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The decline in labour export

August 17, 2017

GIVEN the realities unfolding in the Middle East, it should not be surprising that the number of workers going from Pakistan to that region has dropped. What is surprising, however, is how large the drop is according to the latest data reported for the period January to June 2017. During that time, Pakistan sent just over 77,000 workers to Saudi Arabia, whereas the figure for the preceding year was more than 462,000. This is a staggering fall, indeed, and must be examined more closely to determine what is behind it. Saudi Arabia is the single largest employer of Pakistani labour in the Middle East, and the largest country of origin for remittances from that region too. Therefore, such massive changes in a core aspect of our economic relationship should be taken note of.

One could argue that this drop is due to large-scale cuts in the kingdom’s budget, as oil prices remain low. It could also be the result of a conscious policy choice in the kingdom to recruit labour from countries other than Pakistan, something that can only be known after similar data from other states such as India, Sri Lanka and the Philippines becomes available. These two scenarios pose very different challenges for Pakistan. If the kingdom is simply cutting back on its labour recruitment from abroad, then remittances in Pakistan are surely under a growing cloud, since other oil producers are likely to follow suit, and lower Middle Eastern employment will further depress foreign inflows. This is the first year in over a decade that remittances actually went down, and if the declines are to pick up speed in the months to come, this would have clear implications for our external sector and debt sustainability.

The second possibility — a deliberate effort to recruit fewer people from Pakistan — is even more worrying. Already we saw a crisis-like situation late last year when a large number of unpaid Pakistani workers were agitating in the kingdom for back wages, and were ultimately flown home. By the close of 2016, reports emerged that more than 39,000 workers had been sent home in four months. The government of Pakistan was quite powerless to help its citizens in the kingdom, and while the then prime minister went to Saudi Arabia for talks regarding the Saudi-led military alliance, he was unable to even raise the issue of the workers and their back pay. Now data has emerged suggesting that that episode was followed by a massive slump in new recruitment. It is clear that the situation is continuing to develop, and will keep growing in the wrong direction, unless more light is shed on what lies behind this startling decline. Far too much revolves around the relationship between Pakistani labour and Middle Eastern capital for the matter to be left unaddressed.

Published in Dawn, August 17th, 2017