Understanding South Asian Labor Migration Prepared for the United States Government Office of South Asia Analysis Understanding South Asian Labor Migration Meghan Doherty, Brian Leung, Katie Lorenze, Amanda Wilmarth

Research Question Clarify research question—who, where, what, framework

Roadmap for presentation Introduction Data Limitations Study Area Profile Regional Analysis Push & Pull Economic Impacts of Mass Migration Macroeconomic Microeconomic Stability Concerns, Policy Implications, and Recommendations Volatility of Labor Demand in GCC Countries International Security Vulnerability and Human Right Violations Data Gathering Conclusions Add effects, one at a time

introduction Economic migration is not a new phenomenon South Asia regional and GCC migration Policy Informing http://lewishistoricalsociety.com/wiki2011/tiki-read_article.php?articleId=28 International migration is a common phenomenon, with people moving around the world for economic and educational opportunities, as well as to unite families and nations, and to escape persecution. As you can see in this image, one of the key migration routes is from South Asia to the countries of the Gulf, which we will be talking about today.

Data Limitations Formal vs. Informal, Official vs. Unofficial Stock vs. flows Return migration Remittance Data Before we go into the details of our analysis, I’d like to clarify one of the main challenges for this analysis: data limitations. Complete data on migration in general, and temporary labor migration in particular, is complicated. While official stock and flow data give us clues, they are both incomplete pictures of migration. Return migration data is not available at all, and is estimated in our analysis using stock and flow numbers. Data on the remittances migrants send home is also incomplete.

Formal vs. Informal Official vs. Unofficial Formal Migrants Work permit via official channels Formal employment contract, official visa to enter receiving country Restrictions Informal Migrants No work permit, contract, visa Overstay of official visa Quantities difficult to estimate Official Channel Remittances Generally bank or other commercial transfers Included in IMF BoP calculations Unofficial Channels Through middlemen or carried across borders Not included in IMF BoP First to clarify what is meant by formal and informal migration, and official and unofficial channel remittances. The most important distinction between the formal/official and informal/unofficial for both is that while formal and official measures are accounted for in the available data, informal and unofficial measures are not, making a complete analysis of migration –especially temporary labor migration- difficult.

Migrant Stocks and Flows Migrant Flows Foreign born population Receiving country census data, every 10 years Formal and informal migrants UN Bilateral data Formal migrant laborers Annual departures Sending Country official data Formal migrants only This analysis uses both migrant stocks and flows. Migrant stock data accounts for the foreign-born population of each country. This data is usually collected by each country in a nationwide census approximately every 10 years. For our analysis we used the UN Trends in Intl Migrant Stock dataset, which uses the census data to create bilateral migrant stock data. A great strength of migrant stock data is that it includes both formal and informal migrants, although they are not specified in the data. We use this data to get a sense of the total population from each Study Area country within the region and the GCC. Migrant flow data, on the other hand, is the number of departures from the sending country each year, separated out by receiving country. This data is collected and provided by the government agency in charge of migration for each country, and includes only formal migration statistics. Hard numbers or estimates of informal migration is not provided by these sources. Although migrant stock data shows large numbers especially of Nepalis and Bangladeshis living in India, corresponding flow data is not available. The open Indo-Nepal border makes it unnecessary, and migration from Bangladesh to India is not formally allowed, and hence untracked.

Return Migration Estimates No official return data Return estimates based on flow and stock data 2000 stock + 2001 through 2010 flows – 2010 stock   Bangladesh India Nepal Sri Lanka Average Annual Migrant Flows 2001-2010 345,000 519,000 700,000 215,000 Average Annual Return Migration 2001-2010 168,000 200,000 690,000 204,000 Estimated Return Rate From GCC Countries 49% 39% 98% 88% Our study area countries do not provide return migration data or estimates. To get a sense of return migration, we used a simple calculation from the UN’s 2000 and 2010 migrant stock, and sending country official migrant flow data. Technically, this calculation only estimates the migrant stock no longer in each receiving country, and does not necessarily mean that they have returned to their home country. While our return estimates account for most of Nepali and Sri Lankan workers, it accounts for fewer than half of the Bangladesh and India temporary labor flows to the GCC. This may indicate a high level of informal migration and/or large numbers of migrants staying in the GCC for longer time periods. It is also entirely possible that 2010 migrant stock numbers for migrants from Bangladesh and India are undercounted, or that 2000 migrant stock data are over-counted or misclassified.

