Overseas Workers Prop Up Asia

By Philip Bowring
http://asiasentinel.com/
Friday, 11 September 2009

A half-dozen countries continue to feast off inward remittances despite the global downturn

Worker remittances to Asian countries have held up far better than expected during the global economic downturn. However, there are plenty of exceptions, gaps in the data and concerns that the negative response is being delayed. Employment is a lagging economic indicator, and migration data is further lagged.

According to a report by the US-based Migration Policy Institute, the major countries in Asia most reliant on remittances – Pakistan, Bangladesh, and the Philippines all experienced remittance growth in the first half of 2009, in the cases of Pakistan and Bangladesh by double digit amounts. The Philippines was in positive territory by only a small amount but even that was a creditable performance given the wide geographical distribution of its workers and greater relative numbers in badly hit western countries than in Saudi Arabia and the Gulf countries, main destination for south Asian workers.

This record is in stark contrast to dramatic declines in remittances to Turkey and Poland as workers have had to leave recession-hit Western Europe for home. Other major sufferers have been Ecuador and Morocco – heavily reliant on work in Spain – Kenya and US-dependent Mexico where they were down by around 10 percent.

Although there have been some layoffs in Gulf countries due to the running down of the construction boom, employment in Saudi Arabia, the largest destination, has held up very well.

Not all the reasons for better than expected performance are comforting. One, according to the report, is that decisions on returning home are at least as much determined by conditions back home as by job opportunities in the receiving country. Another is that governments such as those of the Philippines and Bangladesh have stepped up efforts to send workers overseas, perhaps in the process resulting in a lowering of employment standards and wages.

President Arroyo urged the Philippine Overseas Employment Administration (POEA) to refocus its efforts from “regulation to full-blast development efforts”. New destinations for Bangladeshis include countries as diverse as Romania, Sudan and Algeria where workers’ rights may be even weaker than elsewhere.

In the case of Bangladesh, the numbers deployed overseas grew by 5 percent in 2008 to 875,000. That looks satisfactory but is a sharp slowdown on the growth of previous years. In 2009, the numbers are likely to be hit by new restrictions in Malaysia, which accounts for 10 percent of the total.

The comparative data from the Migration Institute also omits Indonesia so it is unclear how far problems in Malaysia have affected this major destination country for Indonesians.

The situation for migrant workers in northeast Asia is mixed. For example in Taiwan there have been big cutbacks in manufacturing work permits (mostly Vietnamese, Thai and Filipino) and construction (mostly Thai) but employment of care givers and maids (mostly Indonesian) continues to rise.

Indeed everywhere care giving and domestic work appear much more stable than other work, which would also account for the stability of remittances to the Philippines from otherwise hard-hit western Europe.

Japan has been sending home Nikkeijin (foreigners of Japanese descent, most Brazilian) and Korea reducing the numbers of ethnic Koreans from China.

Data for most of the recipient countries in Southeast Asia is scanty. Thailand announced that that it would not renew work permits for some 500,000 foreigners, most from Cambodia and Burma, but the actual state of affairs is cloudy and large numbers of undocumented workers remain there as in Malaysia.

The document devotes much space to China’s internal migration issues. It notes that most who returned to rural areas from the coastal cities hit by the export downturn could not find jobs so would likely move again at the first opportunity.

However it has no information on China’s own labor exports which anecdotal evidence suggests may have been rising as Chinese companies and official aid efforts have expanded at a rapid pace. According to the China Daily there are now about 1 million Chinese working overseas.

Looking ahead, the economic outlook is now much better than six months ago. The recovery of the oil price in particular bodes well for stability in employment in Saudi Arabia and the Gulf. However it is not clear how many of the huge number of workers on three-year contracts will have to return on contract expiry and whether new deployment will continue to run ahead of returnees.