What trends will shape the future of worker remittances from the Middle East to India, Pakistan, Bangladesh, Vietnam, and the Philippines?
Cross-Border Payments
Asked by Question Bot04/Oct/20141 answer
1 Answer
F
Faisal Khan
Answered 04/Oct/2014
For the immediate 5-7 years, the future is bright. There is no denying that. Remittances from Middle East will keep increasing at the rate of 12% to 18% per year (depending which country and which remittance corridor you are referring to).
However, long term plans might differ. Today, countries like India, Pakistan, Bangladesh, Philippines that rely on remittances to run a large portion of their economies, should be worried. Almost every Middle East country is on a path to employ more localised labor workforce rather than the temporary (imported) labor. Saudi Arabia for example, has a very large scale "Saudization" plan in effect, to reverse the flow of labor in 10-12 years. The Saudis see the flow of $30 Billion out of the country as a drain on their economy, whilst at the same time 8 million jobs are occupied by non-Saudis (it is a very valid argument that Saudis do not have the labor class right now to take these jobs, nor the vocational training in place for the natives to work in such fields). But this is changing. Slow it maybe, but the trend is slowly reversing, and speed up in the coming years.
The Saudis are not the only one cognisant of this issue. UAE, Kuwait, Qatar and Bahrain are on a path to develo their cities (just like the massive development that took place in Hong Kong and Singapore) and then have these labourers expelled (for lack of a better word).
They just need to have their workforce trained more, their key projects finished and then they can put more stringent labor visa quotas on each immigrant country to mitigate the flow much needed foreign exchange out of their economies.
These 8-9 Million labourers in Saudi Arabia for example contribute very little towards the Saudi economy, (estimates range from 10%-16% fo their work pay) hence they do not do much in terms of being a strong economic spend force as far as the Saudis are concerned.
Ten years ago, such thoughts were just that - thoughts. Today, they are no more thoughts. They are ever so slowly being ingrained into national objectives, national policies, practical projects and laws to see to it that long term 10-15 years growth prospects for these Arab nations are with their citizens and not imported labor.
As such, migrant labor providing countries like India, Pakistan, Bangladesh, etc. are looking at ways to reduce their reliance on the Remittances from Middle East alone, and look at other markets that they can develop (like UK/EU, North America, Aus/NZ, etc.)
However, long term plans might differ. Today, countries like India, Pakistan, Bangladesh, Philippines that rely on remittances to run a large portion of their economies, should be worried. Almost every Middle East country is on a path to employ more localised labor workforce rather than the temporary (imported) labor. Saudi Arabia for example, has a very large scale "Saudization" plan in effect, to reverse the flow of labor in 10-12 years. The Saudis see the flow of $30 Billion out of the country as a drain on their economy, whilst at the same time 8 million jobs are occupied by non-Saudis (it is a very valid argument that Saudis do not have the labor class right now to take these jobs, nor the vocational training in place for the natives to work in such fields). But this is changing. Slow it maybe, but the trend is slowly reversing, and speed up in the coming years.
The Saudis are not the only one cognisant of this issue. UAE, Kuwait, Qatar and Bahrain are on a path to develo their cities (just like the massive development that took place in Hong Kong and Singapore) and then have these labourers expelled (for lack of a better word).
They just need to have their workforce trained more, their key projects finished and then they can put more stringent labor visa quotas on each immigrant country to mitigate the flow much needed foreign exchange out of their economies.
These 8-9 Million labourers in Saudi Arabia for example contribute very little towards the Saudi economy, (estimates range from 10%-16% fo their work pay) hence they do not do much in terms of being a strong economic spend force as far as the Saudis are concerned.
Ten years ago, such thoughts were just that - thoughts. Today, they are no more thoughts. They are ever so slowly being ingrained into national objectives, national policies, practical projects and laws to see to it that long term 10-15 years growth prospects for these Arab nations are with their citizens and not imported labor.
As such, migrant labor providing countries like India, Pakistan, Bangladesh, etc. are looking at ways to reduce their reliance on the Remittances from Middle East alone, and look at other markets that they can develop (like UK/EU, North America, Aus/NZ, etc.)