Post-pandemic transformations

The strong grip of COVID-19 on our lives has loosened, along with “normalcy” being restored in the daily workings of most socioeconomic and cultural institutions, mirroring the pre-pandemic era. However, there have been visible social transformations (temporary and structural) driven by the pandemic, and the domino effect of these changes can be observed across regions. For instance, decisions taken by different developed countries and pharmaceutical companies to safeguard their interests had a large domino effect on developing countries in terms of shortages of vaccines and unequal distribution of health-care products and services, which in turn caused declines in the quality of general health care and hampered recovery in affected countries.¹⁹ The pandemic also induced long‑term changes to consumption patterns in developed and developing countries. For example, prior to COVID-19 in the United States, retail products and services such as groceries and health care were resistant to e-commerce platforms. However, during the pandemic the adoption curve bent significantly upward, changing consumption patterns and thereby widening the use of e-commerce platforms to include daily grocery shopping, resulting in estimated e-grocery sales of approximately 150 billion United States dollars (USD) in 2020.²⁰

Another major post-pandemic phenomenon was the coupling of high inflation and global economic slowdown. In the second quarter of 2022, Global GDP growth began to stagnate at around 3 per cent, and was projected to further slowdown to 2.25 per cent in 2023.²¹ The key factor in the global growth slowdown is the ongoing tightening of monetary policies in major economies, in response to high inflation.²² The effect of the Russian Federation– Ukraine war has put additional upward pressure on prices, particularly for energy and food. These changes have been influenced or aggravated by lower migration. In conventional migrant-origin regions this has resulted in rising unemployment, inflation,²³ and intensification of State control.²⁴ (As an example of country-level insights, see the text box below for discussion on COVID-19 research in India.) In more developed migrant-destination countries, the impacts of lower migration have been historically low levels of unemployment, resulting in acute skills and labour shortages and the added inflationary pressure of rising wages. The impact of the post-pandemic transformations will depend on the longevity of these effects and the recovery path of different regions. Only time will tell how these post-pandemic transformations will affect future migration and mobility patterns.

Growth slowdown and remittances: a heavy burden for some?

The World Bank predicted that global remittance figures would decline by 20 per cent due to COVID-19 in April 2020, revised to 14 per cent in October 2020, in comparison to pre-pandemic levels.²⁵ However, remittance flows ended up declining by just 2.4 per cent globally, with USD 540 billion going to low- and middle-income countries in 2020,²⁶ just 1.6 per cent below 2019 levels.²⁷ In 2021, remittance flows grew by 7.3 per cent to reach USD 589 billion.²⁸

After controlling for economic activity and other pandemic measures, remittances responded positively to COVID-19 infection rates in migrant countries.²⁹ In short, migrants seem to send more money to support their family when the COVID-19 infection rate goes up, which functioned as an automatic stabilizer for the home country (in terms of their output and consumption). This phenomenon stands in opposition to the World Bank’s prediction of a pandemic-induced decrease in remittances, but is consistent with the Bank’s long-term observations that remittances are counter-cyclical: when other economic indicators go down, migrants send more money, to help their struggling families and communities at home. In addition, studies have established a long-term relationship between remittances and real GDP, wherein a 10 per cent increase in remittances was associated with 0.66 per cent permanent increase in GDP.³⁰

Some analysts point out that the increase in remittances could also reflect the switch in the mode of sending remittances from informal channels to formal channels that was induced by pandemic restrictions.³¹ Prior to the pandemic, evidence suggests that significant proportions of remittances were being transferred to families through informal channels (such as hawala or hundi or fei-chien networks, or in person).³² However, with lockdown measures, greater digitalization and reduced remittance transfer fees, migrants have undergone a behavioural switch, and have started relying more on formal channels to remit their transfers, as shown in the text box below.³³ Using flight arrival data, one study found that lower numbers of flight arrivals were associated with an increase in official remittances, after controlling for other factors.³⁴ A study using Mexican data revealed that the largest rise in remittances and bank accounts were registered in municipalities that were heavily dependent on informal channels during pre-pandemic times.³⁵

