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January 21, 2018

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Manpower exports struggle on structural anomalies

KARACHI: Pakistan’s manpower export fell during the last fiscal year on structural hiccups and a slowdown in petrodollar economies, and the central bank warned that the trend would continue in the current year.

“In the wake of the oil price crash and subsequent fiscal retrenchment in the GCC (Gulf Cooperation Council), there has been a marked slowdown in construction activities across the region, and particularly in Saudi Arabia,” the State Bank of Pakistan (SBP) said in its latest report on the state of economy. “This, in turn, has reduced the demand for labourers.”

Pakistan’s manpower exports fell around 40 percent to nearly half a million in 2017, the Bureau of Emigration and Overseas Employment said.

The falling manpower exports resulted in decline in remittances. In FY2017, workers’ remittances fell 3.08 percent to $19.303 billion.

SBP said the South Asia region is particularly affected by fall in manpower exports given that the GCC is the top destination for low-skilled workers from India, Pakistan and Bangladesh.

“For Pakistan, the problem appears to be structural in nature… Pakistan mostly exports low-skilled migrants to the Middle East,” it added.

The bank said over one-third of Pakistanis, who went to the GCC states over the past two years, were labourers. “The demand for these types of low-skilled jobs is often cyclical and depends heavily on initiation of new projects.”

The central bank said relatively high cost of emigration for Pakistani labours to the Middle East is another reason behind the downtrend in manpower exports.

Quoting a World Bank report that Pakistani workers pay around $5,500 for a job in Saudi Arabia – or 3.6 times higher than an Indian worker, the bank said “high charges can be explained by the limited physical network of recruiting agencies”.

The SBP said the government is working on a comprehensive policy for migrant workers’ welfare to deal with structural issues, like lack of proper recruitment procedure, vocational/technical training, and awareness with regards to job opportunities.

“Some other (government) proposals are aimed at reducing work-related costs incurred by prospective emigrants by streamlining the recruitment process,” it added.

The bank said any structural adjustment would have an impact on remittances in the medium- to long-term period.  

“For the interim period, the Pakistan Remittance Initiative is continuing its efforts to ensure that migrants use formal channels to send remittances,” it added.

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