Correlation Between Remittance & Overseas Labor Market

7/26/2019 Correlation Between Remittance & Overseas Labor Market

1/14

Remittance

A remittance is a transfer of money by a foreign worker to his home country. When

migrants send home part of their earnings in the form of either cash or goods tosupport their families, these transfers are known as workers or migrant remittances.

Remittances have been growing rapidly in the past few years and now represent the

largest source of foreign income for many developing countries. The official data on

the inflow of remittances into Bangladesh refers to the transfer of funds made by

migrant workers through the banking channel and through post office. The records of

such transfers can be easily separated from other foreign echange transactions since

these take place under what is known as the Wage !arners "cheme #W!"$.

%oney sent home by migrants constitutes the second largest financial inflow to many

developing countries, eceeding international aid. The World Bank information shows

that a more conservative &"'()* billion for (**+ and these figures are increasing by

almost *- year on year. Remittances contribute to economic growth and to the

livelihoods of needy people worldwide. %oreover, remittance transfers can also

promote access to financial services for the sender and recipient, thereby increasing

financial and social inclusion.

Bangladesh is a huge labor surplus country. ence it belongs to the supply side of the

global labor market. /n an average, (,)*,*** people annually migrate to take up

overseas employment. 0low of migrant workers is associated with growing flow of

remittance to Bangladesh. 1n (**2, it accounted for almost 3- of the global

remittance transfer and 4(- of the official remittance to "outh Asia. "ince the late455*s, successive governments of Bangladesh, reali6ing the importance of remittance

to the economy, have undertaken different macro7economic reforms to encourage

official flow of remittance. The 8th parliamentary government has established a new

ministry entitled !patriates Welfare and /verseas !mployment #!W/!$ to ensure

efficient management of migration sector in Bangladesh.

1


2/14

Destination wise Percentage Distribution of Migrants from Bangladesh

2


3/14

Overseas Labor Market

/verseas labor market refers the demand for labors in the foreign countries. Asia

9acific and %iddle !ast are the prime overseas labor markets for Bangladeshi

voluntary migrant workers.

:urrently two types of voluntary international migration occur from Bangladesh. /ne

takes place mostly to the industriali6ed west and the other to %iddle !astern and

"outh !ast Asian countries. ;oluntary migration to the industriali6ed west includes

permanent residents, work permit holders and professionals. They are usually

perceived as long term or permanent migrants. %igration to %iddle !ast and "outh

!ast Asia are usually for short term. The migrants return home after finishing their

contract. Although long term migration is much older than short term yet information

on their types, etent and composition is not available with the government.

1nformation on the short term labor migrants who officially go overseas for

employment is available with the Bureau of %anpower !mployment and Training

#B%!T$

:urrently, "audi Arabia, &A!, , ?ibya, Bahrain, 1ran,

%alaysia, "outh


4/14

The demand of overseas labor market and supply of remittance of our country is

positively related. The more the demand increase in overseas labor market, the supply

of labor from our country also increases, as such the remittance. The current overseas

labor market has three types of labor demand. These areC skilled labor demand, semi7

skilled labor demand and unskilled labor demand. Among them Bangladesh mostly

eports unskilled labor.

:urrently the global economic recession and global financial crisis is playing a ma@or

negative impact on the overseas labor demand. ue to this, the demands of unskilled

and semi7skilled workers are declining. %anpower eports fell by 2 per cent in three

months to %arch from a year earlier, the B%!T said, the evidence of a continued slide

in overseas @obs. "ome 42,*** Bangladeshi workers found overseas @obs in Danuary7

%arch period of this year, down by 2)3+) from the year before, according to data

released by Bangladesh Bureau of %anpower, !mployment and Training #B%!T$.