Remittance Data Money sent home Official channels only Does NOT include unofficial channels: Hawala/Hundi—middleman transactions Cash or assets carried in person Central Bank dependent May not include: Some or all MTOs ATM withdraws World Bank bilateral remittance data Remittance data is limited to official channel remittances. Data for our analysis came mainly from the WB bilateral remittance data, which is based on IMF balance of payments data. These numbers do not account for transfers through informal channels such as hawala and carrying cash over borders, which may add anywhere from an additional 10 to 100% or more of remittances flowing into the countries. Remittance data is also dependent on each country’s Central Bank definition of remittances, which may or may not include transfers through commercial MTOs such as Western Union. Our analysis did not find a good model to estimate total formal and informal remittances for these regions, so we work with official data only, and estimates as they appear in relevant literature.

Study Area Profile Our analysis Study Area is Bangladesh, India, Nepal, and Sri Lanka. We look at temporary labor migration within the region, as well as to the Cooperation Council for the Arab States of the Gulf, aka the GCC countries. GCC countries are Kuwait, Bahrain, Qatar, United Arab Emirates, Oman, and Saudi Arabia. Although regional migration is very common, especially to India, since the 1970’s, labor migration from the Study Area to the GCC has grown significantly, becoming the number one migration region.

Migrant Stocks in GCC Countries Starting with Saudi Arabia, the lines on this graph shows the total Study Area flows into each GCC country, all other official flow countries, and the GCC overall. The bars correspond to the percent of the total annual flows from the study area going to the GCC.

Migrant Stocks in Study Area Next UAE

Formal Labor Migration Flows to GCC Countries Kuwait

Formal Labor Migration Flows to GCC Countries Kuwait

Common themes In Bangladesh and Nepal, the vast majority of migrant workers are male; in Sri Lanka, female migrants make up just shy of half of all labor migrants. Indian migrant flow data does not provide a breakdown by gender, however UN migrant stock data indicates that approx. 70% of the GCC migrant stock from India are male.

Common themes You can see from the graph above the majority of migrants from the study area are unskilled and semi skilled. Only Indian flows include a sizeable professional population, while Nepali flows record the lowest percentage of skilled migrants.

BMET – Bureau of Manpower, Employment and Training (Bangladesh) Common themes Government Management of Migration MOIA – Ministry of Overseas Indian Affairs SLBFE – Sri Lanka Bureau of Foreign Employment An additional commonality of the Study Area Countries is the establishment of formal government agencies to manage and promote foreign employment migration. BMET – Bureau of Manpower, Employment and Training (Bangladesh) DoFE – Department of Foreign Employment (Nepal)

Regional analysis Bangladesh India Nepal Sri Lanka Population (2012) 154.7 M 1,236.7 M 27.5 M 20.3 M Per Capita GDP (Constant 2005 US$, 2012) $752 $1,503 $690 $2,923 Total Formal Remittances (Millions of Current US$, 2012) $14,085 $68,821 $4,793 $6,000 Formal Remittances Percent GDP (2012) 12.1% 3.7% 25.3% 10.1% Unskilled Migrants (%) 51.9% (all) 70.0% (GCC) 75% (all) 64.4% Female Flows 9.1% (2013) Unknown 1.1% (2010) 48.3% (2011) Top Receiving Country: Flows Oman (2013) Saudi Arabia (2013) Malaysia (2011) Saudi Arabia (2011) Stocks (2013) UAE Top Remittance Source (2012) Qatar Saudi Arabia The chart about outlines some key statistics for the Study Area Countries. Some highlights include India being the most populous of the group, as well as receiving the most gross remittances. Nepal, meanwhile, is the second smallest country in the region by population, as well as the poorest by GDP per capita. Total official channel foreign remittances make up an astounding 25.3% of their total GDP. While Bangladesh, Nepal, and Sri Lanka all report highest migrant stock numbers in India, India is only the top remittance source for Bangladesh. This is especially interesting considering that formal migrant flows between Bangladesh and India and unrecorded, and informal flows are the source of significant tension in the border regions. Finally, as previously mentioned, only Sri Lankan formal migrant flows include a significant number of female migrants. However, despite minimal Nepali female formal migration, migrant stock data puts female migrant populations at about 50% of total Nepali migrant stocks.

