations with nurses, construction workers, recruiters, prospective employers, and experts.
Here are some of my key conclusions.
1. You don't need a huge operation to make real money.
You can make profit of a few thousand dollars per worker moved, assuming the employer pays you a headhunter fee, or the migrant pays you an income-share agreement. Assuming you don’t have any employees, you only need to move 30-50 workers per year in order to make a comfortable living.
I would love to see a bunch of operations that are one person, using a bunch of AI tools, to move 50-100 workers per year within a very specific niche. Who is the person who will get Tanzanian solar installers moving to Sweden? Nigerian electricians moving to Italy? Many pockets of opportunity.
2. Many have worked on labor supply, but not on labor demand.
There are a lot of nonprofits and funders who, for impact reasons, want to help Africans find jobs abroad. None of them understand in detail the needs of employers in rich countries.
My advice for any entrepreneur working in the space is talk to your customers, talk to your customers, and talk to your customers.
3. Visa and certification requirements are complex.
Prospective migrants don’t know how to navigate visa applications, certification requirements, or English tests. At times it seems processes are kept deliberately complex so that middlemen can benefit.
There is clear opportunity for non-profits to provide legibility here (like Rahi Impact). Perhaps for-profits too, as part of a wider suite of offerings.
4. International actors are overly cautious.
Offering someone the chance to move from Africa to Canada is to offer them a chance to 5x their income. On its face, in this situation there is no moral problem with charging that person a fee for providing them this opportunity. But the international norm is to say that under no circumstances can migrants pay anything.
Similarly, the WHO advises rich‑countries not to do healthcare recruitment from a series of redlist countries. The red list list is built on crude head‑count ratios and a generic universal‑health‑coverage score. Of the 54 countries in Africa, 40 are on the red list, and the nurses in those countries who want to find opportunities abroad are not happy that the international community is providing obstacles from them.
International actors have overcorrected their stances in response to very valid concerns about exploitation, and less-valid concerns about brain drain. There is potential for policy advocacy to shift some of these policies to be more migrant-friendly.
5. It’s tough for new players in UK healthcare space.
Africa→UK nurse migration was the pocket I looked into most deeply and I think it would be pretty hard for a new entrant to enter the market here.
- Demand for nurses is much lower than it was 3-4 years ago.
- The focus within the NHS has shifted to improving nurse retention.
- There are shakeups within the NHS over the past few months.
- Trust is incredibly important in nursing recruitment. And there are already trusted and approved agencies in place, who to some extent have captured the NHS.
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If you are an entrepreneur making migration work better and want to chat, email me at [email protected].
How confident are you that the destination country benefits? The most detailed recent study I have seen on this, The Long-Term Fiscal Impact of Immigrants in the Netherlands, Differentiated by Motive, Source Region and Generation, found significantly negative effects on public finances from non-western migration. Unfortunately they didn't do the cross-tabs to show non-western labour-motivated migrants, but based on my eyeballing I think the impact would be negative.
A good question - and actually partially answered in the document you linked. Labour migrants contribute to public finances, while students/family/refugees do not.
In cases where a skill-trade worker is migrating alone, the net fiscal benefit (not including other benefits) is clearly positive. In cases where a skill-trade worker is migrating along with family members, the fiscal impact may end up zero or negative.
But even in those cases - fiscal impact is not everything. In a industry like Canadian construction, where companies are not able to complete projects because they don't have workers, bringing in skilled labor has positive economic and infrastructural benefits beyond the tax dollars those immigrants pay.
Overall I'm confident that supporting workers to fill skill-trade jobs where there are shortages in the destination country will result in a net positive impact on the destination country.
Labour migrants in aggregate contribute positively, but you are focused on non-western migration specifically, which the paper suggests has significantly worse effects than the average labour migrant. They find the average 30year old non-western migrant has a net impact of -EUR125k, or -EUR772k if he brings his family, and that the average 30year old labour migrant has a net impact of ~ +EUR175k (eyeballing the chart). They don't show the intersection, but given that people often do bring their families, and 30 year old is basically the most-favourable-age possible, it seems very likely to me that the combination of non-western background and labour motive is negative.
A good push. This kind of analysis will look different by the destination country's level of social spending - Denmark has particularly high social spending.
And still seems quite likely that for skill-trade jobs with positive externalities (construction, healthcare) where the destination government is trying to attract foreign workers that the net societal impact is positive even in cases where the fiscal impact is negative.
But the picture is not as clear as I assumed - thank you.