How deepening Middle East crisis could impact labour market, RMG export

As the conflict between Hamas and Israel escalates, concerns are growing among thousands of migrant workers, particularly in Lebanon and Jordan, about job security in an increasingly unstable environment.

Since the war began in October last year, tensions have spread to Iran and Lebanon. Experts caution that if the conflict continues to escalate, it could severely impact Bangladesh's economy, as around 6 million Bangladeshi workers are employed in the Middle East.

The ongoing crisis not only threatens remittances, a vital source of income for many families, but could also impact the ready-made garment (RMG) sector and the energy sector, they said.

Fear and uncertainty loom over remittance earners and stakeholders, particularly in Lebanon, where the Bangladesh embassy has begun evacuating workers wishing to return home. 

Lebanon is currently home to around 1 lakh Bangladeshi workers, according to an unofficial estimate. 

At least 15,000 Bangladeshis have become jobless in Southern Lebanon and shifted to capital city Beirut since the Israeli attack started in late September this year, according to migrants in Lebanon. 

Among them, around 1,800 have registered under the Bangladesh embassy in Beirut to return home till Thursday. The first batch of 47 migrants (54 including their children) will leave the country today and reach Dhaka tomorrow under the arrangement of the Bangladesh embassy. 

Jordan, which borders both the West Bank and Israel, also hosts over 1 lakh Bangladeshi workers, primarily skilled female garment employees. The potential for the conflict to spill into Jordan is raising alarms, especially given the country's already significant refugee population.

Labour recruiters said worsening conditions surrounding the Israel-Palestine conflict will have a ripple effect across the entire region, particularly impacting the six Gulf States: Saudi Arabia, UAE, Qatar, Kuwait, Oman, and Bahrain. 

Last fiscal year, these states generated $11.78 billion in remittances, accounting for over 49% of Bangladesh's total remittance income, according to Bangladesh Bank data.

M Humayun Kabir, former diplomat and president of the Bangladesh Enterprise Institute, told The Business Standard that there is a growing risk of instability in the entire Middle East labour market and the government must take the situation seriously.

He said the ongoing war also poses an energy risk for Bangladesh, as the country sources the majority of its fuel from this region. 

"Oil tankers are at increased risk of being targeted, which will drive up transportation costs. If the war drags on, the rising cost of oil imports will have a negative impact on Bangladesh's economy," he added.

Experts urge 'rescue plan'

Around 40% Bangladeshis workers are women in Lebanon as they go there as housemaids, according to unofficial estimates. Besides, people work in the service sector and manufacturing sector. 

"After the huge attack by Israel, about 20,000 Bangladeshis from southern Lebanon have moved to Beirut after becoming jobless, especially around the Rafik Hariri Mosque and Hamra Sanaya Park," Sheikh Mamun, a migrant in Beirut told TBS.

"We are providing support to workers who become jobless," he added.  

Mohammad Jalal Uddin Sikder, a migration expert and faculty member of Political Science and Sociology at North South University, told TBS, "We need to consider a rescue plan for the Bangladeshis if the conflict escalates and spreads further." 

He added, "In the event of job loss due to the war, we must prioritise rescue operations, provide financial assistance upon their return, and facilitate their placement in other job markets."

He also cautioned that if the Strait of Hormuz in the Persian Gulf is blocked due to the conflict, it could disrupt fuel supplies.

"If Iran is attacked, it is likely to retaliate, closing off supply lines. This would increase the chances of our people becoming unemployed in neighbouring countries," he added.

Regarding the safe evacuation of migrants, Foreign Affairs Adviser Touhid Hossain on Thursday said many do not wish to return because they have invested a significant amount of money to go there. "Despite knowing the risks, they prefer to stay due to uncertainty about what they would do back home."

He added, "Among those who have registered to return, nearly 90% have become undocumented, which poses additional challenges. We will need to secure clearances for them, and we are working to waive any associated fines. We are bringing those who wish to return at government expense."

Shamim Ahmed Chowdhury Noman, former secretary general of the Bangladesh Association of International Recruiting Agencies (Baira), told TBS that if people start returning from Lebanon, preparations need to begin immediately. 

"A database for returnee migrants must be created to facilitate their reintegration, and new markets in Europe should be explored," he suggested.

RMG exporters worried 

According to industry insiders, as apparel exports to the Middle East continue to flourish, exporters expect the market to exceed $5 billion within the next five years. However, ongoing conflicts pose a significant risk to this growing regional market.

BGMEA President Khandoker Rafiqul Islam told TBS that if the current tensions escalate into a broader war, the global economic impact could be devastating. 

He also warned that if the tension continues, Bangladesh's apparel exports to the Middle East could be negatively affected, as the instability may prompt brands to hesitate in placing orders, leading to reduced trade activity in the region.

Meanwhile, shipping companies are skipping the Red Sea, rerouting their ships around Africa and the Cape of Good Hope, adding one to two weeks to voyages. 

At least 90% of the container ships that had been going through the Suez Canal are now sailing around the tip of Africa, causing freight cost for a standard 40-foot container from China to northern Europe to go up from $1,500 to $4,000, AP reports quoting Kiel Institute for the World Economy in Germany.