Weak remittance inflow

More needs to be done for skill development

Bangladesh sent a record 750,000 migrant workers abroad last year but it is a mystery that remittance inflow in the last fiscal declined by 14.47 per cent to $12.769 million, the lowest in six years.
Experts say it is time to train workers before sending them abroad, as most Bangladeshi migrant workers leave the country as ‘unskilled’ labourers and earn less than their peers.

Falling remittance
For Bangladesh, remittance is the second largest source of foreign exchange earnings after ready-made garment exports. In fact, it has contributed substantially to the building up of the country’s foreign exchange reserves. But the recent declining trend in remittance inflow has left the government worried.
Bangladesh Bank (BB) expressed concerned over the declining trend of the inward remittances. The central bank’s data show that migrant workers sent home $12.77 billion during the last fiscal year, which was down by 14.47 per cent year-on-year.
When asked why the flow of inward remittances dropped significantly in the last fiscal despite a record number of workers being sent abroad last year, former adviser to a caretaker government AB Mirza Azizul Islam told The Independent that there was a database on how many workers were going to abroad but there was no statistics of how many workers were returning from abroad. It was tough to find out the number of migrant workers coming back to Bangladesh.

Unskilled workers
Bangladesh has been an exporter of workers in the unskilled, semi-skilled and less-skilled categories. This is also reflected in the low average per capita remittance made by Bangladeshi workers compared to those of other countries.
An unskilled worker from Bangladesh gets a monthly wage equivalent to between $220 and $250 in the Middle East or Malaysia, while a skilled worker earns double the wage, experts say.
“The per capita remittance of Bangladeshi migrant workers is lower compared to the migrant workers of other countries like the Philippines, Sri Lanka, India and Nepal. So, we need to develop the skill of the migrant workers before sending them abroad,” said Mirza Azizul.
He also said, “If the workers are provided training according to the demand of the recruiting countries and then sent abroad, the flow of remittance will obviously increase.” Besides, it was important to explore new markets, the economist said.
The number of work permit holders in Singapore, excluding domestic workers, fell by 12,600 to 753,000 in 2016, with most of the losses in the construction and shipping industries, according to Singapore’s Ministry of Manpower.
Some Bangladeshi workers, who went to Singapore last year after selling land and borrowing money from banks and relatives to pay $12,000 in fees to multiple agencies, returned to Bangladesh empty-handed a few months later, as employers laid them off, saying there wasn’t enough work.
Former Bangladesh Bank governor Salehuddin Ahmed told The Independent that many workers were returning to Bangladesh from Malaysia and other countries due to various problems. “The skill development of migrant workers is needed before they are sent abroad,” he said, adding that in most of the cases the unskilled workers lost their jobs when a company planned job cuts.

Middle Eastern slide
Saudi Arabia, which had been the biggest destination for Bangladeshi migrant workers, lifted a six-year ban on Bangladeshi workers in 2016, but the measure is unlikely to increase recruitments because falling oil prices have left tens of thousands of workers unemployed.
In 2016, some 188,247 workers were sent to Oman, the highest figure of Bangladeshi workers going to any one country. Saudi Arabia recruited 143,913 workers, the second highest number. And the third highest destination country was Qatar, which took 20,382 workers that year.
Mirza Azizul said Bangladeshi workers mainly worked in Middle Eastern countries, where wages were now low because of an economic slide caused by falling oil prices. Many workers there were losing their jobs or were being poorly paid. So, they were now sending smaller sums of money back home.
Most of the migrant workers from Bangladesh are young with low levels of education. The majority of them are in the unskilled category, although, in recent years, there has been some increase in the proportion of semi-skilled and skilled workers. Migration of skilled workers can have potential benefits in terms of better paid jobs, leading to higher remittances per worker.
Bangladesh is not unique in suffering such a downturn: for the first time in three decades, remittances to developing countries fell in both 2015 and 2016, according to the World Bank.
Although Saudi Arabia lifted a six-year ban on Bangladeshi workers in 2016, this is unlikely to increase recruitment because falling oil prices have left tens of thousands of workers — mainly Indians — unemployed and starving there. Others are returning from conflict-ridden Middle Eastern countries.
Salehuddin said many Bangladesh workers in the Middle East were working under uncertain economic and political conditions and were not sending money.
He also said the remittance inflow dropped, as the income of the expatriates fell in the Middle East countries. Besides, many migrant workers were saving money abroad, sending home lesser amounts.
First, the annual flow of remittances increased from less than $2 billion in 2000 to over $15 billion in 2014–15, when remittances received were equivalent to about 8 per cent of the country's GDP. Remittances in 2014-15 were equivalent to about 61 per cent of the reserve in 2014-15.
Second, in terms of employment, during the three-year period of 2012 to 2014, about half a million people found jobs abroad every year—representing over a fifth of the annual addition to the total labour force of the country and over half the additional jobs created by the manufacturing sector in recent years.
 
