With Declining Job Opportunities At Home, Boosting Manpower Export On The Double Is The Answer
Muhammad Ziauddin in this article argues how Pakistan can reduce its current account deficit by devising a sound, workable and administratively unambiguous manpower export policy, like India, Philippines and Bangladesh.
It is not possible to curtail imports more than what we have already done. The annual bill would perhaps remain in the vicinity of $40 billion plus for some years to come. And no matter what Herculean efforts we make on the export front, the income from this source is not likely to cover even half of the import bill for a couple of years.
There is a limit to how much Saudi Arabia, UAE and China could cough up at three per cent interest rate. Perhaps the three have already reached the limit of their generosity. The concessional flows from the US and Europe including the UK as well as Japan have already tapered off and none of the traditional bilateral donors appears to be interested in helping us overcome our current balance of payments problems.
The multilateral aid agencies, like the World Bank, the International Monetary Fund and the Asian Development Bank are looking at the FATF for a signal, one way or the other. And even if we escape the black-list the conditionalities on offer by these agencies would be too disruptive for our economic and political health.
The political conditionalities, to say the least, would be so loaded as to undermine our sovereignty. And the economic help, even if it was extended, would not be coming in a day or two to meet the current account deficit that we are facing today or for that matter would be confronted with the next couple of years. They would continue to drag their feet until we kneel down at their feet begging for help.
Averting the ignominy
So, what do we do to avert this ignominy and still remain afloat avoiding a default without having to cut down the imports further to fit our current export earnings?
Boosting manpower export is perhaps the way out. We can significantly improve the inflow of remittances from overseas workers in a year or two to substantially cover the current account deficit we would be facing in the short term. But to make the most of this source of income we first need to boost manpower export on the war footing for which we need to urgently frame a policy and implement it in letter and spirit.
Other advantages of earnings from this source: Remittances also help add to the GDP significantly. In both the formal and informal economies remittances do create jobs and fund health and education expenses of ordinary people adding significantly to the government efforts on the social sector fronts.
Inflows from overseas workers have also been known to have contributed visibly to poverty alleviation by bringing about some kind of equity in income distribution. And there is irrefutable evidence that once basic needs are met, remittances are used for savings, debt repayment, consumer durables, land and housing purchases, small enterprise development and agriculture.
In the absence of credit from banking services to the lower strata of the population remittances partly serve as a source of savings from which the saver can mobilise investment funds not readily available from the banks for small scale enterprises sponsored by persons of humble means.
The best possible aspect of remittances is that if the flows are adequate these can to a great extent replace concessional and non-concessional loans that countries like Pakistan are forced to mobilise along with harsher economic and political conditionalities.
Indeed, we can revive our economy by focusing on manpower export, which has remained our second largest source of foreign exchange earnings for the last several years. But the fact is that we only get a fraction of what the other manpower exporting countries are getting. Even Bangladesh has received more remittances than Pakistan last year – $28 billion against our $20 billion.
It is unfortunate that there is no policy, strategy and vision to enhance the flow of remittances by increasing the export of manpower from Pakistan.
The Philippines, Mexico and India are said to have active policies that specifically aim at keeping diaspora engaged with the country through remittances. For example, the Indian governments have been selling diaspora bonds as a vehicle to support the government budget and to keep the diaspora financially engaged with the country.
In a country with un-employment rate as high as 15% and addition of 2.5 million workers each year in the job market and caught in the quagmire of energy crisis, terrorism menace and declining Law and order situation, the future prospects for our youth appear to be bleak, unless we try to send them out in search of greener pastures but with proper training, education and skills.
It is unfortunate that after Zulfiqar Ali Bhutto’s hugely successful initial efforts to export manpower to the Gulf, so little attention has been paid by successive governments to this endeavour.
Overseas employment is a specialized field and needs handling by professionals and experts who know the subject well. Market research and analysis need to be carried out to ascertain the real potential and opportunities in this area. So far Pakistan has lagged behind due to our un-professional approach.
Major bottlenecks in the way of boosting manpower export are: Lack of market research; Lack of skill development and non-availability of trained and skilled workers; Lack and non-availability of funds and resources to migrant workers; Lack of commitment and will on the part of the Government to reform, energise and pay attention to this very important subject which has been ignored so far.
The suggested actions needed on the part of Government in this regard are: Create a task force under direct supervision of Prime Minister, comprising of labour migration experts to prepare a crash plan for overseas employment of our workers.
This task force should be mandated to carry out proper research and labour migration analysis to ascertain job opportunities in the targeted countries; Strengthening of existing technical and vocational training institutes; Enhancing skill development by equipping skill development centers with latest equipment and training facilities; Launching a scheme to provide financial assistance to job seekers who have been registered with Protector of Emigrants (the Regulating authority for overseas employment). The amount so advanced will be recoverable through the remittances of these workers; The present unworkable, administratively confusing and legally illegal arrangement of two Ministers/Ministries – one for Labour & Manpower and another one for Overseas Pakistanis – should be immediately done away with. This dual control and wrong bifurcation has created more problems than smooth working of the relevant department.
