Deserted in the deserts
For August 2016, SBP numbers show a rebound in worker’s remittances with a 15 percent year-on-year growth, compared to 20 percent decline in July 2016. The two-month aggregates (2MFY17) however show that the overall worker’s remittances declined by over three percent year-on-year.
While the decline in worker’s remittance post Eid is more of a seasonal adjustment, the growth in remittances has come under pressure of-late as the GCC economies struggle against decade low oil prices. In 2MFY17, remittances from Saudi Arabia dropped by 7.5 percent year-on-year. While the decline in these overseas inflows can be seen coming from all major economies including the UK and the US, remember that around more than 60 percent of the inflows from overseas Pakistanis come from the gulf region including Saudi Arabia, and the recent turmoil in Saudi Arabia’s labour market can threaten the 30 percent inflows coming from the kingdom.
Slump in global crude oil prices has been anticipated to hurt oil producing countries that has actually led economies in the Middle East to cut government spending. Since majority of the remittances come from expatriates in Saudi Arabia, UAE, and other GCC countries, the inflows have been awaited to take a hit eventually from job cuts. The recent changes in Saudi Arabia’s labour market and the issue of 8000 plus Pakistani workers among the 16000 plus stranded in Saudi Arabia without employment could just be a trailer of any future upheaval amidst no significant rebound in oil prices.
In the absence of any analysis or development on the impact of the layoffs in Saudi Arabia, it is difficult to estimate the effect of the same on the flow of worker’s remittances. However, it is obvious that the situation in Saudi Arabia for overseas workers is critical. According to UN figures, migrant workers in Saudi Arabia went from around five million to over 10 million from 2000 to 2015; however, in 2016 so far, over a million workers have lost their jobs with remittances dropping every month. This is a significant threat to Pakistan’s inbound foreign currency from overseas residents.
How is laying off 8000 workers a threat to the economy? It is a double whammy say a Senior Programme Manager, ILO: besides a slowdown in the remittances sent back home, shrinking labour market in Saudi Arabia is likely to increase unemployment in the country.
The existing Saudi labour market conundrum also points towards what Saad Gillani, Senior Programme Manager ILO highlights: the human side of the situation. Over 8000 Pakistani workers have found themselves suffering in camps without food, water or visas to leave the kingdom. Most of them had been employed by construction companies.
Talking to BR Research, Saad said that it is high time that we take concrete measures to regulate, diversify and improve worker migration from Pakistan. Talking specifically about Saudi Arabia, he said that the Saudi labour market is challenged by the falling oil prices, political issues and declining development budget that has also affected the Saudi youth.
He highlighted three key policy initiatives to rehabilitate the returnees. One, government should convene with the relevant stakeholders to replenish the layoffs to other countries with opportunities like Malaysia, Korea, Qatar, as they are better at understanding the international standard.
Second, efforts should be made to bring down the cost of migration; a Pakistani worker has to pay four times more than an Indian to get a job abroad. All relevant stakeholders like the private overseas promoters, Bureau of Emigration & Overseas Employment, and Pakistan Overseas Employment Promoters Association, and Overseas Employment Corporation should work together to bring down the cost.
And third and most important, negotiation with countries over worker migration should not just include the number of workers, but also working terms and conditions like no Kafala system, timely salary disbursement, clean and safe working environment, etc. as negotiated by other countries.
