Social Protection for International Migrants Access to and Portability of Social Security Benefits

1. Social Protection for International Migrants Access to and Portability of Social Security Benefits Johannes Koettl Human Development Network – Social Protection and Labor Migration and Development Thematic Group BBL December 14, 2006

2. Background • Commissioned work for the GCIM on portability (2005) • Recent work on social protection for migrants in general • Access to social services in host and home countries • Portability of social security entitlements • Portability: ability to preserve vested social security entitlements and those in the process of being vested, independent of nationality and country of residence

3. Motivation I: guarantee social protection of migrants • Atypical life cycle of migrants requires special provisions for their social protection • Contribute to various systems • Face distinctive vulnerabilities • Return/Circular migration requires high degree of portability to guarantee the social protection of migrants • Pre-WWI: 30% (Hatton and Williamson 1998) • Balkans in first half of 20th century: between 50 and 90% (Sarris et al. 2004)

4. Turkey: Ratio of official outflows to inflows of Turkish nationals for selected host countries (%)

5. 60 to 90 percent of youth in developing countries have a strong desire to migrate temporarily, if the legal opportunities were there, but only 23 percent would move permanently

6. Return rates of youth migrants are high; average Mexican youth migrant returns at age 24, after 3 years abroad; (Albania: 25 after 7 months) Source: McKenzie 2006

7. Motivation II: impact on home and host countries • Home countries • Lack of portability as an obstacle to return migration • Fiscal implications for social security systems of home countries • Host countries • Political expediency of stressing temporary nature of immigration • Encourage participation of migrants in the formal sector • Enhancing portability as a means • to encourage participation in the formal sector • to reduce incentives for undocumented migration • to improve social protection of migrants and their dependents • to encourage return migration

8. Main findings and roadmap • Main findings • Only about 20 percent of migrants worldwide benefit from full portability (mainly North-North migrants) • Bilateral social security agreements are current best practice • Roadmap • Numbers • Main issues and current best practice (pension and healthcare) • Conclusion and operational relevance

9. Portability Regimes • Access to social security benefits and advanced portability regulated by bilateral agreements • Access to social security benefits in the absence of bilateral agreements • No access to portable social security benefits • Undocumented migrants who participate in the informal sector of the host country

10. Portability regimes globally: official and undocumented foreign nationals residing in region in 2000 (%) Source: Harrison 2004, ILO 2005a, Lowell 2002, Passel 2005, and authors’ calculations.

11. Portability regimes globally: official and undocumented nationals from region residing abroad in 2000 (%) Source: Harrison 2004, ILO 2005a, Lowell 2002, Passel 2005, and authors’ calculations.

12. Global stocks of official migrants (thousands) and bilateral social security agreements (i) Numbers refer to bilateral social security agreements per region, including all additional protocols and modifications to previous agreements. Since every agreement has two signatory states, worldwide every bilateral agreement is counted twice (although the two signatory states might very well be located in two different regions). The total number of agreements worldwide is therefore half of 3,656, that is 1,828. Note: n.a. for no information is available. Source: Harrison 2004 and authors’ calculations.

13. Main gaps in current provisions and best practice • Objective I: no benefit disadvantage with regard to pension and healthcare for migrants • Objective II: actuarial fairness • Objective III: bureaucratic effectiveness

14. Main gaps and best practice: pensions • Limited exportability • Some countries don’t allow for exportability or apply reductions • Best practice: unilaterally change national social security law • Proof of life for old-age and survivor pension • Best practice: allow for proof of life at consulates or social security administration in home country

15. Main gaps and best practice: pensions • Absence of totalization • migrants might not meet qualification requirements • reduced replacement rates • Best practice: • Opting out for temporary migrants • Drawback: no contribution from employer, purchasing power, healthcare • Lump sum payments • Drawback: loss of employer’s contribution, lack of annuity market in home country • Bilateral social security agreements • Full totalization

16. Main gaps and best practice: pensions • Other issues • Multitude of agreements • Best practice • EU 1408/1971 and 883/2004 • Euro-Mediterranean Agreements with Maghreb countries • ILO Convention 157 (1982) • Double coverage for expatriates • Fake SSA accounts • US$400bn in unclaimed accounts • About US$35bn from Mexican migrants

17. Gaps and best practice: healthcare • Insufficient access to public healthcare • No access if no employment or pension • Absence of totalization • Medicare not subject to totalization • Best practice • Unilaterally: reimbursements • Private health insurance • Voluntary contributions to public health system • Bilateral agreements • Totalize periods of contribution • Ensure continued coverage

18. Gaps and best practice: healthcare • Actuarial considerations • No cost sharing between countries • Financial drain for developing countries • Best practice: • Not even within EU fully addressed • Under certain circumstances annual transfers between health systems

19. Conclusions • Majority of migrants face obstacles with regard to portability of benefits • Bilateral social security agreements are current best practice • Beyond current best practice, more actuarial structures might improve portability

20. Operational relevance • Concerns of client countries with large diasporas • Social protection of their citizens • Fiscal implications for their social security systems • Labor market integration in south-south migration context • Harmonize social security systems to ensure portability • Pre-deployment training for migrants • Inform migrants about their social rights