The resilience and recovery of remittances have not been universal. East Asia and the Pacific posted a decline of 7.9 per cent in remittances; in Europe and Central Asia they fell by 9.7 per cent, and in sub-Saharan Africa³⁶ by 12.5 per cent.³⁷ Several South Asian economies underwent international remittance shocks when oil prices collapsed in the initial phase of the pandemic, causing a sharp economic contraction across the Gulf region where many South Asian migrants reside.³⁸ This led to a sudden drop in foreign exchange earnings, which coincided with an increase in structural unemployment, and led to worsening welfare for millions of low-income families.³⁹ However, international remittance inflows to all major South Asian countries (India, Pakistan and Bangladesh) increased in 2021, with Pakistan recording the greatest growth over 2020 (19.6% compared to 8.0% for India and 2.2% for Bangladesh). A study of eight ASEAN (Association of Southeast Asian Nations) countries recorded a decline in income in 73 per cent of sampled households in 2021.⁴⁰ Thailand experienced an economic contraction of 6.5 per cent, which pushed the poverty rate up to 8.8 per cent.⁴¹

It has long been recognized that migrants make transnational contributions to their homelands and kin abroad that go far beyond remittances.⁴² The pandemic has drawn attention to the increasingly important role that contributions of time, money, expertise and connections from diaspora groups can make to the alleviation of human suffering.⁴³ Such contributions have been steadily growing in recent years, facilitated by the expanding ability of highly dispersed community members to maintain a sense of congregation using digital social media tools, which have become increasingly pervasive. A key reason for the growing attention paid to “diaspora humanitarianism” since 2020 has been that this trend has accelerated, with the rise of remote work providing a huge stimulus to tech companies that provided tools for online-only collaboration during COVID-19 lockdowns.⁴⁴ In addition, lockdowns severely restricted the ability of conventional humanitarian organizations to access crisis zones and provide assistance.⁴⁵

As a result, those in need in many parts of the world have had to depend almost exclusively on the contributions of friends and family living in more stable circumstances. The result has been, in some cases, a sense in crisis zones of having been abandoned by mainstream international humanitarian organizations, and a sense of increased solidarity with and dependence upon immediate family and community members, wherever they may be. This has also resulted in migrant groups, including refugee-led organizations, needing to become increasingly self-reliant, as international humanitarian responses have been deeply affected by COVID-19, as highlighted in the text box below.

In countries that experience political and climate challenges, such as the Sudan, COVID-19 increased the socioeconomic vulnerability of internal migrants.⁴⁶ Research on seasonal migrant workers in Eastern Sudan reported the inability to send remittances as a major constraint since the start of the pandemic,⁴⁷ and identified inflation as a significant ongoing threat to livelihoods.⁴⁸ Most Middle Eastern and North African countries have experienced high inflation,⁴⁹ and the price of staple foods has increased by more than 20 per cent in countries such as Djibouti, the Islamic Republic of Iran, Lebanon, the Syrian Arab Republic and Yemen.⁵⁰ The coming years will likely see ongoing uncertainty, transformations and counter-transformations.⁵¹ It is therefore important to monitor the recovery process closely, and to develop migration, diaspora and remittance policies that are holistic and shock resistant.

In a comparison between pandemic disruption and the global financial crisis, remittances to developing countries have fared far better in the pandemic. However, the recession in major destination countries was deeper during the pandemic than during the global financial crisis. A study showed that a 1 per cent increase in the number of COVID-19 cases per million population led to a 0.03 percentage point increase in remittances, on average.⁵² Regional specificities and recovery measures underscore how pandemic-induced changes in migration and labour‑mobility patterns are influencing the post-pandemic economy. Internal policy measures such as cash transfers work along with remittance inflows to safeguard economies against crises. In Latin America, there was an increase in public spending of 2.9 per cent from 2019 to 2020.⁵³ Cash transfers were widely deployed as a post-COVID-19 policy measure in this region.⁵⁴ Regional employment has not fully rebounded to pre-COVID levels, but the difference is now small.⁵⁵ Meanwhile, international tourism began to recover in the Caribbean.⁵⁶ According to International Monetary Fund (IMF) estimates in July 2022, growth in Latin America and the Caribbean is at 3 per cent, a significant reduction from 2021, but a healthy level by global standards.⁵⁷

On the other hand, European Union countries as well as OECD countries that are not members of the European Union are the origin of 55 per cent of remittances sent globally.⁵⁸ In particular, the United States, Switzerland, Germany, France and Luxembourg are among the top ten remittance-sending countries globally.⁵⁹ In the migrant‑destination countries, inflationary pressures were on the rise mainly due to increasing energy and commodity prices, production bottlenecks and rising demand.⁶⁰ According to the IMF, a quick recovery of economic activity in many of the regions has increased core inflation relative to levels before the crisis.⁶¹ The inflationary pressures have been the strongest in countries where demand (especially of consumer goods) has recovered the fastest.⁶²

