Bangladesh should redefine its remittance strategy for entering new labour markets

In 2017, a record high of 10 lakh 8 thousand 525 Bangladeshis went abroad for work in a single year. By the end of this year, Bangladesh is going to break that record. In the first 10 months of 2022, we have already sent 9 lakh 47 thousand 873 employees, as per Bureau of Manpower, Employment and Training (BMET). 

Of them, more than 5.5 lakh has gone to Saudi Arabia alone, 1,44,881 to Oman and the remaining to other countries of the world. If this trajectory continues, come 31 December, it will cross 12 lakhs, the new highest number of manpower exports in a single year, in the country's history.  

As a single country, Saudi Arabia is our largest manpower export destination and as a region, it is the Middle East. Of them, Oman, UAE, Qatar, Kuwait, Bahrain, Jordan, Malaysia, Singapore, Brunei, Iraq and Libya are our major labour markets.

The Middle East for 90% of our expatriate workers. Bangladeshi workers have recently also been working in developed countries like Japan, South Korea, the United Kingdom, Italy, Greece etc. 

Changing demographic structures have turned many labour-surplus countries into labour deficit ones. A paper by The Boston Consulting Group (BCG) on 25 countries, titled 'The Global Workforce Crisis,' highlights how different countries are going to face a severe workforce shortage in the coming days due to post effects of Covid-19, the Russia–Ukraine War, decreasing birth rates and ageing populations. 

By 2030, the shortage of labour will be 10 million in Germany, 0.9 million in Italy, 24.50 million in China, 9.2 million in South Africa, 40.9 million in Brazil and 2.3 million in Canada. Of the 25 countries, South Korea will suffer the second greatest shortfall, and Japan too will also be affected. Surely, this will create an opportunity for Bangladeshi workers.

BCG shows that, by 2030, the shortage of labour will be 10 million in Germany, 0.9 million in Italy, 24.50 million in China, 9.2 million in South Africa, 40.9 million in Brazil and 2.3 million in Canada. Of the 25 countries, South Korea will suffer the second greatest shortfall, and Japan too will also be affected. 

Surely, this will create an opportunity for Bangladeshi workers.

At present, South Korea is facing their worst labour shortage in history due to their ageing population. As per a report from 'The Korea Herald' dated 8 August 2022, to run their industry and service sector, the Korean government plans to seek the fast entry of 42,000 workers, whose immigration process had been delayed during the period between 2020 and the first half of 2022. In addition, immigration checks for 20,000 expatriates will be sped up for the second half of 2022. For 2023, the Korean government will determine the quota for foreign workers soon.

According to 'KYODO NEWS' of Japan on 11 November, 2022, over half of the companies in Japan are suffering from a shortage of full-time employees due to the country's labour crunch, caused by an ageing population. 

Besides this, a survey conducted by Teikoku Databank LTD noted that out of over 11,000 businesses, 50.1% said they felt the labour crunch. 30.4% of businesses said there is a shortage of non-regular workers. The eateries and the hospitality sector were particularly affected. The crunch was most felt by the information services sector, maintenance and security sector, by 71.3%, 65% and 64.6% respectively.

The German Economic Institute determined that their labour force will shrink by more than 300,000 by the end of 2022 as more old workers are retiring now, against younger ones entering the labour market. The gap is expected to widen by 650,000 in 2029.  

The German government has already agreed in a coalition deal on measures like a points system for specialists from countries outside the European Union and lifting the national minimum wage to 12 euros per hour to make working in Germany more attractive. 

Sending more skilled labour to advanced economies can bring in significant foreign currency which will strengthen our national reserve. Photo: Mumit M

In November 2022, the Gaidar Institute for Economic Policy published a report showing that one-third (1/3) of Russian industrial enterprises are facing a record shortage of workers due to partial mobilisation for the war in September 2022. 

