26 July 2020, NIICE Commentary 5655
Arhama Siddiqa
It is difficult to overvalue the role of migrant labor in the Gulf, where jobs in construction, sanitation and conveyance are predominantly undertaken by millions of personnel, mainly from South Asia. As a result of COVID-19, countless migrant workers in the Gulf countries have been laid off, forced into lockdown in overcrowded, unhygienic environments with no income and many to this day are powerless to return home due to travel limitations. For Pakistan, manpower resource is extremely valuable, especially in view of the fact that over 60 percent of Pakistan’s population is made up of young people. Lack of employment opportunities and the burden of familial responsibilities are the main push factors for young people to migrate abroad in order to seek better economic opportunities. Government data shows that before the pandemic, almost 4.7 million Pakistanis were employed in the Middle East. In April 2020, the Government of Pakistan according to a plan authorized by the National Coordination Committee on COVID-19 started carrying out stepwise repatriation. A Crisis Management Unit within the Ministry of Foreign Affairs was also been formed for this purpose. By 18 July 2020, all 250,000 Pakistanis abroad, including expats had been brought back to their country.
Impacts on the Economy
Short-term Impact
The Coronavirus pandemic presents an intimidating test for the Pakistani government. Migrant workers returning home could become carriers of the virus to unaffected areas. Even though reasonable safety measures are being taken, the threat of the spread of the disease still poses a challenge. Even though the COVID-19 curve is starting to flatten in Pakistan, consequences could be detrimental if the virus goes unbridled, especially with Eid ul Azha around the corner. Whether or not the home country benefits from returning emigrants depends on the latter’s success in accumulating savings and capital as well as on the home country’s aaptitude to make use of the emigrant’s skills and investment. Having said that, a majority of the Pakistani workers returning from abroad do not have much savings since they send money back to their families on a monthly basis. Moreover, given that shifting saving is a one-time measure, the effects of the lack of remittances have been highly visible from the very next month of lockdown.
In light of COVID-19, strict curfews have been enforced on daily functioning of the economy. In this scenario, a huge influx of unemployed workers, causes anxiety and even in some cases resentment – both from within existing circles and those coming in- something which could have negative repercussions for the society. Hence, reintegration of these workers into society must be one of the top priorities of the government.
Long- term Impact
For Pakistan, remittances make up about 86 percent of the secondary income balance of the economy of Pakistan. Out of this, approximately 60 percent come in from the Gulf countries. Officials have predicted that the decline in foreign remittances will mean that at least 10,000 to 11,000 households will be directly affected
Moreover, before the COVID-19 hit, around 60,000 people were in the process of applying abroad for jobs. Of these 20,000 Pakistani workers were in the process of entering Saudi Arabia. Given the current economic downturn coupled with the recession in global price in oil and discontinuation of all tourist projects in the Gulf countries will mean the cessation of manpower import for a while at least. The International Monetary Fund has already estimated the unemployment rate projection for Pakistan to be 6.2 per cent for 2020. It should not be forgotten that unemployment has a high correlation with a country’s crime rate. Moreover, if high rates of unemployment persist, it could lead to a drop in literacy rate and a rise in domestic violence as well
Measures taken by the Government of Pakistan
Various ministries of the Pakistan Government are working in close coordination with each other to help strengthen the reintegration process for the returnees. The Pakistan Bureau of Emigration and Overseas Employment (BEOE) is coordinating with the National Vocational and Technical Training Commission to get skills certified and if need be, upgraded with the help of various Technical and Vocational institutions of the country. This will ensure better employment for workers in the future, both abroad and locally. Furthermore, laid off workers having skills will be provided technical and financial assistance under the Kamyab Jawan and Ehsaas programmes. Meanwhile, the Overseas Pakistani Foundation (OPF) is also working to help recover remaining salaries of the workers from their foreign employers. OPF chains of schools are also offering tuition waivers to children of expats as well as acquiring grants for setting up micro enterprises for repatriated workers.
The Pakistan Government has also devised a plan to utilize the repat workforce in different welfare projects, including ‘Clean and Green Pakistan’. The Punjab government has decided to establish the largest Special Economic Zone (SEZ) of the country in Chaubara along the Muzaffargarh-Layyah road to boost economic activity in the impoverished areas of South Punjab. The plan is to accommodate the workforce in the economic zone in addition to creating jobs for locals.
Policy Recommendations
- Bureaucracy and red tape can create roadblocks in repatriation efforts and expat investment opportunities. To benefit from returning expats, home countries need policies that encourage returnees’ investment and labour market reintegration.
- Insurance policies should be intensified and existing policies regarding overseas Pakistanis need to be widened so as to encompass emigrants.
- All concerned ministries should ensure minimum job loss of overseas Pakistanis by engaging and cooperating with foreign governments so that those who have already cleared the application process can still be provided for in the future.
- Emigrants who have managed to accumulate savings, may set up small businesses when they return to Pakistan. Cottage and small-scale industries make up for 80 percent of employment in Pakistan. However, it is a neglected sector of the Pakistani economy. Which is why they should be encouraged and facilitated so that they can improve their production and quality at par with international standards. There is also a need for sound policies, secure financial and legal environment to stimulate investment and other capital inflows in this regard.
