Fiji Australia Business Council Forum – 2008

“Business Tomorrow”

Global Labour Migration & Fiji’s Brain Drain

Max Underhill

Maxumise Group

1st December 2008

What to cover!

• The questions posed for this segment of the forum:– Will skilled people keep migrating from Fiji or

will they come back?– What about the most recent surges in the

migration of semi-skilled workers?– Labour migration issues not unique to Fiji– Talent management dominates conferences;

how do we get the right people and how do we get them to stay?

Introduction

• What impact will the global economic crisis have on Fiji?

• Do not know – but what we do know however is that the global crisis has shifted the focus, in a number of international organisations, onto better HCM approaches and technology for more efficiency gains in areas that they have not focussed on before – Fiji’s have to compete in this environment.

What is the solution?

• At this point I could simply say “Brain Drain” has been with us for many years it is likely to stay so learn to live with it and get on with managing what we have in smarter ways!

• However it may be better for me to define what is brain drain and what impact it has and continues to have both globally and on Fiji.

What is “Brain Drain”

• A large emigration of individuals with technical skills or competence normally due to:– Conflict– Lack of opportunity/opportunity differential– Political instability– Health risks

• Brain drain is common amongst developing nations where marketable skills or competence is not financially rewarded as well as more developed countries.

Wikipedia

Why leave “home”?

• Several legitimate political or economic reasons: – peace and security for himself and his family– job satisfaction– better pay and conditions– a higher standard of living, etc.

• Throughout history, countries and centres of academic excellence which offer these attractions have received the largest numbers of professional migrants and these have, in turn, made substantial contributions, not only to the economic growth of their host countries, but also to the scientific and technological advancement of humanity. Australian medical research, genetic engineering are examples. What have some of our Fiji citizens achieved overseas?

Brain Drain / Gain

• Brain drain often regarded as an economic cost:– emigrants are seen as taking with them the

value of their training which was often sponsored by the government

• Converse phenomenon is brain gain– large-scale immigration of technically

qualified persons:• Can be where economy of scale is so large it is

insignificant e.g. Asian to Australia

New Zealand Brain Exchange

• 1990s– 30,000 New Zealanders were emigrating each year (0.75%)

• 2005– 24.2% of New Zealanders with a tertiary education were living

outside of New Zealand

• 2007– 24,000 New Zealanders settled in Australia (0.6%)– Student loans are cited as a major reason– Graduates using higher foreign salaries to pay off their debts.

• New Zealand also enjoys immigration of qualified foreigners, potentially leaving a net gain of skills – Pacific, Asia etc

Young New Zealanders leave in great numbers to experience the wider world. Many return, but some stay overseas, giving rise periodically to concern that the country is losing its best and brightest. With the introduction of a student loans scheme, many

graduates left to earn more money and repay their loans more quickly. The government was initially reluctant to admit that the outflow was anything more than

had been happening for years but, as this cartoon shows, it eventually acknowledged that the loans scheme was contributing to a ‘brain drain’. www.teara.govt.nz

Measuring the Brain Drain

Brain Drain can actually be measured:

• The degree of openness of the sending countries (measured by the average emigration rate)

• The schooling gap (measured by the education level of emigrants compared with locals/natives)

The World Bank Economic Review Advance Access originally published online on June 13, 2007

The World Bank Economic Review 2007 21(2):193-218; doi:10.1093/wber/lhm008

Features of Brain Drain

• Strong in small countries close to major OECD countries

• Share colonial links with OECD countries

• Countries with quality-selective immigration programs attract immigrants

• Is this a unique problem to Fiji?

Assessing the Impact

• More than a decade ago, US presidential candidate Ross Perot talked about the "giant sucking sound" made as American jobs went south of the border.

• These days, it is a phenomena that effects the whole world. – Highly skilled people leaving developing countries

and heading to the developed world. • The worldwide scale of this "brain drain" is

staggering. • Is emigration Fiji is experiencing just a part of

this world phenomena!

Reassessing the Impacts of Brain Drain on Developing Countries By Dhananjayan Sriskandarajah Institute for Public Policy Research August 2005

That “sucking sound” is Global – we live in a mobile world

Future Outlook

• 2009:– Is this “sucking sound” still getting louder?– Will the demand now diminish?