The figure for %arch was also depressing as the number of Bangladeshi migrant

workers dropped by () per cent to 353+, down from )542 a year earlier. /fficials

also acknowledged that the flow of return migrants is also on the rise, threatening to

slow down the boom in remittance flow witnessed in recent years. The new figures

depicts trouble for future and highlight the vulnerability of Bangladesh to rely mainly

on the %iddle7eastern nations and %alaysia for workersE employment, economists and

migration eperts say. The World Bank economist noted that if oil prices remain the

same throughout the year and ma@or economies of the west, :hina and 1ndia does not

pick up steam, those of the Fulf region will not revive. The oil7rich region is also

linked to BangladeshEs growth story, with around + per cent of the countryEs

remittances coming from the economies of the Fulf :ooperation :ouncil #F::$ that

constitutes "audi Arabia, &nited Arab !mirates, Bahrain, =atar, /man and


5/14

Training & Development

5


6/14

1f a country considers its employees to be human assets, training and development

represents an ongoing investment in these assets and one of the most significant

investments a country can make. Training involves employees ac>uiring knowledge

and learning skills that they will be able to use immediately, employee development

involves learning that will aid the country and employee later in the employees

career.

%any organi6ation use the term learning rather than training to emphasi6e the point

that the activities engaged in as part of this development process are broad7based and

involve much more than straight forward ac>uisition of manual and technical skills.

0or several reasons, developing and under developing nations are considering

employee training and development as a ma@or strategic issue. "ome of these reasons

areC

4. Rapid changes in technology continue to cause increasing rates of skill

obsolescence. 1n order to remain competitive, a country needs to continue to

training their manpower to use the best and latest technologies available.

%anaging in such a disruptive environment has created the need for

continuous learning among people.(. The redesign of work into @obs having broader responsibilities re>uire

employees to assume more responsibility, take initiative and further develop

interpersonal skills to ensure their performance and success.. The globali6ation of business operation re>uires employee to ac>uire

knowledge and skills related to language and cultural differences.

mportance of Training & Development

1n order to remain competitive in the overseas labor market, the government of

Bangladesh must consider the importance of training and development. The present

global economic condition demands highly trained and >ualified workers. Thus, the

importance of training and development plays the most significant role among the

countries who are supplying the labors in the overseas labor market. "ome significant

importances areC

6


7/14

4. Optimum !tili"ation of #uman Resources G Training and evelopment

helps in optimi6ing the utili6ation of human resource that further helps the

employee to achieve the organi6ational goals as well as their individual goals.(. Development of #uman Resources G Training and evelopment helps to

provide an opportunity and broad structure for the development of human

resources technical and behavioral skills in an organi6ation. 1t also helps the

employees in attaining personal growth.. Development of skills of emplo$eesG Training and evelopment helps in

increasing the @ob knowledge and skills of employees at each level. 1t helps to

epand the hori6ons of human intellect and an overall personality of the

employees.3. Productivit$G Training and evelopment helps in increasing the productivity

of the employees that helps the organi6ation further to achieve its long7term

goal.). Team spiritG Training and evelopment helps in inculcating the sense of team

work, team spirit, and inter7team collaborations. 1t helps in inculcating the 6eal

to learn within the employees.+. %ualit$G Training and evelopment helps in improving upon the >uality of

work and work7life.8. #ealth$ workenvironmentG Training and evelopment helps in creating the

healthy working environment. 1t helps to build good employee, relationship so

that individual goals aligns with organi6ational goal.2. #ealth and 'afet$G Training and evelopment helps in improving the health

and safety of the organi6ation thus preventing obsolescence.5. MoraleG Training and evelopment helps in improving the morale of the

work force.

4*. Profitabilit$G Training and evelopment leads to improved profitability and

more positive attitudes towards profit orientation.

!tili"ation of Remittance

The utili6ation of remittance on the economy of labor sending countries depends to a

large etent the way they are used. /ver the years, concerns have been epressed

about the limited etent of the productive use of remittance. ifferent authors have

7


8/14

different perceptions about what constitute productive use. owever, there is a general

agreement that bulk of the remittance money is used in daily ependiture for food and

(8 clothing. Another big segment goes into house improvement. 1t is estimated that

)*7+*- of remittance in Asia are typically spent in current consumption and only

about 4*- goes into investment.

