Integrating Venezuelans into the Colombian labor market

Mitigating costs and maximizing benefits

A former rebel (R), who now owns a clothing factory, oversees a worker in his workshop in Bogota in this photo taken on February 3, 2015. Fighters from the Revolutionary Armed Forces of Colombia (FARC), which is currently in peace talks with the government to end 51 years of war, face a complicated path to employment and a life away from crime as they try to reintegrate into society. Demobilized rebels are popular recruits for crime gangs and will have to overcome prejudices to become economically independent after they graduate from government reinsertion programs. Picture taken on February 3, 2015.     REUTERS/Jose Miguel Gomez - GF10000135974

Before leaving office in August 2018, outgoing Colombian President Juan Manuel Santos decreed that 442,462 undocumented Venezuelans living in Colombia—most of whom had arrived since 2015 when the massive exodus of Venezuelans throughout the continent accelerated—would be regularized, enabling them to receive residency and work permits.  This is in addition to the 376,572 Venezuelans already in the country with regular migration status.  This commendable action is the largest process of migrant and refugee work regularization ever seen in the region, perhaps in the world outside of Uganda. It not only demonstrates solidarity with the country’s Venezuelan neighbors, but it is also smart policy, given the massive economic opportunity these migrants could represent for the country. 

Yet, successful integration of migrants into the labor force marks an unprecedented challenge for Colombia. Despite its recent admission to the Organization of Economic Cooperation and Development, Colombia still faces important development challenges of its own. It is important that policies designed to facilitate and support the integration process seek to maximize the potential benefits and mitigate the possible costs of migrant integration.

This policy brief describes in detail the main characteristics of the population of Venezuelan migrants undergoing the regularization process and discusses some important points of consideration for decisionmakers designing policies to accompany this process. The population of newly regularized migrants is predominately young, moderately educated, and ready to engage in the labor force. Over 75 percent are working age, and 83 percent of those have completed at least secondary education. As compared to the Colombian labor force, the newly regularized migrants are younger and more educated. If properly integrated into the labor force, they thus represent a largely productive cohort which could contribute to economic growth and productivity gains.

This new wave of migrants remains geographically concentrated in a handful of border municipalities, where their per capita concentration reaches 23.5 percent in Puerto Santander, for example. However, in the vast majority of the country, these newly regularized migrants make up less than 1 percent of the municipal population. Large metropolitan centers such as Bogota and Medellin continue to have lower per capita concentrations, and thus have additional capacity to absorb the newcomers.

The economic impact of this new cohort largely depends on whether their skill sets substitute for or complement those of the native population. Research suggests that migrants and refugees typically have little impact on native employment rates, suggesting complementarity.  However, it would be wise to take measures to avoid job displacement of those Colombians whose skills could be, to some extent, substitutes for migrant labor.

One way to combat this risk is to inject capital into highly impacted regions. However, in the absence of funds to invest in infrastructure and expand access to credit in the short term, the government of Colombia might consider a form of voluntary, incentivized relocation to reduce the pressure on highly impacted border regions. This reallocation scheme should consider factors such as regional unemployment rates, relative sizes of informal labor markets and the business climate.