Classic economic migration Push Poverty Unemployment Surplus of labor in home countries Pull Employment opportunities Higher wages Overall, migration within the Study Area and to the GCC is classic economic migration, with poverty, high unemployment, and labor surpluses in the home countries acting as push factors. Additionally, employment opportunities and higher wages abroad act as pull factors to induce labor migration. As the graph demonstrates, within the Study Area, Indian minimum wages are higher than in Bangladesh, Nepal, and Sri Lanka, drawing immigrants ti India. The green bars represent minimum wages in the GCC countries, which are significantly higher than the Study Area.

Classic economic migration Push Poverty Unemployment Surplus of labor in home countries Pull Employment opportunities Higher wages However, average wages for migrants are actually much lower than official minimum wages. Even so, the average estimated wages for migrants working in the GCC are still notably higher than the wages in the Study Area.

Official Remittances from GCC Countries to Study Area This graph shows the value of formal channel remittances from the GCC to the Study Area countries.

Official Remittances from GCC Countries to Study Area First is Bangladesh, who’s largest remittance source is Saudi Arabia.

Official Remittances from GCC Countries to Study Area India’s largest source is the UAE, however they receive significant remittances from each of the GCC countries.

Official Remittances from GCC Countries to Study Area Nepal receives the vast majority of their remittances from Qatar, working on FIFA 2022 World Cup preperations.

Official Remittances from GCC Countries to Study Area Sri Lanka also records remittances from each of the GCC countries except for Bahrain, with Saudi Arabia their largest source.

Official Remittances from GCC Countries to Study Area This graph shows the total remittance receipts for the Study Area as a whole. While India drives the total receipts from each country, they especially drive remittances from UAE and Saudi Arabia.

Official Remittances from GCC Countries to Study Area Same data, less India and overall Study Area for close up of Bangladesh, Nepal, and Sri Lanka

Official Remittances from Within Study Area This graph looks at remittances from within the Study Area.

Official Remittances from Within Study Area You can see that the vast majority of remittances to Bangladesh come from India. Bangladesh receives nearly 4.5 times as much in remittances from India, to which there is currently no formal migration, as from it’s largest source in the GCC, to which there is a lot of formal migration.

Official Remittances from Within Study Area India also receives not insignificant amounts of remittances from each of the SA countries as well, especially Bangladesh.

Official Remittances from Within Study Area Nearly as much money is remitted to Nepal from India as from it’s largest source in the GCC, Qatar.

Official Remittances from Within Study Area Sri Lanka receives the lowest remittances from the region, mainly from India, with some from Nepal.

Official Remittances from Within Study Area Looking at the SA as a whole, the majority of within-region remittances come from India, as would be expected.

Economic Impacts of Mass Migration: Macro On a macro level, remittances are a central aspect of temporary labor migration in the study area As this figure shows, these large remittance flows constitute a significant and growing portion of GDP in the study area countries The global financial crisis in 2008 had a very limited impact on remittance flows to South Asia. In fact, remittance receipts in Bangladesh, Nepal, and Sri Lanka actually increased in 2009 compared to the previous year and continued to increase in 2010. This is due in part to the majority of remittances coming from the GCC countries, which were only slightly affected by the financial crisis. The degree of resilience to the crisis was dependent on the source countries that the migrants are sending monies from.