Automation, digital outsourcing and the changing role of labour mobility in the global economy

Between its catastrophic impacts on the global airline industry and its lasting changes to patterns of community mobility as mentioned above, the long tail of COVID-19 is reshaping the role of mobility in economies everywhere. In particular, falling mobility rates have gone hand-in-hand with rising rates of digitalization and automation, in a mutually reinforcing pattern.⁶³

Growing digital transformation has major effects on migrants and migration processes. Because of the pandemic, migrants now increasingly rely on digital sources for information and remittance transfers while governments increasingly rely on new digital systems to manage migration.⁶⁴ Adapting to online service provision has been a key focus during the pandemic health crisis, especially to cater to migrant populations and other vulnerable groups. For example, 14 out of 27 European Union countries adopted or switched to online health-care service provision, including videos and tutorials in different languages, as well as online consultations.⁶⁵ While these integration technologies can support migrant populations, the designs, development and implementation of these technologies must centre human rights, and human rights must not be restricted by the limits of technical feasibility.⁶⁶

Meanwhile, increasing digital transformation is itself partially a result of changing migration and mobility trends due to the pandemic. For example, a key impact of movement restrictions has been to drastically reduce labour supplies to major economic centres. In the international context, this means fewer immigrants to the main destination countries, while in the domestic context it means fewer internal migrants and commuters to dense urban areas. These reduced levels of migration and mobility have led to extremely tight labour markets in cities across the developed world. In theory, a smaller supply of immigrant labour should lead to higher wages in destination regions. It should come as little surprise therefore that many labour economists have declared the post-pandemic period a golden era for workers, involving plentiful job vacancies, rising wages, so-called “quiet quitting” (in which employees put less effort into their work), and a “great resignation”.⁶⁷

In theory, higher wages should in turn stimulate innovation, as firms reduce their dependence on costlier (immigrant) labour by investing in labour-saving technologies. This too is a prominent feature of the post-pandemic economy. On one hand, this has involved automating tasks in agriculture, manufacturing and non-tradeable services such as retail, hospitality and health care that, in the several decades prior to the pandemic, had become highly dependent on migrant labour.⁶⁸ For example, despite an overall downturn in the technology start-up sector, AgTech firms such as United States-based FarmWise are attracting increasing venture capital to develop their autonomous weeding robots, based on demographic projections in which farmers are ageing and migrant workers are increasingly difficult to source.⁶⁹

On the other hand, automation has involved “digital outsourcing” from the higher-skilled sectors of service and knowledge economies. As firms struggle to find savings in the economic aftermath of the pandemic, one of the easiest decisions is to cut expenditure on business travel and downtown office space, while investing more in digital transformation in the hope of increasing productivity. The resulting digital outsourcing involves firms adopting online labour platforms to allow for tasks to be performed remotely, including legal and financial services, data analytics, software development and design, translation, transcription, image annotation and content moderation.⁷⁰

At the domestic level, increased digital outsourcing is contributing to much higher rates of working from home, and thus lower levels of commuter mobility. A widely cited econometric study suggested that remote work will persist because the pandemic jolted firms past the inertia tying them to unnecessary in-person work patterns, while reducing the stigma of working from home, catalysing a wave of innovative remote-work technologies, showing employees that remote work could be more satisfying, and demonstrating to employers that it could also be cheaper.⁷¹ During 2020/2021, there was strong evidence of counter-urbanization – internal migration away from cities – especially in high-income countries. In the United States, an estimated 37 per cent of jobs can be worked from home,⁷² and during the pandemic this allowed the average outflow of people from urban neighbourhoods to double in 2020.⁷³ Such reversals to decades of relentless urbanization went hand in hand with decreased mobility within and between cities, driven by mobility restrictions accelerating the adoption of remote work.