• Global economic crisis• Recession• Job cuts• Terrorism • ……

• The movement will be in all directions and largely unpredictable

Expatriate Trends

• Expatriates returning to Australia due to crisis - the last month a large placement agency for IT Industry Executives received zero placements and 15 returning citizens looking for work!

• June 08 an Australia Gov Authority went on a worldwide search for 32 qualified Engineers “any degree - qualified engineer” including Fiji they were only able to attract 28 engineers.

• Returning Fiji citizens - again hard to quantify but we know it is increasing however as the numbers in the following graph show potential employees monitor the opportunities in Fiji and have done so since 2000.

Return to Fiji?

The Key Question

• What should be done?• The intuitive response

– try to plug the drain

• Stemming the flows seems to make sense– the departure of these key workers hurts the

sending countries

SO– reducing the scale of emigration should ease the

pain

Reassessing the Impacts of Brain Drain on Developing Countries By Dhananjayan Sriskandarajah Institute for Public Policy Research August 2005

Limiting Mobility

• May not be the most efficient or humane way to tackle the problem - "compassionate racism"

• The notion of "brain drain" as a bad thing needs to be carefully thought through.

• Curbing the rights to mobility limits development• We need to devise measures that recognize that

greater mobility, not less mobility,

is likely to be the most sustainable

& efficient response over the long term

Domestic Gain in Fiji

• The prospect of being able to emigrate increases incentives to acquire education.

• In other words, even in the presence of a brain drain, the average education level of those who remain may be higher than it would have been without migration

• Are all the people that we have put through tertiary education system being utilised efficiently?

When questioned about increased levels of emigration from

New Zealand to Australia,

Muldoon responded that these migrants

"raised the average IQ of both countries"

Positive Spin-offs for Fiji

• Acknowledging and accounting for the positive spin-offs from emigration is an important first step other than lifting the standard:– Some of those who migrate return, often with

greater competence and ability to contribute– In some cases, those who leave have been

underemployed in Fiji, so their departure may not actually result in a huge loss to the sending country

– In other cases, the departure of skilled workers clearly leaves a gap we need to address

Net Impact on Fiji

• Other impacts of migration – remittances– inward investment– technology transfer– increased trade flows– charitable activities of diaspora communities

• The net impact may actually be positive

Control is not the answer, management is!

• While I am not suggesting there are or should be policies that restrict emigration there policies that have some impact:– the policy stance should not undermine the pressures for,

greater human mobility or discriminate

• Brain drain may aggravate the shortage of skilled workers in some sectors– However emigration may not be the fundamental reason for

actual or anticipated shortages

• Increasing wages, improving working conditions, and providing employment opportunities may be a better approach than restricting mobility

• “Fiji” being the country of choice first and then being the employer of choice may be Fiji’s answer.

• No different to attracting investors

Brain Strain

• “Brain drain” vs. "brain strain" – Brain Strain is where the net outflow of

workers from a particular sector is actually hampering or is very likely to hamper economic development or the pursuit of important socioeconomic goals.

– Poor planning does not count!

Is Fiji suffering Brain Strain?

• It is possible to identify where brain strain may be occurring but it needs to be carefully analysed – remove the emotions

• Fiji as a developing countries with high rates of emigration is particularly vulnerable

• In Fiji the sheer volume of emigration suggests that any possible positive effects may be outweighed by negative impacts on economic dynamism & the delivery of key public services

• Is Fiji suffering from Brain Strain? (vs Brain Drain)

THE BURNING QUESTION IS THEN HOW DO WE MANAGE AROUND THIS

BRAIN DRAIN PHENOMENA

Brain Drain is a fact of life in Fiji as it is in any developing country but this is not necessarily all bad

for Fiji!

Attracting them back to Fiji

• I am not going to repeat or try to address all the causes of people leaving

BUT I do want to address:• Giving people the opportunity to return and• Improving the general management of our

workforce as larger gains can be made here than the emigration losses which will also assist in attracting people back to Fiji

Are People looking for opportunities in Fiji?

When is Turnover a Concern?

• Too small – there is inadequate new blood

• Too large the cost is excessive

• Need to get a balance

• Need to consider where in the organisation the losses are occurring

The Cost of Turnover

• While it is OK to have between 6% and 13% turnover; it obviously matters where in the organisation this turnover occurs – if all from key areas in the business then it falls into the concern zone. A retail business has close to 100% turnover – No not everyone turns over but the ave. cashiers turn over is between 1.5 to 2 times a year

• Turnover cost varies between 50% and 150% of the salary in normal circumstance (much higher in a dispute situation 200% +):– Recruitment costs– Training and retraining– Labour withdrawal– Quality drop/sabotage

We therefore need to get Smarter in the way we “specify”

and manage our people

It is about making Fiji workplace more attractive and more efficient so we can reward better and retain more

people.