Economic Impacts of Mass Migration: Macro On a macro level, remittances are a central aspect of temporary labor migration in the study area and in South Asia As this figure shows, these large remittance flows constitute a significant and growing portion of GDP in the study area countries The global financial crisis in 2008 had a very limited impact on remittance flows to South Asia. In fact, remittance receipts in Bangladesh, Nepal, and Sri Lanka actually increased in 2009 compared to the previous year and continued to increase in 2010. This is due in part to the majority of remittances coming from the GCC countries, which were only slightly affected by the financial crisis. The degree of resilience to the crisis was dependent on the source countries that the migrants are sending monies from. On a macro level in Sri Lanka, Nepal, and Bangladesh, remittances have fueled GDP growth, financial trade deficits, and have increased the investment rate.

Economic Impacts of Mass Migration: Macro On a macro level, remittances are a central aspect of temporary labor migration in the study area and in South Asia As this figure shows, these large remittance flows constitute a significant and growing portion of GDP in the study area countries The global financial crisis in 2008 had a very limited impact on remittance flows to South Asia. In fact, remittance receipts in Bangladesh, Nepal, and Sri Lanka actually increased in 2009 compared to the previous year and continued to increase in 2010. This is due in part to the majority of remittances coming from the GCC countries, which were only slightly affected by the financial crisis. The degree of resilience to the crisis was dependent on the source countries that the migrants are sending monies from. On a macro level in Sri Lanka, Nepal, and Bangladesh, remittances have fueled GDP growth, financial trade deficits, and have increased the investment rate.

Economic Impacts of Mass Migration: Macro On a macro level, remittances are a central aspect of temporary labor migration in the study area and in South Asia As this figure shows, these large remittance flows constitute a significant and growing portion of GDP in the study area countries The global financial crisis in 2008 had a very limited impact on remittance flows to South Asia. In fact, remittance receipts in Bangladesh, Nepal, and Sri Lanka actually increased in 2009 compared to the previous year and continued to increase in 2010. This is due in part to the majority of remittances coming from the GCC countries, which were only slightly affected by the financial crisis. The degree of resilience to the crisis was dependent on the source countries that the migrants are sending monies from. On a macro level in Sri Lanka, Nepal, and Bangladesh, remittances have fueled GDP growth, financial trade deficits, and have increased the investment rate.

Economic Impacts of Mass Migration: Macro On a macro level, remittances are a central aspect of temporary labor migration in the study area and in South Asia As this figure shows, these large remittance flows constitute a significant and growing portion of GDP in the study area countries The global financial crisis in 2008 had a very limited impact on remittance flows to South Asia. In fact, remittance receipts in Bangladesh, Nepal, and Sri Lanka actually increased in 2009 compared to the previous year and continued to increase in 2010. This is due in part to the majority of remittances coming from the GCC countries, which were only slightly affected by the financial crisis. The degree of resilience to the crisis was dependent on the source countries that the migrants are sending monies from. On a macro level in Sri Lanka, Nepal, and Bangladesh, remittances have fueled GDP growth, financial trade deficits, and have increased the investment rate.

Economic Impacts of Mass Migration: Macro In Sri Lanka, Nepal, and Bangladesh, remittances have fueled GDP growth, financed trade deficits, and increased investment rates. 2012 study of remittances in South Asia found that each 1 percent increase in migrant remittances is associated with a .02 percent increase in the economic growth rate. India’s economy has been impacted less by remittances, except for the state of Kerala. Not all macroeconomic impacts are positive. Read first bullet (it’s more than just GDP) This is a very big deal. In Sri Lanka, migrant remittances contributed to 27% of total receipts in the balance of payments. In terms of investments, remittances as a percent of total investments (that’s total investments of the entire country) from 20% in the early 1990s to 27% in 2005-2010. The numbers are similar for Bangladesh, remittances as a percent of exports jumped from 29% in 2001 to 42% in just one year by 2002 In Nepal, this growth in remittances has compensated for a decline in agricultural production. India: remittances have had significantly less of an impact on the economy as a whole. However, the state of Kerala (location), received $2.9 billion in remittances from the Gulf from 1999-2004 alone. The government has used these funds for essential aspects of development. For example, when exchange reserves fell, migrants in developed countries withdrew funds from withdrew a ton of money from Indian banks and there was an immediate need for action on India’s part. Growing remittances from Indian workers in GCC countries are cited as a main reason why India was able to avoid defaulting on its international obligations. India’s economy as a whole is still reliant on remittance, however, to a lesser extent. This means that India is impacted less by remittances than the other Study area countires, with the excpetion for the state of Kerala. Negative stuff: High levels of remittances may pose a moral hazard by reducing governments’ incentives for maintaining fiscal discipline and political will for policy reform Dutch-disease effects (I don’t know enough about this)