/ver the last few years in Bangladesh, ma@or policies and actions have been

undertaken to ensure greater flow of remittance through official channel, yet steps

towards effective utili6ation of remittance are still inade>uate. ere as well, common

perception of government functionaries and F/ activists is that migrants spend a

large portion of their remittance in conspicuous consumption. owever, a number of

studies conducted over the last ) years demonstrate that in the 452*s a section of

migrants may have spent the remittance in these sectorsC

4. 0ood, :lothing, ealth(. 1nvestment in ?and. ome :onstruction H Repair3. Repayment of ?oan). Business 1nvestment+. "ocial :eremonies8. :ommunity evelopment2. "avings

mpact on overall econom$

?abor migration plays a vital role in the economy of Bangladesh.Bangladesh has a

very narrow eport base. Readymade garments, fro6en fish, @ute, leather and tea are

the five groups of items that account for four fifthsof its eport earnings. :urrently,

garments manufacturing is treated as the highest foreign echange earning sector of

the country #&" ' 3.)2 billion$. owever, if the cost of import of raw material is

ad@usted, then thenet earnings from migrant workers remittances are higher than that

of thegarments sector. et eport earnings from R%F should be between&"'(.(57

(.)( billion, whereas the earning from remittance is net &"'.*+billion. 1n fact,

since the 452*s, contrary to the popular belief, remittances sent by the migrants

8


9/14

played a much greater role in sustaining the economy of Bangladesh than the

garmentsfor the last two decades, remittances have been at levels of around )- of

eport earnings, making it the single largest source of foreign currency earnerfor the

country. This has been used in financing the import of capital goodsand raw materialsfor industrial development. 1n the year 4552755, (( percentof the official import bill

was financed by remittances.

The steady flow of remittances has resolved these problemsC

4. theforeign echange constraints,(. improved the balance of payments. helpedincrease the supply of national savings

Remittances also constituted a very important source of the countrys development

budget. 1ncertain years in the 455*s remittances contribution rose to more than )*

percent of the countrys development budget. Fovernment of Bangladesh treats

0oreign aid #concessional loan and grants$ as an important resource base of the

country. owever, remittances that Bangladesh received last yearwas twice that of

foreign aid. Remittances have played a ma@or role in reducing the etent of the

countrys dependence on foreign aid.

owever if one takes into account the unofficial flow of remittances, its contribution

to F9 would certainly be much higher. An increase in remittance by Taka 4 would

result in an increase in national income by Tk .. 0ollowing the epiry of multi7

fiber agreement #%0A$, Bangladesh will face steep competition in eport of R%F.

The country will cease to en@oy any special >uota. 1t is apprehended that Bangladeshs

R%F eport will decline sharply. This will result in loss of @ob of many workers and

shortfall in foreign echange earnings. 1t is in this contet labor migration has become

key sector for earning foreign echange and creating opportunities for employment.

Therefore, the importance of migrant remittance to the economy of Bangladesh can

hardly be over emphasi6ed.

9


10/14

'kill (ise Percentage Distribution of Migrants from Bangladesh

nitiatives from Different 'ectors

10


11/14

To increase the demand of our labor in the overseas markets, it is important to turn our

unskilled and semi7skilled workers into skilled labors. And in order to do that,

initiatives from different sectors should be taken. These sectors could be of different

types. 0irst of all the most important measure should be taken by the government.

Because they are the supreme authority of a country and since the remittance is

directly affecting the economy of the country, so the government should discover the

highest possible ways to train the workers. /ther than the government, some other

sectors can also work for itI 9rivate sectors, vocational training institutes, foreign high

commissions and embassies. "o overall, we can put focus on the following sectorsC

