The International Organization for Migration (IOM) Dialogue on ‘Return Migration’ Impact of Return Migration on the Pakistani Economy Presentation by the Centre on Migration, Remittances and Diaspora (CIMRAD), Lahore School of Economics 23 February 2017 Islamabad

About CIMRAD The Centre on International Migration, Remittances and Diaspora (CIMRAD) was established in 2014 by the Lahore School of Economics and is the first institute of its kind in Pakistan. The Centre specializes in the study and analysis of international migration and its social and economic consequences –with a focus on the diaspora, the flow of remittances and return migration.

Migrants and Remittances After foreign direct investment, remittances are the second largest source of capital inflows Over 7 % of the GDP Massive shift of remittances from urban to rural areas in all areas except Balochistan – 1996-07 to 2007-08 Urban areas shift from Karachi and Lahore to Gujranwala, Faisalabad and Rawalpindi Rural areas shift from Gujrat, Swat and Dir to Gujrat, Mandi Bahauddin and Sialkot

Impact of Return Migration on Employment Issue of return migration emerged in the late 1970s and early 1980s ILO-ARTEP Study (1984)on the Impact of Return Migration on Domestic Employment in Pakistan: a Preliminary Analysis carried out for the Ministry of Labour, Manpower and Overseas Pakistanis, GOP (i) the extent of return migration with an attempt to differentiate between temporary and permanent returnees and, (ii) the impact of return migration on the functioning of the domestic labour market and its influence on overall employment generation in the economy

Issues in absorption of return migrants Return migrants may not wish to return to manual work Possibility of skill shortages and need for skill development programmes – changing demand patterns for different skills Shortages in certain key skills induced by the pattern of expenditure of remittances – tendency for use of capital intensive technologies which will have an adverse impact on the long tem labour absorptive capacity of he economy

Issues …. Absorption of educated unemployed likely to be more acute Investment in real estate – land ‘bubble’ Facilities and inducements for investment Expectation of higher wages by returnees – preference for skilled and semi-skilled jobs Demand for better health, education and housing facilities Demand for consumer durables requiring capital intensive technologies Constraints: unreliability of available data based on PLM survey (1979) estimates and Airport Survey (1982) Data issues as many returnees use new passports or different names

Return Migrants and the Domestic Labour Market Unemployment rates are much higher among return migrants than among non-migrants. Although this difference has narrowed with time, even among those who returned to Pakistan at least 18 months prior to the surveys, more than 10 percent of workers are unemployed. Reintegration pattern of return migrants: variables indicating their human capital such as occupation and pre- migration and during-migration work experience appear to have greater influence on their re-absorption than the variables related to economic positions such as savings. The possibility is that unemployed returnees cannot save enough from their overseas earnings to become self-employed. (Reintegration of Pakistani Return Migrants from the Middle East in the Domestic Labour Market- GM Arif 1998)

Preferences of Returnees Rural labourers on return show preference for jobs outside the agricultural sector Returnees preference to move into business and trading – small scale industry, bonds, retail shops, transport Returnees moving into the informal and service sector More innovative, technologically advanced Impact of cultural values of the host country on return migrants has been both positive and negative

Oil prices and return migration An investigation of the relationship between oil prices, labour demand and remittance flows between Saudi Arabia and Pakistan (Mphil thesis 2016) shows that: Fluctuations in the price of oil since 2008 Recent downward trend In the long run if the lower oil prices are likely to persist, financial buffers will be used up quickly as government revenue will be reduced. The demand for labour will slow down as the government expenditure is cut down. As a result the return flow of migrants may also increase.

Increased Possibility of Return Since the immigration policies of the oil-rich countries are restrictive, the migrant workers who are on contract for limited number of years have to keep close ties to their home countries and send as much money as possible back home. Study underway to look at ‘contract migration’ and its impact on the economic status of households and the community An earlier study points to to higher rate of returnees in Punjab compared to other provinces

Lack of Data on Returnees 1980 PIDE/World Bank Survey of Return Migrant Households 1986 ILO/ARTEP Survey of Return Migrant Households Population Census