Workers' remittances

Workers' remittances have emerged as a major source of cushioning or improving external sector accounts of a number of countries in the recent years. According to World Bank estimates released on 1st December, 2011, Pakistan was placed among top 10 recipients of remittances among developing countries, fetching over dollar 12 billion last year. India was the highest recipient of remittances with dollar 58 billion, followed by China at dollar 57 billion, Mexico at dollar 24 billion and the Philippines at dollar 23 billion. Bangladesh followed Pakistan with dollar 12 billion, Nigeria dollar 11 billion, Vietnam dollar 9 billion and Egypt and Lebanon dollar 8 billion each. The "Outlook for Remittance Flow 2012-14" showed that the officially recorded remittance flows to developing countries were estimated to reach dollar 351 billion in 2011, up 8 percent over 2010. World-wide remittance flows, including those to high-income countries, were projected at dollar 406 billion in 2011 and were expected to rise to dollar 515 billion by 2014. The World Bank has also indicated the sources of vulnerability for remittances to developing countries. It has noted that ongoing sovereign debt crisis in Europe and high unemployment rates in high-income OECD countries are adversely affecting employment prospects of migrants and have also created political pressures to reduce current levels of immigration. If the European crisis deepens further, immigration controls in these countries could become tighter, affecting remittance flows to all regions - especially to countries in Eastern Europe and Central Asia. On the other hand, high oil prices, hovering around dollar 100 a barrel in recent months, continue to provide opportunities for migrant employment. Oil-driven economic activities and increased spending on infrastructure in Gulf Co-operation Countries (GCC) and Russia are making these countries attractive for migrants from developing countries. Remittances from the GCC to Bangladesh and Pakistan, for instance, were up by 8 percent and 31 percent respectively during the first three quarters of 2011 on a year-on-year basis. We feel that credit needs to be given to the World Bank for estimating the amount and highlighting the role of workers' remittances in the economies of various countries. These remittances have not only financed the external sector gap, promoted investment in small-scale industries and reduced income inequalities but have also changed the social landscape of several recipient countries by empowering the disadvantaged groups of society. Their growth at the present rate could promise more integrated world, higher dissemination of knowledge and quicker diffusion of innovation and technology, thus enriching the lives of vast majority of poor people across the globe. While eulogising the impact of remittances, the fact should not be forgotten that this source of money should not be treated as a permanent source of income by the recipient countries. As such, efforts should be made to utilise this source to stimulate investment in the domestic economies rather than promote consumption so that the recipient country is in a better shape when foreign remittances dry up or slow down. The World Bank has referred to such a possibility due to sovereign debt crisis in Europe and high unemployment in OECD countries but there could be so many other reasons including breakthrough in technology leading to drastic reduction in demand for labour, etc, which could affect the attitude of host countries for recruiting or retaining labour force from abroad. While on the subject, we would also urge upon the World Bank to highlight the ill-treatment meted out to foreign labour force in several labour-importing countries. In all fairness, remuneration paid to the immigrant workers is solely for their services and physical efforts and they should not be treated inhumanly. We are sure that the voice of the World Bank would carry some weight and help reduce some of the injustices of an unequal relationship inherent in the arrangement. At least insofar as the case of Pakistan is concerned, the role of remittances in its economy is more than obvious and the above observations equally apply in our case. In order to maximise the remittance inflows till the bonanza lasts, we must try to increase the demand for our labour force by imparting the kind of expertise needed by the labour-importing countries. Besides, no worthwhile effort has so far been made to channelise remittances into investment with the result that most of the remittances have been used to finance consumption. The government needs to devise an appropriate strategy to enhance productive capacity of the economy and provide employment to expatriates upon their return. Also, notwithstanding the positive impact of remittances on our external sector account at present, the country needs to shift its emphasis and bolster its export earnings for a sustained improvement in its balance of payments (BoP) due to uncertain nature of remittance inflows. Copyright Business Recorder, 2011