As part of these trends, “work from home” is metastasizing into “work from anywhere”, with substantial implications for the role of labour mobility in the global economy. At the international level, the rise of online digital labour platforms has accelerated a trend of firms in more developed countries outsourcing tasks to workers in less developed countries. Even before the pandemic, the bulk of labour demand on such platforms originated in countries such as Australia, Canada, Germany, New Zealand, the United Kingdom and the United States, while the resulting work itself was largely performed in countries such as India, the Philippines and Ukraine.⁷⁴ Prior to COVID-19, so-called “digital nomad” communities – predominantly comprised of professionals dependent on digital media – advocated for an alternative mode of work with the aid of ICT. However, COVID-19 presented an opportunity for non-nomads to experience the digital nomadic life, while digital nomads reflected on COVID‑19’s negative impacts on their highly valued “freedom to move”, forcing them to reassess the viability of nomadism.⁷⁵

These patterns are not uniform or universal; for example, there is much geographical variation in patterns of rural–urban migration and remote working since the pandemic. In 2020, Spain experienced net migration losses of 6 per cent from high density areas, and a drop of 15.4 per cent in urban migration; in contrast, sparsely populated regions saw net migration gains, and have now rebounded to pre-pandemic patterns.⁷⁶ Similarly, in the United Kingdom,⁷⁷ with the implementation of the Government’s European Union exit strategy in July 2021, there was a visible increase in mobility intensity across urban areas, which came close to pre-pandemic levels.⁷⁸ In 2020 Australia saw a net loss of 11,200 individuals from capital cities to less populated rural regions, along with a 52 per cent decrease in the use of public transport, and a reduction in demand for commercial space in cities of 24 per cent.⁷⁹ However, remote work cannot be extended to labour-intensive, tourism-heavy economies.⁸⁰ Tourism-dependent countries such as Aruba, the Maldives, Thailand, Antigua and Barbuda, Cambodia and Costa Rica have introduced policies and special funds to spur domestic and international tourism because tourism declined so drastically as a result of pandemic movement restrictions.⁸¹ They are not alone. International tourism rebounded by 4 per cent in 2021, but it remains far below pre-pandemic levels.⁸²

Health care and demographic effects: a scattered picture

There has been widespread criticism of pandemic interventions to control the movement of migrants, which have created barriers to accessing health and social services in countries of destination.⁸³ During the peak of the pandemic, internally displaced persons (IDPs) were unable to follow prescribed public health measures; combined with their already precarious living conditions, this led to markedly higher infection rates.⁸⁴ Rising racism and xenophobia sparked discussions on the status of migrants and the differences that arise in the provision of services.⁸⁵ However, the complexity of multi-pronged policy responses and the absence of recorded data at the global level makes it impossible to measure the overall impacts on migrants during the pandemic.

That said, many countries made robust efforts to address the specific needs of migrants during the pandemic (see text box on COVID-19 and regularization, below). Basic or emergency health care was guaranteed to migrant workers, irrespective of their status, in Argentina, the Republic of Korea, Thailand and 20 Member States of the European Union, amongst others.⁸⁶ Undocumented migrants were provided with free access to emergency health services related to COVID-19 in quite a few countries and municipalities around the world, including in Belgium, Croatia, Cyprus, Estonia, Greece, France, Finland, Israel, Italy, Lithuania, Luxembourg, Malta, Mexico, Spain, Poland, Slovakia, Slovenia, Sweden and Switzerland.⁸⁷ Some countries provided targeted public health materials and information for migrant populations. Migrants in Norway reported that they received sufficient pandemic information through official channels, which was correlated with high levels of trust in government and official sources.⁸⁸ Saudi Arabia and Bahrain have made recruitment companies take responsibility for migrants’ health insurance prior to departure, and have issued administrative circulars setting out guidelines for both employers and employees.⁸⁹

The wider health impacts of COVID-19 have demographic implications that may reshape future migration significantly. The pandemic disrupted child immunization programmes in several world regions, increasing the vaccination gap by 8 million, and led to the postponement of 60 lifesaving mass immunization campaigns in 50 countries affecting 228 million people.⁹⁰ Around 10.5 million children lost one or more caregivers.⁹¹ The health impacts of the pandemic have fallen more heavily on the developing world, in ways that will shape future demography and migration.

Major economies have been affected by both excess mortality and changing fertility patterns.⁹² France recorded its lowest birth rate since World War II.⁹³ Chinese authorities registered 15 per cent fewer babies in 2020:⁹⁴ annual births declined from 14.65 million in 2019 to 12 million in 2020, with a further decline to 10.62 million in 2021.⁹⁵ The resulting population crunch from lower fertility is set to cause future economic and debt crises. Governments will soon seek to repay debts they racked up to provide social support and financial stimulus during the pandemic. But because of lower birth rates, there will be fewer taxpayers to shoulder this burden. This will hamper growth and force many countries to simultaneously raise fertility, recruit more migrant workers in key sectors, and invest in more in automation of key jobs.