Boosting remittances

Policymakers are gung-ho about record high remittances. And why not! Year after year, remittances have provided great support to forex reserves and local economies, with the World Bank estimating remittances at 6 percent of Pakistan’s GDP in 2012. Nearly $80 billion have been received under this head in last ten fiscals. Inflows are set to cross $15 billion this fiscal, a first. What’s not to rave about?
However, hidden beneath this hoopla lies a somber reality which policymakers must now start grappling with. Pakistan’s annual remittances per migrant are ranked far below those of neighbouring countries like China and India. The data taken from a WB and IFAD’s report released last May show that annual inflow per migrant stood at $7943 for China, $6144 for India, but only $2978 for Pakistan!
Pakistan’s inflows are visibly lower compared to its two neighbouring giants on proportionate basis. A Pew Research Center report last December showed that India and China had 6.12 percent and 4 percent shares in global migrant stock, respectively, but received 13.89 percent and 11.74 percent of global remittances in 2013, respectively. Pakistan had a 2.45 percent share in global migrant stock but it received comparatively less, 2.91 percent of global remittances.
There is a need to explore the phenomenon of per migrant inflows-–or what the industry refers to as the ‘Average Transaction Size’ or ATS. Seemingly, the answer to the low ATS lies in the quality of workers Pakistan sends abroad. Pakistani workers abroad have low skill profiles and are primarily headed to one particular region.
Recent data from Pakistan’s Bureau of Emigration and Overseas Employment shows that Pakistan sent over six hundred thousand new workers abroad in 2013. Over 95 percent of these fresh migrants went to the GCC countries, primarily UAE and Saudi Arabia. GCC is said to be a ‘low ATS’ region, for migrants from South Asian nations primarily find blue collar jobs in these countries.
Among the migrants leaving the Pakistani shores in 2013, only 42 percent were qualified as ‘skilled workers’. About 38 percent were unskilled workers and another 17 percent were semi-skilled workers. Only 2 percent were ‘highly qualified’ and less than 1 percent was ranked as ‘highly skilled’.
More specifically, 36 percent of these migrants were labourers, followed by drivers (12 percent), masons (7 percent), technicians (5 percent), carpenters (5 percent) and electricians (4 percent).
This tilt towards higher concentration of semi-skilled and unskilled workers’ migration towards countries like Saudi Arabia, UAE and Oman has been consistent in recent years’ migration data. The demand for such workers is obviously there. It is no surprise then that bulk of Pakistan’s migrant stock works in the GCC region and has over 60 percent share in Pakistan’s overall remittances.
Employment opportunities in these countries mean a lot to workers and their families. But, the government must also step up its efforts in areas of technical training and migrant education to send more skilled workers overseas. Besides this, purposeful incentive schemes may also help pull up ATS among white collar migrants living in North America and Europe. Continued growth in inflows is contingent upon taking creative and forward-looking measures today.