Slowing remittance growth poses 'downside risks' to Bangladesh: World Bank

Bangladesh is experiencing a distinct slowdown in growth of inward remittances, a key contributor to the economy, in the wake of the COVID-19 pandemic, according to a new report published by World Bank.

News Deskbdnews24.com
Published : 19 Nov 2021, 06:18 AM
Updated : 19 Nov 2021, 06:18 AM

Remittances rose above pre–COVID-19 and 2020 levels by almost 6 percent to reach $23 billion in response to the government’s tax cuts and other incentives in 2021.

However, in October 2021, remittances to Bangladesh were down 21.7 percent year-on-year, the global lender noted in its report titled ‘COVID-19 Crisis. Through a Migration Lens.’

The slowing growth in terms of money sent back by migrants in the first nine months of 2021 suggests "downside risks" for 2022, it said.

The report attributes the slowdown to a lull in outmigration of return migrants, keeping remittances flat this year.

The influx of foreign workers in the Gulf Cooperation Council (GCC) countries, which are among the top destinations for migrants and top sources of remittances, have continued to decline in 2021.

Deployment of workers from Bangladesh in the GCC region fell by 19 percent in the first three months of 2021, compared to the same period of 2020.

High airfares and COVID-19 requirements (multiple pretravel RT-PCR tests), which are financially costly for migrants from countries where testing is expensive, along with the slow pace of visa issuance in the GCC countries have also bogged down outmigration.

Around 40,000 Bangladeshis who came home on vacation could not return this year.

In all developing regions of the world, migrants stepped up their support to families back home, especially to countries affected by the spread of the COVID-19 Delta variant.

Their ability to help was enabled by a welcome pickup in economic activity and employment in major migrant destination countries, grounded partly in the exceptional COVID-19 emergency fiscal stimuli and accommodative monetary policies, the report says.

The SDG indicator 10.7.1 monitors global efforts to reduce migrant recruitment costs. Migrants continue to pay exorbitant amounts to get jobs abroad, the report said.

Newly released data covering the 2019– 20 pre-pandemic period shows that Bangladeshi workers in Saudi Arabia paid the equivalent of 20 months of their foreign earnings (around $5,000), while Vietnamese workers heading to the Republic of Korea incurred costs close to 9 months of their salary abroad (over $9,200).

There has been a shift in policy in the GCC countries, which are now looking for more skilled workers to diversify their economies.

Saudi Arabia granted 12 percent fewer work visas in Q1 2021 to lower skilled workers relative to the same period in 2020, while Oman reported a 15 percent decline in Bangladeshi workers during that time.

Return migration has increased due to falling employment and incomes for migrant workers. For example, Malaysia had repatriated nearly 90,000 undocumented migrant workers since November 2020.

According to the UNHCR, the majority of those returning from Libya are nationals of Bangladesh, Sudan and Mali, with the South Asian country accounting for 11 percent of the returnees.

Migrant workers are among the most vulnerable groups affected by the COVID-19 pandemic. From losing jobs to being stranded and lacking access to health care and support services, such workers are struggling to cope, even more with additional movement restrictions induced by the spread of the Delta variant.

In comparison with the overall economy (GDP), the importance of remittances varies across South Asian countries. In 2021 Bangladesh, Nepal, Pakistan and Sri Lanka featured in the list of top 50 recipients of remittance inflows in the world.

The significance of remittances in their economies ranged from about 6–8 percent of GDP for Bangladesh, the World Bank said in its report.

But several challenges face less-skilled South Asian migrants in the medium term, the report warned.

To prepare for a future with low oil prices, GCC governments are considering a variety of diversification policies that will require large numbers of skilled migrants.

The United Arab Emirates recently announced green visas that will offer more attractive terms for skilled migrants. Saudi Arabia’s Vision 2030 plan is expected to create 400,000 new jobs requiring mostly skilled workers.

These strategies provide an early warning to South Asian governments to begin investing now in training their workforce for more skilled jobs in the GCC countries in the medium term.

As at least 50 percent of Bangladesh’s 5 million migrants in the GCC countries are less-skilled workers, the benefits of this win-win retooling strategy will be huge for the migrants and the government alike.

Presently, the average monthly remittance of a Bangladeshi migrant who performs manual work is only $203 compared to $276 for a Pakistani, $396 for an Indian, $564 for a Filipino, and $533 for a Chinese.

The hike in remittances from more-skilled Bangladeshi migrants could be a windfall for Bangladesh and its migrants.

A World Bank survey of households in Bangladesh conducted in April– May 2020 reported 25 percent greater declines in earnings and fourfold greater prevalence of food insecurity among migrant households since March.

The G-20 leaders meeting in Rome called for preventing irregular migration flows and the smuggling of migrants.

Toufique Imrose Khalidi
Editor-in-Chief and Publisher