By: Faheem Haider

Note: This post reflects the views of the author, not those of the Foreign Policy Association. The author is an independent contributor.

The World’s South Asia blog had recent post on the background facts behind my recent piece on the central government’s takeover of migrant recruitment and management.

Zahid Hussain’s post fills in the numbers gap between the latest news on international migrant workers and the government’s latest move to own a larger share of the remittances that make up an ever increasing share of the gross product of the Bangladesh economy.

Hussain presents the latest findings of the Final Report on the Bangladesh Household Remittance Survey–the latest data available, of its kind–sponsored by the International Organization for Migration.

Collecting data from a representative sample of 10,926 migrant households, the survey has some very interesting, though quite predictable findings.

Migrants are, in general, young, averaging 32 years old, familied men, who mostly seek low-skilled job contracts, and mostly migrate to the Middle-East and Southeast Asia.

Migrants are not poor, for the costs of obtaining these contracts tend to be many times above the government mandated fee. Indeed, the cost of obtaining these contracts is 5 times GDP per capita. Migrants tend to own homes and given the cost of migration –by no means a negligible amount, much of it paid by selling land–migrants tend to select themselves from the middle and lower middle class.

The most interesting finding, however is, that given the high costs of migration, survey respondents report that, nevertheless, it is worthwhile to seek international migrant worker contracts.

On the economic incentive to migrate, Zahid Hussain writes:

“On average migrants earn Tk 21,363 per month (6 times our FY09 GDP per capita), although the majority (54.3 percent) earn between Tk 10,000 to 20,000 (2.8 to 5.6 times GDP per capita). Migrants save 62 percent of their income on average and the amount they save per month constitutes 3.7 times our monthly GDP per capita.”

He also cites some data that suggests that given the fact that on average migrants remit nearly half their savings, the government is only being a rational actor is seeking to systematize and regulate remittance payments.:

“Migrants remit on average Tk 81,710 per annum (1.9 times per capita annual GDP and 32 percent of migrants’ average income) in three to four installments. The amount remitted comprises 1.6 times the recipients’ pre-remittance income. Also, the average amount remitted constitutes 51 percent of migrants’ average savings, suggesting a significant part of their savings is not remitted. This is a new insight.“

Zahid Hussain’s run down of those regularities found in the data are interesting. Again, so that nothing significant gets lost in translation, the findings of the data are directly quoted below:

The amount remitted varies positively by the amount of income migrants earn, the duration of stay, and the level of education.
Not all migrant households receive remittance. The total local income of recipient households is on average 34 percent lower than non-recipient households.
Remittances are mostly sent through banks (73 percent). Only 18 percent migrants reported using informal channels.
It takes on average 8.6 days to receive remittances from banks and shorter (4.7 days) through informal channels. The good news is that 87 percent receiving remittances through formal and informal channels reported not requiring to pay any fee and the other transaction costs (transport) are not very significant.”

Finally, Zahid Hussain points to well-known facts that remittance payments are a form of private social security: payments come in on top of household wage income and thereby raise the standard of living of the recipients in towns and villages dotting the country. The package of extra-income helps deleverage household debt while helping insulate recipient families from health and market shocks.

Given the data, it seems that left outside of government intervention remittance payments serve as a secondary source of intra-familial income, much as welfare payments serve as safety net for millions in Western democracies. The government’s move to systematize the recruitment and management of migrant workers is designed to impact the outcome variable of remittance payments. This is because the current privately run practices seems to have a negative impact on individual employment and therefore remittances.

If the government intervention into the private market scheme turns out to be successful, then it will be most interesting to observe whether the average share of income remitted increases to more than the current high of 51%. Alternatively, might the intervention have a negative consequence on remittance capture?

World Bank Outlines Latest Findings on Migrant Workers and Remittances in Bangladesh

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