Each year over 400,000 workers leave Pakistan for employment abroad through Bureau of Emigration and Overseas employment (the regulating authority) and are registered with Protector of Emigrants before their departure.
Each worker has to incur an expenditure of Rs 200,000 to Rs 300,000 (approx) in connection with Visa, documentation, services charges to government and employment promoter. They often sell their property, assets and obtain loans on exorbitant interest rates to meet these expenses. It will, therefore, be a great help to these job seekers if the government initially met the expenses and subsequently recovered the same from the worker in the shape of remittance.
The above policy framework recommendations have been gleaned from exhaustive work already done by Mr Rashid Ahmed Mughal, former DG (Emigration) and Consultant International organization for overseas workers.
The export of manpower is on the top of economic diplomacy initiatives for the governments of India, the Philippines, and Bangladesh, whose inward remittances amounted to $70bn, $28bn and $15bn respectively in 2014 and they have been rising exponentially. But Pakistan’s earnings through remittances are stagnating at around $20 billion for a number of years. India is the world’s largest recipient of worker remittances, followed by China at $64bn.
On the other end of the spectrum, the apathetic attitude of our governments is demonstrated by the recent memoranda of understanding signed with Qatar.
With a major infrastructure push under way in Qatar in preparation for its hosting of the football World Cup in 2022, it is today perhaps one of the biggest importer of manpower among the regional countries. Not so, it seems, for Pakistan.
Out of a total estimated global pool of 247 million migrants, the total strength of Pakistan’s diaspora has been barely growing over the last several years from its strength of around seven million. Bangladesh has nine million emigrant workers, India around 25 million.
The biggest hurdle in the way of boosting our manpower exports is the increasing demand in the importing countries for manpower holding certificates in such skills as gardening, carpentering, electricians, plumbing and low-level hotel services like bell-boys etc. And now there is this increasing demand for manpower well-versed in primary high-tech know-how.
The Fourth Industrial Revolution is said to be causing a large-scale decline in developed countries in some roles as they become redundant or automated. According to the 2018 Future of Jobs Report, 75 million jobs are expected to be displaced by 2022 in 20 major economies. At the same time, technological advances and new ways of working could also create 133 million new roles, driven by large-scale growth in new products and services that would allow people to work with machines and algorithms to meet the demands of demographic shifts and economic changes.
In addition, such measures should be complemented, it is advised, by strategic rethinking on how work is regulated and which areas of job creation could enhance societal benefits. A recent white paper suggests that countries should work to increase public and private investment in three areas: people’s capabilities, institutions and rules related to work, and sectors that are poised for growth and that benefit society, including care, education, water, energy, and digital and transport infrastructure.
The World Economic Forum provides a platform for such alliances to urgently deliver new skills for today’s workforce as well as designing education for the future workforce. The Closing the Skills Gap initiative serves as a platform to focus fragmented actions within one overarching mission to address future-oriented skills development, while at the same time supporting constructive public-private collaboration on urgent and fundamental reform of education systems and labour policies to prepare workforces for the future of jobs through country-specific programs, global and regional exchanges of best practices, and global business commitments.
These efforts have resulted in a global network of public-private task forces in India, South Africa, Argentina and Oman, in addition to several global partner companies pledging to reskill or upskill 17 million workers globally, exceeding the 2018 goal to help 10 million workers by 2020.
According to Børge Brende, President of the World Economic Forum (We need a reskilling revolution. Here’s how to make it happen—published in the WEF’s newsletter dated April 15, 2019) as the world faces the transformative economic, social and environmental challenges of Globalization 4.0, it has never been more important to invest in people.
He says, valuing human capital not only serves to equip individuals with the knowledge and skills to respond to systemic shifts, it also empowers them to take part in creating a more equal, inclusive and sustainable world.
Education is and will remain critical, he adds, for promoting inclusive economic growth and providing a future of opportunity for all. But as the technologies of the Fourth Industrial Revolution create new pressures on labour markets, education reform, lifelong learning and reskilling initiatives will be key to ensuring both that individuals have access to economic opportunity by remaining competitive in the new world of work, and that businesses have access to the talent they need for the jobs of the future.
He is talking about the state of employment in rich countries which would mean the state of employment in emerging markets and developing countries would be even worse. Therefore, countries like Pakistan whose dependence on foreign remittances has become crucially important would need to arrange crash courses for training their manpower for future job prospects.
In nominal dollar terms recorded remittances sent home by migrants from developing countries reached almost $500 billion in 2017-2018, a rise of over 8.5 per cent from 2015-2016. This amount, however, reflects only transfers through official channels. However, unrecorded flows through informal channels may add 50 per cent or more to recorded flows. Including these unrecorded flows, the true size of remittances is estimated to be larger than FDI inflows and more than twice as large as official aid received by developing countries.
- Global Migration rate 3%.
- One out of every 35 persons is a migrant.
- Total migrants estimated to be 200 million.
- About 70% of total Remittances go to developing countries.
- Remittances from Labour migrants rising at 18-22% every year.
- Total Remittances in 2012 $582 Billion out of which $360bn went to developing countries.