Savings abroad and Hundi channel
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, says the flow of remittance has not merely dropped from the Middle Eastern countries but also from the USA.
He wonders why remittances from the USA have dropped when there is no recession there.
Mansur thinks a rising demand among Bangladeshis to hold foreign currency abroad is the reason behind the falling trend.
According to BB, the country received a total of $15316.91 million in FY15, $14931.15 million in FY16 and $12,769 million in FY17.
The authorities say migrant workers are using illegal channels to send money home. Many are using Hundi, as it is cheaper, faster, and thought to handle at least as much in remittances as banks, without foreign currency ever crossing the border. Many are using authorised mobile-money operators, such as bKash, which alone has 28 million accounts and 170,000 agents.
The exchange rate, controlled by the government, makes money remittance through banks unattractive. The difference between bank and Hundi rates is five taka (six cents) per dollar, say experts.
In the backdrop of a declining remittance inflow, the government has taken some initiatives such as the abolition of bank fees on remittance transfers and is working on other ways to keep cash flowing through banking channels.
Remittance, however, hit a 14-month high in August, mainly due to Eid-ul-Azha, which may bring a sigh of relief for the government. In August, migrant workers sent home $1.42 billion.
Bangladesh has one of the highest unemployment rates in South Asia, despite a steady economic growth. Unemployment is likely to be fuelled by high inflation and an increasing population. A World Bank report estimated that, in 2013, about 41 per cent of Bangladeshi youths were not employed or in education or training, and the portion of young unemployed people was 78 per cent. So, many young men placed all their hopes of a better life for their families in Bangladesh on getting jobs abroad.

