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July 2011, Volume 18, Number 3

South Asia, Gulf

Bangladesh. The Fourth Ministerial Consultation of Colombo Process was held in Dhaka in April 2011. During the meeting, Bangladesh announced the formation of an Expatriate Welfare Bank and pledged to clean up a recruitment process that means most Bangladeshi migrants leave the country with debts equivalent to 20 to 30 percent of what they expect to earn abroad.

Gulf Cooperation Council representatives called on migrant-sending countries to regulate "all actors in the recruitment chain, including subagents" to better protect migrant workers. The GCC proposed that migrant-sending countries send approved contracts to government agencies in migrant-receiving countries so that migrants are not presented with new contracts after arrival, so-called contract substitution.

The meeting ended with a ten-point Dhaka Declaration that called for paying special attention to vulnerable workers, developing contingency plans for mass repatriations, and dealing with climate-change-induced migration.

Bangladesh, which received $10 billion in remittances in 2010, equivalent to 11 percent of GDP, said the new Expatriate Welfare Bank, with a billion taka ($137 million) in capital (85 percent from the Expatriate Welfare Fund to which departing migrants contribute) would make collateral-free loans to migrants to cover recruitment costs. The EWB promised to open branches in countries with Bangladeshi migrants, and to make loans to migrants who want to start job-creating businesses upon their return to Bangladesh.

Bangladesh sent 875,000 migrants abroad in 2008 and 358,000 in 2009. If migrants pay an average $2,000 in pre-departure recruitment costs, the EWB's initial capital will cover recruitment costs for 68,500 migrants, suggesting the need for a mechanism to allocate limited funds. In other countries offering collateral-free pre-departure loans, recipients have been nominated by politicians, and repayment rates have been poor.

India. A sixth of the world's seven billion people, some 1.2 billion, are Indian. India has the world's fastest-growing labor force, expanding by 12 million a year, and the largest number of poor people; some 455 million Indians live on less than $1.25 a day. India spent two percent of its $1.4 trillion GDP in 2010, $29 billion, on social programs to alleviate and prevent poverty, but much of this government support was absorbed by government administrators and middlemen.

The Mahatma Gandhi National Rural Employment Guarantee Scheme is trying to spread the benefits of India's economic growth to the rural areas where two-thirds of Indians live. It provides $9 billion a year for 100-day a year jobs for poor Indians, who earn 100 ($2.25) or 125 rupees a day. The NREGS wage is higher than the day-laborer wage in many areas, which may increase the dependence of rural Indians on the government. Furthermore, NREGS requires that workers work without machinery to maximize the number of jobs, but this inefficient use of labor means that few roads or other major infrastructure is built.

The Wall Street Journal on April 30, 2011 concluded that the NREGS was riddled with corruption, as some local leaders give available jobs to relatives and supporters who did not show up to work. In other cases, local leaders demanded kickbacks to get jobs, and a 2008 plan to pay workers via bank accounts backfired because of a combination of workers desperate for their wages and the government needing at least a month to make the bank deposit prompted many workers to accept less pay immediately from moneylenders and turn over their full pay when it was received to repay the loan.

India liberalized its economy in 1991, and economic growth has accelerated, but employers complain they cannot find enough qualified workers. Employers blame the education system, which was not reformed. Employers say that over three-fourths of Indian college graduates cannot be put to work without remedial training.

There are several reasons why Indian credentials do not always indicate abilities, including rampant cheating on college tests. Many students seek credentials rather than skills, and employers say that most graduates lack analytical skills. Tata Consultancy Services, for example, gives new hires 72 days of training. Tata expects to hire 65,000 new workers in 2011, and says that only 10 percent of the 3,000 Indian engineering colleges produce graduates whom it can hire.

Sri Lanka. Sri Lanka deployed 266,400 workers abroad in 2010, up from 247,000 in 2009, including 113,000 domestic helpers, 42 percent, who mostly went to Gulf oil exporters to work in private homes. Critics emphasize that Sri Lanka missions in Gulf oil exporters are more likely to be staffed by diplomats with links to politicians dependent on Sri Lanka recruiters than by women sensitive to the concerns of Sri Lanka domestic helpers abroad. The Sri Lanka government, which puts the stock of Sri Lanka migrants abroad at 1.5 million, aims to reduce deployments of domestic helpers by sending more skilled workers to destinations outside the Middle East.

The Sri Lankan government is considering an Overseas Employees Pension Benefits Fund that would provide pension benefits for migrants who pay at least Rs 12,000 a year before reaching 55; pension benefits would be available after age 65. Critics said the bill was vague, noting that it requires contributions in two consecutive years, but does not spell out benefits.

Gulf. Iraq's government in June 2011 announced plans to reduce the employment of foreign workers in order to open jobs for some of the 900,000 unemployed Iraqis. Under new laws, private firms will not be able to bid for government contracts unless they have at least 50 percent Iraqi workers. Some migrant workers who paid up to six months wages for jobs, fear that they may have to leave before their work permits expire; the government plans to give laid-off migrants at least six months to find other jobs. Iraq's minimum wage is $600 a month; most migrant workers earn $200 to $400 a month.

Saudi Arabia in May 2011 stepped up efforts to replace migrant workers with Saudis, a process known as Saudization. Unemployment among Saudi youth approaches 30 percent, and fears that jobless youth could protest add urgency to Saudization. A third of the 2.5 million foreign workers in Saudi Arabia are Egyptian.

Under the notaqat (zones) program, private employers are divided into four categories based on the share of their employees who are foreigners. Those with more than 90 percent foreign employees will not have work permits renewed for any foreigners they have employed six or more years.