4. )overnment* The government of Bangladesh already has some training

centers. But, unfortunately these training centers work for the internal labors of

the market. 1f the government can establish training centers especially for the

workers who will be going to work in the foreign labor markets, then it would

be helpful for workers. The government can easily turn the workforce into

important human resource @ust by giving them the proper training for the work

in speciali6ed sectors.(. +ocational Training nstitutes* ;ocational training institutes can also help to

increase the >uality of the labors in the overseas labor market. What needs to be

done is focusing on the needed skill which the overseas labor markets are

asking for. Then, they can introduce those types of training in the institute and

can train the workers. This means, making the workers speciali6ed only in

those sectors which are the re>uirement of the different overseas labor market.. Private 'ectors* This is another sector which can help to increase the skill of

the workers. 9rivate sectors can work on the contracts which they can get from

the overseas labor market. 1n these contracts, the private firms would make the

deal where the companies would ask them to provide with good skilled

workers. This deal eventually would help both the sides. The overseas labor

markets would get the skilled workers, and the workers here would get the

chance to get skilled.

11


12/14

3. ,oreign #igh -ommissions* To increase the labor demand of the home

country workers foreign high commissions can also play an important role.

With the permission of the government, this high commission in different

countries can open up training institutes based on the specific demand of

workers in host countries. 1t will help the overseas labors to get more skilled

which will decrease the chance to get back in our country for not being

efficient in certain sectors.

.bsence of Training & Development / effect on our

-ountr$

The absence of TH can be very costly in this highly competitive world. Basically,

the absence of TH in a workforce not only depicts the weak infrastructure of the

workforce but also creates an overall negative impression on the country. This

negative impression can be costly if we consider the manpower of our country as a

long term asset. The effects are described in the following segmentC

4. ncreased amount of unemplo$ment*The lack of training could turn into a

disaster for the countrys economy. 0or the global recession in economy

already some of the countries are not willing to take any more workers from

our country as they need skilled labors and some of the countries are sending

12


13/14

the workers back into our country. As a result the unemployment rates are

increasing.(. 0egative impression on our labor market* "ince our workers are not trained

enough as needed, so the impressions of the workers are creating poor

reputation. They cant perform well in the sector as they were supposed to

which makes the impression of the workers negative.. Lesser amount of remittance* Without training and development our human

resource remains unskilled or semi skilled. The price for unskilled or semi

skilled workforce is much cheaper. /ur country eports unskilled workforce.

"o, we earn lesser remittance than the countries who eports skilled labors.

#!7:hina$3. 0egative effect on econom$* The increased amount of unemployment and the

reduced source of remittance weaken our economy. Remittance is a prime

source of the reserve of foreign currency. An import based country like ours

need foreign currency to build our economy.

'ummar$

Remittances to Bangladesh have been growing steadily over the past decade. The

study shows that the inflow of remittance in Bangladesh has worked as a catalyst to

restore the balance of payments deficits. The inflow of remittances uniformly proved

to be invaluable for Bangladesh, by reducing the burden of debt payment, providing

scarce foreign echange and finally boosting the national savings. The economic

benefits of inflow of remittance are clear. The finding of this study, where remittance

was integrated in the national income accounting framework, brings out the

importance of inflow of remittance in the economy. But the current economic situation

seems to be different because of the global economic recession. "o, it is very

important to increase the training institutes and increase the facilities for the workers

which would not only help them build their skill but also help to increase the

reputation of the labor market of our country and it would also help to get more

remittance to build our economy.

13


14/14

Bibliograph$

4. www.boesl.org.bd(. www.wikipedia.com. httpCJJwww.newagebd.com3. www.economic7observer.com). httpCJJwww.thefinancialepress7bd.com+. httpCJJwww.bmet.org.bdJTrainingJ"yllabus.html

14
http://www.boesl.org.bd/http://www.wikipedia.com/http://www.newagebd.com/http://www.economic-observer.com/http://www.thefinancialexpress-bd.com/http://www.bmet.org.bd/Training/Syllabus.htmlhttp://www.boesl.org.bd/http://www.wikipedia.com/http://www.newagebd.com/http://www.economic-observer.com/http://www.thefinancialexpress-bd.com/http://www.bmet.org.bd/Training/Syllabus.html

Documents

Correlation Between Remittance & Overseas Labor Market