PUBLIC POLICIES TO SUPPORT INTERNATIONAL MIGRATION IN PAKISTAN AND THE PHILIPPINES. Farooq Azam

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1 PUBLIC POLICIES TO SUPPORT INTERNATIONAL MIGRATION IN PAKISTAN AND THE PHILIPPINES Farooq Azam Abstract: Pakistan and the Philippines are two leading source countries for international migration. Currently about 3.75 million Pakistanis and 7.0 million Filipinos are estimated to be living or working overseas. Both the countries have nearly 3½ decades of experience of managing migration through sets of policies and programs aimed at promoting overseas employment opportunities for their citizens, maximizing the benefits of migration for migrants, protecting migrants against exploitation and hazards and improving the welfare of migrants and their families. Policies have also been introduced for maximizing the inflow of cash remittances through formal institutional channels. The relevance and adequacy of the policy measures is examined from the perspectives of making migration more affordable to include more social groups, and productive use of capital and human assets resulting from migration for improved and sustainable livelihoods of migrants and their families. The paper highlights policy strengths and gaps based on available empirical evidence from the two countries and makes recommendations for policy improvements and further research. Keywords : international migration, livelihoods, public policies, Pakistan, Philippines DISCLAIMER: This is a draft working paper produced for the World Bank conference, New Frontiers of Social Policy: Development in a Globalizing World. The findings, interpretations, and conclusions herein are those of the author(s) and do not necessarily reflect the views of the International Bank for Reconstruction/The World Bank Group and its affiliated organizations, or its Executive Directors, or the governments they represent. If you wish to cite from this document please request the latest version from the author(s) or from socialpolicy@worldbank.org. 1

2 Introduction International migration for employment is an inherent phenomenon of globalization though yet to receive due recognition in most countries. The growing migration from some countries (origin or sending countries) and its importance to their economy have led them to introduce measures to deal systematically with this multi-dimensional phenomenon. Here these measures will be examined from the point of view of migrants, especially how the international migration policy regimes contribute towards improved livelihoods of migrants and minimizing any related negative influences. Migration provides opportunities to migrants to build their human, capital and social assets. How does the government intervention in origin countries help migrants in achieving these goals? The aim here is to highlight policy gaps from this perspective and make recommendations for a more pro-active policy intervention. Experience of two leading origin countries, Pakistan in South Asia and the Philippines in South-East Asia, will be discussed here. In their respective regions they are more advanced than other origin countries in introducing measures towards migration management over the last 3½ decades. Migration Scale and Trends Stocks According to the Philippine government s estimates, there were more than 8 million Filipinos working or living overseas by December Pakistan government s estimate dates back to 2001 when less than 3.75 million Pakistanis were estimated be working or living abroad. A big shift in the numbers is not expected since 2001 and by end 2004 Pakistanis abroad would be still half of the number of overseas Filipinos. The largest proportion of overseas Filipinos is in the region of Americas (44%), mainly in the United States, followed by the Middle East and Asia (each 19%), Europe (10%) and Oceania (4%). Overseas Pakistanis are mainly present in the Middle East (45%), followed by Europe (29%) and Americas (23%). Tables 1 and 2 provide further details. Annual Outflows Filipinos therefore have had greater access to markets for migrants globally than Pakistanis. This becomes more evident when the destination regions of the annual outflows are 2

3 taken into account. The outflow data for land-based migrants (the outflow data has another category of sea-based migrants who work on ships) for the years shows that the outflow to the Middle East region ranged from 44% to 50% and to the Asian region from 38% to 45%. The share of Europe remained around 6% and that of America less than 2%. By contrast, outflow from Pakistan during these years was heavily directed towards the Middle East, at around 97%. There are some signs of a trend towards diversification in this period as migration to the Asian end European regions has started becoming visible. Details are provided in Tables 3 and 4. It s difficult to present comparable data of annual outflows for the Philippines and Pakistan because of differences in the migration registration system of the two countries. The Philippines system registers both the new hired migrants as well as the migrants who are rehired by their employers. (In outflow data of the last 5 years there are 6 rehires in every 10 migrants). This classification is only available for land-based migrant workers while the data for sea-based migrants is given without this distinction. Pakistan s registration system takes the migrants re-hired by the same employer into account only if they are re-hired under a fresh contract, and this process takes place in Pakistan. Here it is assumed that the Philippines data on re-hires is actually or predominantly based on fresh contracts that are signed in the country rather than the country of employment. Further, migration from Pakistan on visas other than employment visa is not included in the migration for employment statistics. Therefore, Pakistanis traveling on immigration visa, green card, etc. would not be counted in the annual outflows data. The average volume of annual outflow over the 5 year period of from the Philippines has been more than 5½ times that of Pakistan, the respective figures being 880,336 and 155,922. In 2004, the Philippines sent 933,588 migrant workers (including 419,674 rehires, 284,912 new hires, and 229,022 sea-based migrants) compared to 654,022 sent a decade ago in Philippines government had targeted to achieve the figure of one million for the outflow by 2003 (POEA 2004). Pakistan sent 174,864 migrants in 2004, the number increasing from 122,620 in Women participation in migration flows Another very significant difference in overseas migration from the Philippines and Pakistan relates to women s participation. The Philippines data available on gender distribution 3