This is the highest shortage since 1993. To tackle the crisis, the Russian Federation has already placed an official proposal to Bangladesh for supplying skilled labour for their shipbuilding industries. In the first lot, 100 workers have been sought by Russian companies to Bangladesh Overseas Employment and Services LTD (BOESL). 

They are mainly interested in hiring workers for Scaffolding (builder), Hall Fitter (metal vessels), Marine Machine Fitter, Marine PipeFitter and welding. Bangladesh can easily capitalise on this opportunity as we have six marine technical institutes which produce skilled manpower each year. 

The minimum migration cost (TK42,000) is lucrative; the challenge is working under minus temperatures (-11 to -30 degree Celsius) for three to five months in a year.

Italy – Europe's most rapidly ageing society - is experiencing a severe labour shortage in agriculture, tourism and construction. To fill up the vacancies, the Italian Ministry of Interior Affairs has announced hiring a maximum number of foreign workers, including 69,700 Bangladeshis, for 2022. 

The quota for 2023 will be declared by the end of December 2022. The Italian government is expected to offer a larger quota of work permits to countries that agree to sign repatriation agreements with Italy for irregular migrant workers, according to a report from Italian newspaper 'La Repubblica' published 5 December 2022. 

The new decree of the Italian government is expected to extend some types of work permits by two or three years – instead of renewing permits after one year, as is currently the case.

The economic transformation across the Middle East region has increased their ability to source more skilled and unskilled workers from us. A UK-based consultancy service provider PwC (PriceWaterhouseCoopers) published a survey report indicating that the labour shortage in the region in 2022 is 75% in Kuwait, 60% in Qatar, 58% in Saudi Arabia and 46% in UAE, this will rise as expected in 2023. 

The world's demography is undergoing a radical change. Bangladesh should redefine its labour market along with its remittance strategy in order to take advantage of this transition. 

For example, Saudi Arabia and South Korea do not have the same labour market. We can send any type of worker to Saudi Arabia but South Korea or Japan accepts only skilled workers in specific sectors. Again, the average earnings of a person from both markets are not the same. Earnings from Japan or South Korea (per employee) are much higher (two times or three times) than that of countries in the Middle East. 

It means, by sending less skilled workers we can earn more from advanced economies. For this, we have to categorise our workers into the skilled, unskilled and semi-skilled levels. A semi-skilled worker can become skilled if provided with the necessary technical, vocational and educational training. 

For this, the Bangladesh government should set up more technical and vocational centres at the Upazilla level. Besides this, training on country-specific rules and regulations, language and communication skills should be included. Despite sending more workers, our remittance is not increasing as expected because of Hundi. 

To overcome this problem, every outgoing worker must be given training on the entire remittance process, indicating how Hundi negatively affects our economy and why remittance should come in the formal channels to boost our economy. 

By targeting 2030, the government can create a remittance vision. Very soon advanced economies like Japan, South Korea, Italy and Germany will declare migrant foreign workers quota for 2023. G2G collaboration should be increased to list Bangladesh in their labour sourcing country list. Sending more skilled labour to advanced economies can bring in significant foreign currency, which will strengthen our national reserve to pay necessary import bills, settle foreign debt obligations and so on.

In five decades of independence, Bangladeshi expatriate workers have reached 176 countries of the world, since the beginning of manpower export in 1976, earning billions in remittance income. 

In 1972-73, the size of our economy was $8 billion in GDP, $94 per capita income and more than 70% people lived under the poverty level. In the maiden year of manpower export, our remittance earnings were only $23 million. 

After 50 years, our GDP is now $465 billion, and per capita income is $2,824, as per the Bangladesh Bureau of Statistics. Moreover, Bangladesh is currently the 41st largest economy in the world as per IMF. 

Expatriates' remittance is one of the biggest contributors towards our steady development. Remittance makes our economy stronger. As per IMF data, in South Asia, Bangladesh is the second largest economy behind India. World Bank data cited Bangladesh as the seventh largest remittance-earning country in the world. 

Salim Ahmed is a banker and analyst.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.