Migration scheme won’t solve Pacific’s problems

It wouldn’t be polite to say so at the Forum meeting in Nuie this week, but there is trouble brewing in the South Pacific.  Conflict in the Solomon Islands, coups in Fiji, murders by raskol gangs in Papua New Guinea, and the burning of Chinatown in Nukualofa in Tonga suggest an ‘arc of instability’ right at our doorstep.

At the heart of the region’s civil strife is the unemployment and underemployment of men.  Lots of them. There are more than two million underemployed and unemployed men in the Pacific as a whole.  More than 100,000 join the labour force each year. Most do not have any hope of earning an income or having a job in their lifetime.

 Men well into middle age can be seen languishing, openly unemployed, on the streets of the region’s capital cities or underemployed in rural villages.  They make ready recruits for the criminal gangs that help Port Moresby compete with Port-au Prince and Nairobi for the most violent towns in the world.

The region certainly presents a bleak picture, but it isn’t all bad. Look a little more closely and there appear to be two groups of countries in the Pacific. 

One group of islands has managed to grow modestly over the last 30 years and provide decent levels of education, healthcare and living standards for their population.  They include Tonga, Samoa, Cook Islands, New Caledonia and French Polynesia among others.  Population growth in these islands has slowed as they have become wealthier and good education outcomes mean they can travel abroad for further opportunities.

A second group of countries, however, has stagnated at best and in some cases, become poorer.  In Papua New Guinea, Solomon Islands and Vanuatu, population growth has been exceeding economic growth for much of the last 30 years.  In Fiji, coup after coup has damaged what was once the most prosperous country in the region.

What is most important is that this second group of low income, high population growth countries account for about 80% of the Pacific population.  It will be in these countries that the future stability and prosperity will be decided.  And on current trends, that path looks shaky.

As if acknowledging that very fact, the Australian Government has just announced that guest workers from the Pacific will be allowed temporary work as fruit pickers in regional Australia.  The scheme has been widely applauded by the Nation Farmers Federation, by The World Bank, and loudest of all, by Pacific governments themselves, who see it as a way of releasing some of the building employment pressures at home.

The scale of the labour market problems in the Pacific, however, suggest that unless a million or more guest workers were invited to participate, migration will fail to make any inroads into the problem. The only way to make the Pacific stable and prosperous is to pursue economic growth. Migration is not development.

The guest worker scheme will undoubtedly benefit those Pacific Islanders lucky enough to qualify for the initial program.  The danger is that the warm glow that has accompanied the announcement of the scheme will serve to endorse the Pacific leaders unwillingness to take the steps that would provide significant farming incomes and jobs in the Pacific. 

The bulk of the region’s unemployment is concentrated in the larger states that cannot argue that they lack economies of scale for growth.

During the past 30 years Botswana, a small, landlocked African country has outpaced Papua New Guinea. Mauritius, about the same size as Fiji, with much the same starting endowment of a sugar industry, has become a labour short economy. Iceland, which is the same size as the Solomon Islands, is poorly located in the cold North Atlantic with short growing seasons and barren agricultural lands.  But it has become one of the highest income industrialised countries anywhere.

Fate does not doom the Pacific to poor standards of living.  Bad policy by corrupt, incompetent elites does. 
The Pacific can only avoid looming economic, social, and political crises if its large economies dramatically reform their policies to encourage substantial employment creating growth. Otherwise, it will only be a matter of time before the growing army of unemployed and underemployed turns from restless to violent.

Gaurav Sodhi is an economist at the Centre for Independent Studie, his report The Bipolar Pacific, written with Helen Hughes, is available at www.cis.org.au