Weak remittance inflow

More needs to be done for skill development

Bangladesh sent a record 750,000 migrant workers abroad last year but it is a mystery that remittance inflow in the last fiscal declined by 14.47 per cent to $12.769 million, the lowest in six years. Experts say it is time to train workers before sending them abroad, as most Bangladeshi migrant workers leave the country as unskilled labourers and earn less than their peers. Falling remittance For Bangladesh, remittance is the second largest source of foreign exchange earnings after ready-made garment exports. In fact, it has contributed substantially to the building up of the countrys foreign exchange reserves. But the recent declining trend in remittance inflow has left the government worried. Bangladesh Bank (BB) expressed concerned over the declining trend of the inward remittances. The central banks data show that migrant workers sent home $12.77 billion during the last fiscal year, which was down by 14.47 per cent year-on-year. When asked why the flow of inward remittances dropped significantly in the last fiscal despite a record number of workers being sent abroad last year, former adviser to a caretaker government AB Mirza Azizul Islam told The Independent that there was a database on how many workers were going to abroad but there was no statistics of how many workers were returning from abroad. It was tough to find out the number of migrant workers coming back to Bangladesh. Unskilled workers Bangladesh has been an exporter of workers in the unskilled, semi-skilled and less-skilled categories. This is also reflected in the low average per capita remittance made by Bangladeshi workers compared to those of other countries. An unskilled worker from Bangladesh gets a monthly wage equivalent to between $220 and $250 in the Middle East or Malaysia, while a skilled worker earns double the wage, experts say. The per capita remittance of Bangladeshi migrant workers is lower compared to the migrant workers of other countries like the Philippines, Sri Lanka, India and Nepal. So, we need to develop the skill of the migrant workers before sending them abroad, said Mirza Azizul. He also said, If the workers are provided training according to the demand of the recruiting countries and then sent abroad, the flow of remittance will obviously increase. Besides, it was important to explore new markets, the economist said. The number of work permit holders in Singapore, excluding domestic workers, fell by 12,600 to 753,000 in 2016, with most of the losses in the construction and shipping industries, according to Singapores Ministry of Manpower. Some Bangladeshi workers, who went to Singapore last year after selling land and borrowing money from banks and relatives to pay $12,000 in fees to multiple agencies, returned to Bangladesh empty-handed a few months later, as employers laid them off, saying there wasnt enough work. Former Bangladesh Bank governor Salehuddin Ahmed told The Independent that many workers were returning to Bangladesh from Malaysia and other countries due to various problems. The skill development of migrant workers is needed before they are sent abroad, he said, adding that in most of the cases the unskilled workers lost their jobs when a company planned job cuts. Middle Eastern slide Saudi Arabia, which had been the biggest destination for Bangladeshi migrant workers, lifted a six-year ban on Bangladeshi workers in 2016, but the measure is unlikely to increase recruitments because falling oil prices have left tens of thousands of workers unemployed. In 2016, some 188,247 workers were sent to Oman, the highest figure of Bangladeshi workers going to any one country. Saudi Arabia recruited 143,913 workers, the second highest number. And the third highest destination country was Qatar, which took 20,382 workers that year. Mirza Azizul said Bangladeshi workers mainly worked in Middle Eastern countries, where wages were now low because of an economic slide caused by falling oil prices. Many workers there were losing their jobs or were being poorly paid. So, they were now sending smaller sums of money back home. Most of the migrant workers from Bangladesh are young with low levels of education. The majority of them are in the unskilled category, although, in recent years, there has been some increase in the proportion of semi-skilled and skilled workers. Migration of skilled workers can have potential benefits in terms of better paid jobs, leading to higher remittances per worker. Bangladesh is not unique in suffering such a downturn: for the first time in three decades, remittances to developing countries fell in both 2015 and 2016, according to the World Bank. Although Saudi Arabia lifted a six-year ban on Bangladeshi workers in 2016, this is unlikely to increase recruitment because falling oil prices have left tens of thousands of workers mainly Indians unemployed and starving there. Others are returning from conflict-ridden Middle Eastern countries. Salehuddin said many Bangladesh workers in the Middle East were working under uncertain economic and political conditions and were not sending money. He also said the remittance inflow dropped, as the income of the expatriates fell in the Middle East countries. Besides, many migrant workers were saving money abroad, sending home lesser amounts. First, the annual flow of remittances increased from less than $2 billion in 2000 to over $15 billion in 201415, when remittances received were equivalent to about 8 per cent of the countrys GDP. Remittances in 2014-15 were equivalent to about 61 per cent of the reserve in 2014-15. Second, in terms of employment, during the three-year period of 2012 to 2014, about half a million people found jobs abroad every yearrepresenting over a fifth of the annual addition to the total labour force of the country and over half the additional jobs created by the manufacturing sector in recent years. Savings abroad and Hundi channel Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, says the flow of remittance has not merely dropped from the Middle Eastern countries but also from the USA. He wonders why remittances from the USA have dropped when there is no recession there. Mansur thinks a rising demand among Bangladeshis to hold foreign currency abroad is the reason behind the falling trend. According to BB, the country received a total of $15316.91 million in FY15, $14931.15 million in FY16 and $12,769 million in FY17. The authorities say migrant workers are using illegal channels to send money home. Many are using Hundi, as it is cheaper, faster, and thought to handle at least as much in remittances as banks, without foreign currency ever crossing the border. Many are using authorised mobile-money operators, such as bKash, which alone has 28 million accounts and 170,000 agents. The exchange rate, controlled by the government, makes money remittance through banks unattractive. The difference between bank and Hundi rates is five taka (six cents) per dollar, say experts. In the backdrop of a declining remittance inflow, the government has taken some initiatives such as the abolition of bank fees on remittance transfers and is working on other ways to keep cash flowing through banking channels. Remittance, however, hit a 14-month high in August, mainly due to Eid-ul-Azha, which may bring a sigh of relief for the government. In August, migrant workers sent home $1.42 billion. Bangladesh has one of the highest unemployment rates in South Asia, despite a steady economic growth. Unemployment is likely to be fuelled by high inflation and an increasing population. A World Bank report estimated that, in 2013, about 41 per cent of Bangladeshi youths were not employed or in education or training, and the portion of young unemployed people was 78 per cent. So, many young men placed all their hopes of a better life for their families in Bangladesh on getting jobs abroad.