Economic Impacts of Mass Migration: Micro Reduced levels of poverty Raised standards of living Consumption and investment in human capital This includes covering food and housing costs, paying for children’s education, and meeting health needs. Payment of loans is another major use of remittances. Go over Kerala on the map (send most unskilled migrants to GCC) Different countries: Sri Lanka; when households receive remittances from abroad (6.5-11 percent of households), the remittances usually account for 37 percent of the household’s income Migrant households are better off than non-migrant households – they spend more annually, receive a higher level of income from properties, financial and physical assets, and receive income from more sources (which means they have more diversified income sources). Same as true for Bangladesh – remittances have reduced the poverty headcount ratio by 6 percent in Bangladesh. Nepal – remittances have also contributed to a decline in poverty, from 42 percent to 31 percent from 1995 to 2003. India: Kerala is the most impacted by remittances on a micro level. Has seen a dramatic evolution of the housing market due to remittances from the GCC area Neoclassical microeconomic theory also indicates that when a large portion of the workforce leaves, wages rise. This is certainly the case in kerala – due to shortage of unskilled and semi-skilled workers. Sri Lanka – shortages of construction sector workers due to migration for foreign employment has resulted in higher daily wages for carpenters and masons. Wages at home, even after the adjustments, do not stack up to what migrants can make abroad. Source: GeoCurrents

Stability Concerns: Volatility of Labor Demand in GCC Countries By far the largest stability concern of the study area is the enormous reliance on remittances as a major source of foreign income: Unskilled migration to GCC initiated by oil boom Many ways that can affect migration flows: only a few years after the boom, GCC countries implemented policies restricting labor in-migration due to growing unemployment in the national population Labor migration in 1991 due to the Gulf War (migrants were evacuated) Global economy It is all derived-demand If it dries up and/or subsequent policies restrict migration were enacted, very little can be done to preserve remittances Source: The Guardian

Aid, FDI, and Remittance Inflows as a Percent of GDP To highlight the countries reliance on remittances, here is a graph that shows how important they are. The global financial crisis in 2008 had a very limited impact on remittance flows to South Asia. In fact, remittance receipts in Bangladesh, Nepal, and Sri Lanka actually increased in 2009 compared to the previous year and continued to increase in 2010. This is due in part to the majority of remittances coming from the GCC countries, which were only slightly affected by the financial crisis. The main point: The degree of resilience to the crisis was dependent on the source countries that the migrants are sending monies from.

Aid, FDI, and Remittance Inflows as a Percent of GDP The global financial crisis in 2008 had a very limited impact on remittance flows to South Asia. In fact, remittance receipts in Bangladesh, Nepal, and Sri Lanka actually increased in 2009 compared to the previous year and continued to increase in 2010. This is due in part to the majority of remittances coming from the GCC countries, which were only slightly affected by the financial crisis. The main point: The degree of resilience to the crisis was dependent on the source countries that the migrants are sending monies from.

Aid, FDI, and Remittance Inflows as a Percent of GDP The global financial crisis in 2008 had a very limited impact on remittance flows to South Asia. In fact, remittance receipts in Bangladesh, Nepal, and Sri Lanka actually increased in 2009 compared to the previous year and continued to increase in 2010. This is due in part to the majority of remittances coming from the GCC countries, which were only slightly affected by the financial crisis. The main point: The degree of resilience to the crisis was dependent on the source countries that the migrants are sending monies from.

recommendations: remittances Build domestic economy Encourage use of remittances for investment Monitor situation of labor demand in GCC Quick explanation as to why the list is so short

