by Moiz Mannan
The initiatives of various Gulf countries for nationalising their workforces may have created a flutter in high labour exporting countries of the developing world, but one must ask whether, in this globalised world, is it really feasible to stop the movement of migrant workers.
There are valid social and political reasons for labour importing countries to impose restrictions on foreign labour. One could argue that similarly, there are internal compulsions on governments to restrict totally free flow of capital, goods and services as well.
There are many criticisms of the World Trade Organisation’s (WTO) functioning in this regard. However, not going into the merits of the charges traded between the developing and the developed world in this regard, one must also see the writing on the wall. Globalisation is a process that cannot be rolled back. It can only go ahead. Just as countries can’t remain isolated in terms of trade and finance, so also perhaps it would be difficult to turn away from the economic realities of having migrant workforces.
Following the Uruguay Round of negotiations, the WTO also implemented the General Agreement on Trade in Services (GATS), which is of particular relevance to the movement of people across international borders.
Mode 4 of GATS covers issues related to a foreign national providing a service within a country as an independent supplier (e.g., consultant, health worker) or employee of a service supplier. (e.g., consultancy firm, hospital, construction services company).
For some countries money sent back in the form of remittances from migrant workers constitutes a substantial portion of GDP and their balance of payments. For very poor countries like Tajikistan, remittances make up nearly 50 percent of GDP so clearly it is very important for increasing GDP and living standards.
This money can be used to reduce relative poverty and fund capital investment. It counts as a credit in the balance of payments current account (net transfers) and so enables a higher standard of living. It can fund capital investment and small business.
Remittances are sent to family members, therefore unlike aid it isn’t siphoned off into corruption or misdirected arms projects. However, remittances may not be sent to the very poorest in developing economies meaning that remittances still leave a gap, which may need to be funded
by aid.
The movement of people across international boundaries — has enormous implications for growth and poverty alleviation in both origin and destination countries.
According to the United Nations, more than 215m people live outside their countries of birth, and over 700m migrate within their countries. In the coming decades, demographic forces, globalisation and climate change will increase migration pressures both within and across borders.
The World Bank’s studies have shown that international migration boosts world incomes. Remittances generally reduce the level and severity of poverty, typically leading to: higher human capital accumulation; greater health and education expenditures; better access to information and communication technologies; improved access to formal financial sector services; enhanced small business investment; more entrepreneurship; better preparedness for adverse shocks such as droughts, earthquakes, and cyclones; and reduced child labour. Diasporas can be an important source of trade, capital, technology, and knowledge for countries of origin and destination.
Remittance flows to developing countries are estimated to have totalled $401bn in 2012, an increase of 5.3 percent over the previous year. Global remittance flows, including those to high-income countries, were an estimated $529bn in 2012.
According to the World Bank, the top recipients of officially recorded remittances in 2012 were India ($69bn), China ($60bn), the Philippines ($24bn), and Mexico ($23bn). Other large recipients included Nigeria, Egypt, Pakistan, Bangladesh, Vietnam and Lebanon. However, as a share of GDP, remittances were larger in smaller and lower income countries; top recipients relative to GDP were Tajikistan (47 percent), Liberia (31 percent), Kyrgyz Republic (29 percent), Lesotho (27 percent), Moldova (23 percent) and Nepal (22 percent).
The World Bank estimates that the remittances sent home by migrants to developing countries are equivalent to more than three times the size of official development assistance. So even as we’re talking about a joint working group being set up by India and Saudi Arabia and even as the so-called ‘money order economies’ of major manpower exporting states like Kerala brace for an influx of returnees, the situation still demands a reply as to whether the host countries can really do without migrant labour?
The Peninsula
