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July 2013, Volume 20, Number 3

South Asia: Migrants

Bangladesh. Almost 2,000 Bangladeshis a day leave for overseas jobs, 608,000 in 2012. Many leave in debt to moneylenders who lent money to pay recruitment costs. The government has been unable to enforce regulations that limit maximum recruitment fees to about four-months foreign earnings for low-skilled workers.

In April 2011, the government established the Probashi Kallyan (PKB) or Expatriates Bank to provide low-interest loans of up to 84,000 taka ($1,100), the maximum government-allowed recruitment charge. In its first two years of operation, the PKB made loans to 1,700 migrants at a nine percent interest rate. Most of the PKB's one billion taka capital came from the wage earners' welfare fund, supported by a mandatory contribution from departing migrants.

Bangladesh received $14.2 billion in remittances in 2012, equivalent to 10 percent of GDP and over 12 times FDI arriving in the country. Two-thirds of Bangladeshi remittances are from the Gulf Cooperation Council (GCC) countries.

Most Bangladeshi migrants are low-skilled and earn $200 to $300 a month abroad. Many rely on the oral promises of recruiters and their agents about wages and working conditions abroad.

The Bangladeshi government proposed the Overseas Employment and Migrant Workers' Act of 2013 to improve protections for migrants by separating recruiters according to their compliance with recruitment laws and their ability to send workers to countries that offer good wages and working conditions. The Bangladesh Association of International Recruiting Agencies (BAIRA) opposes the OEMWA, arguing that a better strategy is for the government to reward the best recruiters. BAIRA says that recruiters, who would be designated commercially important persons or CIPs, could bribe their way onto the CIP list.

BAIRA opposes the 2012 government-to-government agreement with Malaysia that anticipates moving 30,000 Bangladeshis to Malaysian plantations in 2013. The Bangladeshi workers will pay 40,000 taka ($490) in recruitment costs and earn 25,000 taka ($300) a month in Malaysia.

As of June 2013, fewer than 200 Bangladeshis had left for Malaysia under the MOU when 600 Bangladeshis were recalled to the Bureau of Manpower, Employment and Training in Dhaka to have their photos retaken with a blue background, as required by the Malaysian government.

In June 2013, the World Bank provided $2.6 million to the NGO BRAC to educate potential migrants about work abroad.

Garments. The eight-story Rana Plaza building in Savar that housed five sewing factories collapsed April 24, 2013, killing over a third of the 3,000 workers who made clothes for export. The Rana Plaza collapse is considered the deadliest accident in the history of the garment industry.

Structural flaws in the building were discovered on April 23, 2013, prompting the closing of some ground-floor businesses but not the sewing factories on the upper floors, which had heavy generators to provide electricity during regular brown outs. In November 2012, a fire at Taren Fashions which made clothing for stores such as Wal-Mart, left 112 workers dead.

Bangladesh exported clothing worth $18 billion in 2012 from 5,000 factories that employ four million workers; garments were 80 percent of Bangladeshi manufacturing exports. China, the world's leading clothing exporter, shipped clothing worth $154 billion in 2012. India, which exported clothing worth $13 billion in 2012, may take sewing jobs from Bangladesh due to safety concerns and strike-related losses there.

Walt Disney announced that it would stop having its licensed clothing made in Bangladesh, unleashing a discussion of whether sewing jobs that offer a minimum wage of 3,000 taka ($38) a month were helping to reduce poverty in Bangladesh or adding to the misery and danger of poor workers. Some clothing brands said they would stay in Bangladesh and step-up efforts to ensure that factories were safe.

Garment manufacturers emphasized that, with overtime pay, many sewers earn $70 or more a month, but acknowledge that this is not sufficient near the capital city of Dhaka. They estimate rent for a one-room apartment for a couple with one child at $40 a month and food costs of $50 a month make living costs more than the monthly wage for a sewer even with overtime. Garment manufacturers say that they are asked to produce shirts for $7 each, and that they spend $5 on two yards of cotton and $1 on labels and buttons, leaving $1 for sewing as well as shipping and profits, leaving them little room to raise wages.

After the Rana Plaza disaster, the Bangladeshi government closed 18 garment factories, signaling that it would begin to enforce building codes, and announced plans to increase the minimum wage and make it easier for workers to form unions. Swedish retailer H&M, the largest purchaser of garments from Bangladesh, in May 2013 joined other buyers in stipulating rigorous inspections of garment factories and promised to help to pay for safety improvements.

As garment buyers considered whether to stay in Bangladesh or move production elsewhere, some noted that only China, Bangladesh, Vietnam and Indonesia had manufacturers who could quickly ramp up production to produce thousands of items to the standards of major brands. Cambodia and Pakistan are developing firms with the capacity for mass production, but poor infrastructure and a lack of skilled workers keeps most garment production in China, Bangladesh, Vietnam and Indonesia.