Matching process:• Recruitment and Selection• Competency assessment• Succession Planning• Talent management

RoleManagement

Matching- HR Asset

PerformanceManagement Reward

Development

Acquiring the right assetMaintaining the asset

Managing Our People Better – Start with a Specification

What are your people assets worth?

Emma Harrison Required Level Assessment Score

Applicants Calculated Pay $31,341 $43,320 Applicants Band Size 4.72

D B A 2 Business Performance D B A 3 Risk Management D C A 5 Planning D D A 6 Resource Management C B A 7 Systems and Procedures D C A10 Communication D B B 1 Customer Commitment C B B 3 Commercial Focus C B C 1 Leadership C C C 3 Facilitation D B D 7 Technology Application D B E 3 Health and Safety

Score Personal Attribute Accountable 4.50 Challenger 2.50 Customer Focused 2.75 Detail Oriented 3.00 Disciplined / Systematic 4.00 Enthusiastic 4.00 Perceptive 3.00 Reliable 4.50 Self Sufficient and Assured 3.00 Well Organized 4.00

35.25

What is the cost of not developing your people?

Emma Harrison Required Level Assessment Score

Applicants Calculated Pay $31,341 $43,320 Applicants Band Size 4.72

D B A 2 Business Performance D B A 3 Risk Management D C A 5 Planning D D A 6 Resource Management C B A 7 Systems and Procedures D C A10 Communication D B B 1 Customer Commitment C B B 3 Commercial Focus C B C 1 Leadership C C C 3 Facilitation D B D 7 Technology Application D B E 3 Health and Safety

RoleRole

Design IncumbentEmma H. Difference

Size 5.71 4.72 -21.0%Salary $43,320 $31,341 -38.2%

Specification/ Requirements Delivered

Power (hp) 35 27.65

RoI (%) 20% 12%

Understanding your “People Power”

Band Salary Diff Band Diff $'s

Ideal 8.23 $120,513 “Power” “Value”

Joe Hillsborough 7.94 $107,353 -3.65% -12.26%

Fred Nirks 7.32 $83,229 -12.43% -44.80%

Harry McLaren 7.19 $78,743 -14.46% -53.05%

Appointee Reward & Development

New Generation Organisations

1. Organisations worldwide are getting flatter and more focussed on their core business or purpose.

2. This is forcing organisations into smarter utilisation of resources in particular technology and people.

3. Higher proportion of more competent people, less lower level competence people.

MANAGING OUR PEOPLE BETTER WILL ALLOW US TO MANAGE WITHIN

THE BRAIN DRAIN AND BE AWARE OF THE BRAIN STRAIN

Brain Drain is a fact of life in Fiji as it is in any developing country but this is not necessarily all bad

for Fiji!

The Bottom-line of Emigration

• Mobility is part of the world we live in• The cost is one we will have to shoulder• The net effects is not necessarily all bad• Without it would be like having low turnover we

stagnate• Tertiary education institutions have an influence. • Brain strain needs to be planned for largely by

Government.• Improve the workplace and improve retention and

return

Thank you for this opportunity

Know your Business & Who you Need?

Strategic Direction

Performance Framework Capability Framework

Structure

Role Expectations Performance Measures

Employee Mgt

Phase 1

Phase 2

Phase 3

Strategic Direction

Performance Framework Capability Framework

Structure

Role Expectations Performance Measures

Employee

Phase 1

Phase 2

Phase 3

The smaller economies need to be smarter in how they manage their human capital!

COMPANY’S STRATEGIC DIRECTION

+

ORGANISATIONAL CAPABILITIES &

PERFORMANCE FRAMEWORK

COMPETENCIES THE PEOPLE DRIVERS

+ =ORGANISATIONAL

AND HR PROGRAMS

Training &Development

Recruitment &

Selection

Career & Succession

Planning

Remuneration& Reward

Structure,Work Practices& Job Design

Administration Procedures& Contracts

PERFORMANCE MANAGEMENT SYSTEM

CONTINUOUS IMPROVEMENT

Fiji Australia Business Council Forum – 2008

“Business Tomorrow”