4 of newly deployed migrant workers between 1992 and 2002 shows that women s share in the migration increased from 50% to 70% during this period (Table 5). Women s increasing dominance was reflected in all the main occupational categories, their share increasing from 75% to 85% in Professional and Technical Workers category and from 82% to 90% in Service Workers category. The two categories accounted for 69% of the total outflow of the newly hired migrants in The most marked increase was seen in the male dominated category of Production Workers, where the share of women migrants increased from 5% to 29% during this period. The Pakistan migration data does not provide gender distribution but the government s policy to discourage women migration has led to mainly men migrating, constituting probably above 95% of the registered migrants. It seems that a higher participation rate of women in the domestic labor force has led to their high participation in the migration outflows and this has improved the migrants ability to navigate diverse markets thus improving outflow volumes. However, there are no studies available that establish these linkages. Socio-economic Characteristics of Migrants There is not much systematic assessment available regarding what socio-economic conditions and individual and family characteristics and aspirations lead to overseas migration. In both Pakistan and the Philippines some earlier studies indicated that migrants do not come from the poorest social strata: a certain measure of financial and human assets was required to meet the migration costs. Two studies conducted in 1986 and 1987 in Pakistan showed that the migrants belonged to the low or lower-middle income groups. They did not come from the poorest sections (Azam 1991). Another study based on a survey of 300 migrant and 300 non-migrant households in a high and a low out-migration district in Pakistan showed that while income levels, asset base, level of education, and access to information regarding employment opportunities abroad, recruiting agencies and migration networks were the main pre-conditions for migration, this was true for households falling within a certain range or band of socio-economic strata determined primarily by their asset base. The households in high migration district, Rawalpindi, owned small subsistence agriculture farms and were heavily dependent on non-farm employment for their livelihood, whereas the households in low migration district, Sahiwal, owned large agricultural 4

5 farms depending mostly on agricultural income. The migrant households in high migration district were in a vulnerable situation of struggling to keep at the current levels of their livelihoods before migration and migration provided them the opportunity to improve their livelihoods and asset base considerably (Azam 1998). Go (Go 2003) analyzed the findings of Family Income and Expenditure Surveys in the Philippines for various years and, on the basis of households reporting foreign remittances as their main source of income, concluded that overseas migration has benefited the urban families more than the rural families. Go further highlighted that level of remittances was higher in the households belonging to higher income groups, drawing the conclusion that wealthier households benefited more from migration rather than poorer households. Saith (Saith 1997) earlier pointed out that remittances from overseas formed the main income source of richer families located in specific regions of the Philippines, whereas poor families located in certain other regions mainly depended on domestic cash transfers related to internal migration. The exposure of poor family members to richer regions where they went for work did not help them in securing overseas jobs. Evidence from both Pakistan and the Philippines regarding who migrates, their income and asset levels, rural/urban distribution, among others, needs to be investigated further. The scope of current evidence available from the two countries remains rather limited. Migration Policy Regimes Both Pakistan and the Philippines have encouraged international migration for two main reasons: it reduces unemployment and significantly adds to national income through cash remittances. Most government policies have, therefore, focused on encouraging and facilitating emigration especially for employment, providing protection to migrants against hazards and exploitation both at home and abroad, and providing incentives for and facilitating flow of remittances and investment by migrants. Both Pakistan and the Philippines have managed the dynamic and persistent phenomenon of migration in a supportive and flexible manner. Given the high migration potentials in both countries this approach has served to keep majority of the migration flows in regular channels. However, irregular migration including smuggling of migrants in case of both the countries and trafficking of women in case of Philippines remain significant challenges. 5

