The Political Economy and Bureaucracy of Remittance Payments

Working abroad has been a clear path to comfort and riches for Bangladeshi men for over twenty or more years.  Mass migrations of a generation of young men to the Middle East and South East Asia have propped up Bangladesh’s economy through long spells of dictatorship and democracy.  Throughout that time, remittance payments have been processed and absorbed into the economy in a decentralized manner.  The sitting Awami League government of Bangladesh intends to change that.

According to the Bangladesh Economic Review more than 5.5 million people work abroad and the vast majority of these people send home cash payments in order to provide for their families in cities and villages spread out over the whole country. (According to the Association of Female Migrant Workers of Bangladesh, some 330,000 of these individuals or 6% of the total foreign migrant population are women; I’ll soon jot down some thoughts about the disparate impact of Bangladeshi women’s employment in the foreign job market).  But more important than the absolute number of people working abroad, is the number of people who leave every year–900,000–to seek employment abroad and send back money to sustain their families back home every month.  The official value of those remittances makes up about 12% of GDP in Bangladesh.  There is strong evidence that at least as much money flows into Bangladesh through unofficial channels

Though officially 900,000 work ready individuals leave the labor market in Bangladesh to seek their fortunes, there is evidence that many more people have sought and have found employment in other countries.  The real numbers of foreign migrant workers is likely higher because there exists a substantial market for individuals who seek employment through illegal back channels and find work through similar, associated,  illegal, black market channels in host countries.  But since these individuals are persona non-grata in their host countries, they send back their money at irregular intervals through less than accountable means, with the consequence that the value of such remittance payments does not register in the government rolls.

That was fine, whilst the global job market could soak up a surplus of low-wage, low-skill labor from Bangladesh.  In the last decade, the oil rich countries in the Middle East worked with Bangladesh and Bangladeshi workers to staff its firms and industrial assets. During that time remittance payments were large and, far too numerous for the government–any government–to take stock of the money coming in, so long as the money coming in could take the place of government investment in town and village infrastructure.  Now that the global financial crisis has adversely impacted the foreign, international, labour market, and work has dried up in those countries that used to soak up Bangladeshi  human capital, it has become imperative that the government take stock of the money coming in.  Moreover, as Bangladesh’s foreign reserves have dipped, taking stock of that inflow has become doubly important.

Hence, as the Daily Star reported over the weekend, Zafar Ahmed Khan, the Expatriates Welfare Secretary, announced that the government would try to secure that unofficial flow of remittance payments within official channels.

“Last year the money sent by the migrants was $10.72 billion. Almost the same amount comes through unofficial channels. If incentives are provided, remittance through official channels will go much higher.”

However, supporters of migrant workers rights and well-being like the “International Centre for Diarrhoeal Disease Research, Bangladesh” have called for greater social security for those migrant workers who have been let go from their lucrative jobs. NGO’s like ICCDDR,B have long argued that though these workers are well-paid relative to prevailing wages in Bangladesh, they are often underpaid relative to wages in the host country, and suffer deplorable working conditions.

NGO’s that support foreign migrant workers rights and claims have long sought to provide for a social safety net for these individuals in just the case that they lose their jobs abroad.  Due to the large number of non-illegal or, worse, illegal foreign workers, there is no unambiguous consensus on where the average foreign worker finds employment, in what and how. NGO’s and even the Ministry of Expatriates Welfare and Overseas Employment have lobbied the government to include the migrant worker population in the 2011 census.  NGO’s have argued that because many of these people though citizens are unknown to the government, when calamity strikes they fall through the cracks; government, unable to find them, in a manner of speaking, thinks them ephemeral data points, well within the margin of error.

One strong argument for including more information about migrant workers in the government bureaucracy is that if the government incorporates the well-being of these workers, they would more gladly pay remittances through official channels, thereby propping up the macro-economy.  Say, as NGO leaders have claimed, that the government takes a small portion of the net value of remittances and diverts those funds to service the welfare of those individual, the simple fact of the discovery of those workers and their history would pull them into government databases and rolls.

Perhaps the truth will set the migrants workers free.