Indonesia appears best positioned to take garment jobs from Bangladesh because its safety codes restrict sewing factories to two stories, making it easier to evacuate workers in a fire or emergency.

The US suspended Bangladesh from trade privileges for the poorest countries under the Generalized System of Preferences (GSP) in June 2013, a symbolic step to express concern over poor working conditions because the GSP does not cover garments. A quarter of Bangladesh's garment exports are sent to the US.

India. Some 747,000 Indians went abroad to work in 2012, up from 626,000 in 2011 but well below the peak 850,000 in 2008. Remittances were about $66 billion, almost six percent of India's GDP.

The southern Indian state of Kerala has the highest share of migrants, most of whom are in the GCC countries. Some 2.3 million Kerala residents went abroad in 2011, when remittances were equivalent to a third of the state's income, and 1.1 million returned, leaving a stock of 3.4 million Keralites abroad. About 44 percent of those leaving Kerala in 2001 were Muslims, followed by 37 percent Hindus and 18 percent Christians.

The Kerala government debated what to do about Indians in Kuwait and Saudi Arabia who are forced to return by crackdowns on illegal workers and nitaqat or nationalization-of-workers programs. The government promised a program to recognize the skills of returning migrants to help them find jobs in Kerala that use the skills they acquired abroad.

India's working-age population is growing, but not the number of formal-sector jobs. Some 60 million net new jobs were created between 1999-00 and 2004-05, but formal employment was stable between 2004-05 and 2009-10.

Lower profits at Infosys highlight the limits of information outsourcing, which employs about three million Indians and generates $75 billion a year in revenue. Infosys hires tens of thousands of IT specialists in India to help detect and fix problems in computer systems abroad. Most are paid about $5,000 a year, and most leave Infosys within five years. Some are being replaced by automated computer systems that can detect and fix problems.

Many Indian college graduates are frustrated by the lack of formal-sector jobs. By some estimates India produces twice as many new graduates each year as it can absorb, even though many new graduates expect to earn only $500 a month. Only 16 percent of Indians are in formal jobs that pay regular wages.

By contrast, about 85 percent of India's jobs are in "informal" enterprises that have fewer than ten employees and are not incorporated; 80 percent of these informal workers earned less than the national minimum wage of $1.46 a day in 2004-05. Another 11 percent of Indians have casual jobs, as with Bihar-based Frontline, which employs 86,000 security guards for offices, apartment and stores all over the country.

Many experts want India to create more manufacturing jobs. Data show that 30 percent of China's workers are employed in "industry," compared to 23 percent in India, but half of India's "industry" workers are in construction, a far higher share than in China. China created a net 130 million formal jobs in services and industry between 2002 and 2012.

Indian labor laws, which include 51 federal and 170 state laws, may discourage investment in manufacturing. Many factories get labor from third-party temp firms, so that the workers can easily be laid off. Directly hired workers in factories around Maruti earn $20 a day, while the 70 percent who are brought to factories by third-party temp firms earn about $5 a day. In China, factory workers Guangzhou earn about $10 a day.

The governing Congress Party in July 2013 promised a national food subsidy program that, if implemented, would be the world's largest. India is moving toward a market economy, and critics wanted to end fuel and food subsidy programs and change to cash-transfer programs that would enable poor residents to buy necessities; India currently distributes free and subsidized food and fuel via Fair Price Shops in a corruption-prone system. The new food subsidy program would expand spending on food and poor farmers from $15 billion a year to $21 billion.

Nepal. Nepal was charging $57 for a passport in spring 2013, almost twice the average $38 in South Asian countries and three times the $18 in India and $20 in Sri Lanka. Bangladesh charges $26 for a passport and Pakistan $32.

Nepal's Ministry of Labor and Employment in April 2013 announced a $240 minimum monthly wage for its citizens working in Oman and Bahrain. However, the Nepal Association of Foreign Employment Agencies said that less than a quarter of Gulf employer requests for foreign workers meet the minimum wage and other criteria established by regulations issued under the 2007 Foreign Employment Act.

Nepal in April 2013 asked the UAE not to approve domestic worker visas for Nepali women under 30; the UAE response was that the Nepali government should regulate exits. In response to cases of abuse, the Nepali government in August 2012 enacted a ban on women under 30 going to the GCC countries as domestic workers.

Sri Lanka. Since 2010, women going abroad to be domestic workers must be at least 21. In May 2013, the government raised the minimum age to 23 for domestic workers going to Middle Eastern countries and to 25 for those going to Saudi Arabia.

There were an estimated 1.7 million Sri Lankans abroad in 2013, including 600,000 in Saudi Arabia.