6 According to Abella (Abella 1997), migration policy regimes could be categorized as (a) laissez-faire, where market forces exclusively guide the emigration process; (b) regulated, where market still takes care of the recruitment for overseas employment but follows a set of standards and procedures imposed by the state; (c) state-managed, where under state regulation recruitment is carried by state- managed agencies and where government encourages domestic enterprises to seek contracts overseas against which domestic labor could be employed; and (d) state monopoly, where state has full control on recruitment and there is no private sector participation. Philippines have a regulated migration policy regime in that the government instructions and legislation on migration, the Migrant Workers and Overseas Filipinos Act of 1995, define standards and procedures to be followed by private recruiting agents for overseas recruitment or by individual migrants proceeding abroad on their own. The Pakistan s Emigration Ordinance 1979 does the same, but the country besides the private recruiting agents also has a government recruiting agency named Overseas Employment Corporation. Pakistan, therefore, follows a mix of the regulated and the state-managed models. Earlier in 1970s Pakistan had also briefly experimented with the policy of encouraging local firms to win contracts overseas, and the state-managed enterprise National Construction actually did win some contracts in the Gulf. However, after Pakistani firms were out-classed by firms from South Korea, which followed the state-managed migration policy model, this policy was largely abandoned. It needs to be noted that the policy regimes followed by Pakistan and the Philippines did not have poverty reduction or improved livelihoods of migrants as one of their explicit objectives. In fact, the country development plans and poverty reduction strategy papers do not treat the migration phenomenon as part of the development challenge. Migration policy, therefore, has largely stood apart from the overall development framework, although having strong development and poverty reduction implications for individual migrants and the economy. From the point of view of facilitating improved livelihoods and assets for migrants, the government policies could be categorized as follows: (a) policies having implications for lowering migration costs; and (b) policies having implications for enhancing migration benefits including migrants protection. 6

7 Lowering Migration Costs Lowering the cost of migration would allow social groups on the relatively lower end of the social spectrum to avail the overseas employment opportunity. It will also reduce the possibility of migrants having to deplete their current household and financial assets in order to meet the migration cost. The migration cost here implies the amounts incurred by migrant to search for and secure overseas employment, the latter including the commission of recruiting agent, the government fee and processing charges, and the transport costs from home to the place of work. It also includes mandatory charges by the government to provide welfare services to migrants and to provide insurance cover against death and disability. In practice, it is the commission charged by recruiting agent that principally inflates the cost of migration though there is room in other areas as well to bring the cost down. Recruiting costs The migration management systems introduced by both Pakistan and the Philippines have at least aimed to control the migration cost mainly by regulating the recruiting agents. Pakistan introduced the system in 1979, through Emigration Ordinance 1979, establishing a Bureau of Emigration and Overseas Employment (BOE). Philippines established the Philippines Overseas Employment Administration (POEA) in 1982, through a presidential order. Both the BOE the POEA were given the regulating responsibilities, including issuing license to recruiting agents and ensuring compliance with minimum standards in the foreign employment contract, among others. The government orders also determined the rate of various charges, including the commission to be charged by recruiting agent from the migrant, charges to be paid by the migrant on his/her skills test, medical examination and travel and other documents, and overseas travel costs to be paid by the employer. They also determined the charges to be paid by the migrant as welfare fund contribution and for insurance cover for death and disability during employment abroad. Both Pakistan and the Philippines have sought to control the amount of commission charged by recruiting agents from migrants but with mixed results. Both the countries follow a stringent criterion in selection of private recruiting agents and require them to provide substantial security deposits against penalties for any malpractice, including any over-charging from 7

8 migrants. Numerous studies have shown that in actual practice recruiting agents charge migrants at least 8 to 10 times more than the officially prescribed changes (Azam 1998 & 1995). Migration is a lucrative business if only because of the huge number of migrants involved. There are opportunities and temptation for corruption by recruiting agents. However, only part of the over-charging could be explained in terms of corruption by recruiting agents. The bulk of the charges account for two other types of hidden costs, one related to the employer and the other to government bureaucracy. The intense competition between the labor sending countries have led many employers in the Middle East to cut down or eliminate the commission paid to the recruiting agent. In fact employers tend to pass on some their own costs and obligations, e.g. expenditure on their trips to the sending country and air ticket costs of the migrant, to the recruiting agent. Recruiting agents in both Pakistan and the Philippines are required to follow an elaborate procedure involving government scrutiny against any malpractice or migrants exploitation. The procedures involve authentication of the job order by the Labor Attache in the country of employment, verification of the terms of employment to meet the minimum standards by BOE/POEA, verification of individual contracts of the recruited workers and issuance of permission to leave the country for employment by BOE/POEA, and checking by immigration of this permission at the port of departure before migrants are allowed to leave. According to the recruiting agents, bribery is common at all these points where government clearance and approvals are required. All these payments shoot up the cost of migration as they are passed on to the migrant by the recruiting agent. There is a strong case for simplifying the procedures involved and allowing recruiting agents to charge market based commissions for their services and for simultaneously generating greater competition by allowing more recruiting agencies in the private sector (Philippines follows a policy of containing the number of recruiting agents). Appropriate safeguards against migrant s exploitation would still need to be put in place. The government in the Philippines has followed the policy of restricting the number of recruiting agencies, which in 2004 numbered 1,337 (POEA, 2004). They have followed a combination of a penalty and an incentive system. The recruiting agencies applying for license must have a paid-up capital of Pesos 2 million (US$1 = P54), which was recently increased from P 1 million. The existing licensed agencies were allowed to increase their capitalization 8