Stability concerns: International Security Indo-Nepal Border Indo-Bangladeshi Border Indo-Nepal Border Open border is mutually beneficial – ideas, culture, bilateral relations Vulnerability for terrorists (border is becoming less open) India has increasingly implemented more CT measures since Mumbai bombings National Investigation Agency in India along with other security establishments – over a dozen terrorists in 2013 2 key terrorists Cross border Crime Control Action Plan – id’s 17 crimes; commits Nepal to maintain records of criminal groups SSB: granted search, arrest, and seizure powers (installed cameras along the border) Looking to intercept fake Indian currency notes Large-scale halawadar raids – unlikely Indo-Bangladeshi Border IB Border Fencing Project initiated in 1989 BSF Presence – smuggling cattle, drugs, and narcotics has increased basically every year “shoot on site” Source: Nepal Mountain News Source: Amnesty International

Stability concerns: Vulnerability and Human Right Violations Treatment of temporary labor migrants while they are abroad presents another stability concern: These violations are concerning because they threaten migratory flow by deterring aspirant migrants and disrupting bilateral relations. If home country governments take action and prohibit their citizens from migrating to certain countries, which they have done, this could be very problematic. Abuse starts at initial stages of recruitment: Cost (Bangladeshi workers pay around $2700 to migrate to Gulf) Labororers are sometimes smuggled into destination country by an employer or “middleman” or they are trafficked Main victim of trafficking are wome Child labor is also common (U.S. blacklisted all 6 GCC countries due to human trafficking in 2008) Abuse gets even worse once people are in the country: Working conditions Delayed pay Retaining of passports Fear of retaliation (instigators are sent back to home country immediately) Many suicides Talk about Qatar picture Protest in Ireland source: Reuters

recommendations: stability Potential restrictions of migration flows Trade off between international security and livelihood of poor Tightening of remittance channels and borders Abuses and effect on bilateral relations Monitor situation at borders Monitor 2022 FIFA World Cup preparations To recap, these two things are related.

recommendations: Data Average remittances per migrant (official channels) by country pairs Based on stock data   Study Area Bangladesh India Nepal Sri Lanka GCC Countries $ 4,062 $1,169 $4,768 $69,601 $9,911 Bahrain $2,770 - $2,891 Kuwait $4,614 $3,668 $4,034 $30,201 Oman $4,053 $3,540 $4,055 $9,368 Qatar $5,715 $3,977 $1,255,212 $18,916 Saudi Arabia $3,489 $1,182 $4,757 $5,860 $8,549 UAE $4,133 $428 $5,499 $5,762 $3,379 $2,049 $7,556 $2,763 $2,414 $51,066 $120,787 $2,196 $2,050 $2,955 $2,530 $3,976 $1,295 $3,979 $3,236 Other Countries $3,974 $2,829 $4,434 $2,522 $3,113 All Countries $3,868 $1,816 $4,858 $4,588 $4,790 Focus on the highlighted country parings to collect more data on remittance channel usage and formal/informal status. Specifically, Bangladesh and UAE, India and Bangladesh, Nepal and Qatar, and Sri Lanka and Kuwait. Working more closely with receiving countries’ immigration departments at airports and other entry ports, as well as banks, MTOs, and other commercial money transfer operations may yield additional useful data to capture the true magnitude of migration and actual remittance levels.

recommendations: Data Wider migrant surveys Receiving country entry points Sending country return entry points Bank/MTO new customers Partner with MTOs Survey new customers Review remittance records Review and clarify study area central bank policies Focus on the highlighted country parings to collect more data on remittance channel usage and formal/informal status. Specifically, Bangladesh and UAE, India and Bangladesh, Nepal and Qatar, and Sri Lanka and Kuwait. Working more closely with receiving countries’ immigration departments at airports and other entry ports, as well as banks, MTOs, and other commercial money transfer operations may yield additional useful data to capture the true magnitude of migration and actual remittance levels.

Conclusion Classic economic migration Significant reliance on remittances Monitor potential stability concerns Acknowledge and address data limitations

Thank You Meghan Doherty Brian Leung Katie Lorenze Amanda Wilmarth doherty3@wisc.edu bwleung@wisc.edu lorenze@wisc.edu amwilmarth@wisc.edu