DUBAI – In September 1960, delegates from Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela met in Baghdad to form the Organization of Petroleum Exporting Countries. As the world’s dependence on oil increased, so did OPEC’s power. Today, with many developing countries, including a majority of the countries in the Middle East, serving as some of the world’s main labor exporters, might it be time to consider the formation of an OPEC-like cartel for migrant workers?
OPEC succeeded in protecting its members’ shared interests that they could not protect individually. When a market has structural distortions, political tools and collective action of the sort that OPEC embodied can be more effective than public policy.
Labor-exporting countries today are not so different from OPEC’s founding members in 1960. They, too, are vulnerable in a market where their customers call the shots. Rich labor-importing countries and poor labor-exporting countries have a mutually dependent relationship; but labor importers can unilaterally tighten or loosen immigration or labor-market regulations, leaving exporters in a constant state of uncertainty.
This imbalance can have serious costs for labor exporters. Remittances by expatriate workers are an essential lifeline for many developing countries – more so than any other financial inflows, including foreign direct investment and aid – and often help to balance a country’s books. Indeed, according to the World Bank, in 2013 remittances amounted to 20-24% of GDP in the Philippines and Indonesia, 42% in Tajikistan, 32% in Kyrgyzstan, 17% in Lebanon, 10.8% in Jordan, 9.9% in Yemen, and 6.6% in Egypt and Morocco.