Remittances: The Reality Behind the 'Shiny' Statistics

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Dec 27 2009

This thought-provoking article from Bangladeshi paper The Star, 'Remittance: Behind the Shiny Statistics' explores the story behind statistics that suggest that migrant workers are still able to send plenty of money back home despite the financial crisis.

Despite the economic crisis and the meltdown of the Gulf construction sector- one of the biggest employers of migrant workers- media reports claim that remittances to countries such as Bangladesh, Pakistan and the Philippines have 'surged' in 2009. But how is it that migrant workers have been able to send such healthy sums of money back home this year in spite of pay-cuts, job losses and deportations in Gulf states?

Migrant construction workers have been badly hit as work in the Gulf states has dried up. According to a recent study by an Indian think tank, 264,000 Indian workers have lost their jobs in the Gulf following the economic crash (see previous post on Migrant Rights) and many more have had their pay slashed.

So why are we repeatedly seeing articles like this one in Pakistani paper Dawn that suggest that remittances have been increasing at 'remarkable' rate over the past year?

At the beginning of 2009, analysts in Bangladesh and other South Asian countries were making fearful predictions that their remittance-dependent economies would be badly affected as overseas workers were fired from jobs and returned home empty-handed. But apparently the numbers tell a different story - for example, a 24% year-on-year increase in remittances in Pakistan in the first quarter of the 2009-2010 financial year.

Jyoti Rahman and Naeem Mohaiemen at The Star offer an alternative explanation: migrant workers who are fired from their jobs or who face deportation (as many have over the past year) have to send all of their money back home in one go, either through official channels or through the hawala system. They also point out that migrant labourers will virtually never invest any of their money in the country where they are guest workers - they send all of their earnings back home.

Rahman and Mohaiemen suggest that instead of looking at remittance flow figures, analysts should turn their eyes to airports:

Analysts celebrate remittance growth curves in seminars, but we need to unpack these shiny numbers. The Ministry of Expatriates' Welfare and Overseas Employment publishes the total number of migrant workers by year, but has no timely statistics on returns which, by evidence of our airports, is large. So we have no calculation of how many are coming back due to deportation or job loss.

While money may still be flowing in to Bangladesh and other Asian countries from the Gulf, there is a darker story behind the figures. It seems that you would only have to go and stand in an airport in South Asia and watch migrant workers returning 'empty handed, and wearing sandals' rather than laden with gifts and consumer goods to see that the individuals behind the statistics are in a bleak situation.

Advancing the rights of migrant workers throughout the Middle East