There are many estimates of the number of Venezuelans in Trinidad and Tobago. The government of TT registered some 16,523 Venezuelan by June 2019 in an attempt to start to formalize the process by which these immigrants participate in our labour market. In 2020 though, R4V put the number of Venezuelans in T&T at 33,400.
The jobs that migrants perform are typically lower-end jobs which natives refuse and tend to be unskilled labour intensive and carry an inferior social status. The working conditions are often hard or unpleasant and involve a certain level of insecurity and are usually dead end, offering limited opportunities for advancement. The Central Statistical Office of TT does not collect data on immigrants. In this regard, this note refers to the PEW Research Center of the USA which in its assessment of the 2014 US Census data, found that 63% of the people that provide services such as manicurists, pedicurists, make-up artists and skin specialists were immigrants. 51% of these were in the USA with proper authorisation but 12% were undocumented. The PEW Research Center also found that 28% of the workers checking the fruits and vegetables which go to supermarkets in the USA were unlawful immigrants. (In the absence of comparative data for Trinidad and Tobago, this data provided by the PEW Research Centre is used as a partial reflection of the basic distribution of migrant workers in Trinidad and Tobago).
Possible impact on wages
Diagram 1 below is standard in the economics literature and can be used to explain the impact of immigrants from Venezuela on the wage rate of T&T. For simplicity it is assumed that there are two factors of production, labour and capital and in Venezuela the equilibrium wage rate is Wv0 and in T&T the initial wage rate before migration is assumed to be W0TT. Most of the Venezuelan immigrants to T&T come from Tucupita and if there were no legal or other impediments to the movements of workers across borders, then hypothetically Venezuelans could bid the wage in TT down to W0v, which is significantly lower than the W0tt in T&T prior to the massive inflow of immigrants. For simplicity, I focus on unskilled labour only and again I also simplistically assume that because of the language barrier, all Venezuelans in TT work as unskilled laborers. Let us assume that the 33,400 Venezuelans allegedly in TT, shifted the supply curve for labour from S0tt to S1tt. In this regard, the domestic wage rate, assuming a homogenous labour force fell from W0TT to W1 TT and total employment expanded to od, as compared to oc previously. As the supply curve of labour is upward sloping domestic employment falls from oc to ob. (As long as the labour supply curve is upward sloping there would be some displacement of labour). With a fall in wages from W0 v to W1 tt the amount of wages earned in total by the labour force changes from ofhc to oild (oild consists of two parts, the first part accrues to local workers oijb and the second part bjld, which accrues to immigrants). Note then that because of immigration there is a fall in the total wages of indigenous workers. Anecdotal data suggests that this is actually happening in some lower-end jobs in T&T.
Of significance though is the increase in the income of capital from fph to ipl. If ipl is spent on capital in the manufacturing and other export oriented sectors, then this can help expand the export base of the economy and increase foreign exchange inflows. If ipl follows the immigrant labour pool and boosts the size of the non-tradable sector, then this can result in problems for the external account.
However, immigration causes not only an outward shift of the supply curve but also of the demand curve for labour. There are two substantive permutations in this regard, point m and point n in the diagram above. At point n, the demand shift dominates the supply shift and at point m the supply shift dominates the demand shift. If capital follows the Venezuelan unskilled workers, then there can be an increase in demand for Venezuelan workers and the economy can drift to point n, where wages are higher than at Wo tt. Policymakers need to be clear that whilst this block of immigrant labour may represent a factor boom, it is very different from the natural gas factor boom experienced in the period 1999- 2015 and will need a careful and skillfully designed set of policies to maximise the gains for the TT economy.
Conclusion The real challenge of the T&T economy is how to manage the inflow of migrants in a setting in which there is a rise in the domestic unemployment rate and in which there has been no economic growth since 2009. In this setting, the State will have to encourage its capitalist’s class to invest to increase the stock of workers absorbed.
The State will have to monitor the production spaces within the economy to ensure that the capital class does not chase after opportunities that arise with an intensive deployment of labour as this can have adverse implications for the economy. Specifically, and to use a simplistic example, if the number of bars that employ Venezuelans were to increase alongside an increase in the number of Venezuelans employed per bar, then this could lead to an increase in the imports of alcoholic drinks, which could have adverse balance of payments implications.
In this regard, the Government of Trinidad and Tobago should consider a strategy of sector specific work permits so that the agriculture and manufacturing sectors get a much-needed boost in terms of production of goods for exports of import-substituting products.
Managing these migrant flows in the post- COVID setting of low growth and higher domestic employment and with declining natural gas production will require skilful policymaking.