9 requirement on a staggered basis. To begin with they are given an interim license for 1 year where they are required to export at least 100 workers to an employer who has never been accredited by POEA. The limit has been recently increased from 50 workers. The idea is to test their competitiveness in exploring the virgin markets. In addition, they are required to deposit P 1 million, recently increased from P 300,000, as escrow deposit and a surety bond of P 100,000. The two deposits are meant to be guarantees against over-charging the workers and for meeting their contractual obligations. There are additional requirement of escrow account, US$ 20,000 for recruiting agencies exporting entertainers who are mostly females. For agencies providing domestic workers (mostly females) in Singapore an additional bond of US$ 2,000 per worker is required. Any claims resulting from violation of the agreement are to be paid out of the escrow account that the agency is required to replenish. The maximum penalty is cancellation of the defaulting agency s license. The incentive system involves grant of in-house processing of migrants required by POEA, no verification of the workers employment contracts in selected cases, extension of license for another 4 years, and regular provision of information about new employment opportunities abroad. The recruiting agency qualifying for the incentive scheme should have a track record of no recruitment violations, provision of welfare services to migrants and their families, and supporting community based projects (Baldoz, 2003). Pakistan currently has 1,182 licensed recruiting agencies, increasing from 1,095 in Compared to the Philippines recruiting agencies their per capita performance in sourcing overseas employment is clearly very low. The agencies are required to provide Rs 300,000 (US$1 = Rs60) as security deposit out of which Rs 100,000 is to be provided as cash deposit and Rs 200,000 in the form of Defense Savings Certificates, a savings scheme. The license is issued for 5 years. There is no incentive policy linked to the performance of recruiting agencies. However, the Emigration Laws do provide for penalties against over-charging migrants and other related offenses. In the Philippines, the Overseas Workers Welfare Administration (OWWA) set up under the Department of Labor has been running a scheme of pre-departure and family assistance loans for migrants. The scheme was introduced in recognition of the fact that many Filipinos sell their household assets to obtain an overseas job and to make arrangements for the security of their family in their absence. The Migrant Workers and Overseas Filipinos Act of 1995 expanded the 9

10 scheme by establishing a Migrant Workers Loan Guarantee Fund in the revolving amount of one hundred million Pesos (more than US$1.84 million). Migration cost and irregular migration High migration cost could force people to use irregular channels for migration. A high incidence of human trafficking has been noted for the Philippines by the United States government in its trafficking in person report (United States Department of State 2004). The report notes that Filipino women who are trafficked for sexual exploitation to destinations throughout Asia, the Middle East, Africa, Europe and North America, are often lured abroad with false promises of legitimate employment. The report notes that although the government had introduced an anti-trafficking law in 2003 but its implementation remains weak. In case pf Pakistan the report notes that men, women, and children are trafficked to the Middle East to work as bonded laborers or in domestic servitude. Tougher enforcement efforts in Pakistan and the ban on child camel jockeys in the United Arab Emirates are believed to have reduced the numbers of boys trafficked through Pakistan for that purpose. The report notes human smuggling as a significant issue in Pakistan and that the officials do not distinguish between the trafficked and smuggled persons. Pakistan had also introduced an anti-trafficking law recently but its implementation remains weak. The issue of irregular migration needs to be addressed in the context of migration policy and not as a separate phenomenon. As noted above, the migration cost is one of the contributing factors to irregular migration while the other is lack of access to information regarding regular migration opportunities and procedures. Transnational networks and migration cost Compared to migration through recruiting agents, migration through informal transnational networks is found to have much lower costs and higher employment benefits including salary. A survey conducted in Kuwait involving 800 migrants from South Asia (including Pakistan) found that half of them had used the informal networks for finding overseas employment while the rest had come through recruiting agents. Friends and relatives already working in Kuwait arranged jobs for the migrants in two ways: by introducing the migrant to their employer and the latter sending an employment visa directly to him/her, or by purchasing 10

11 the visa through a local agent or directly from an employer (in this case as well the visa is issued to the migrant by the employer). In the former instance, only 14% had to make any payment to the employer for the visa while in the latter case around 63% made the payment for the visa. Substantial salary differences were also found, with the migrants coming through recruiting agents earning the lowest salary and the migrants directly contacted by employers receiving the highest salary for similar jobs. Satisfaction level with the employment conditions was also higher among the migrants using informal networks compared to the migrants coming through recruiting agents, the latter complaining of inferior employment conditions and benefits than what was provided in their employment contracts (Shah 1998). The outflow data from the Bureau of Emigration shows that 46% of the migrants in 2004 went abroad on a direct visa. The share of this category in the total outflows has increased over time, though fluctuating from year to year. The overall share of this category in total outflows from 1977 to 2004 has been 31%. The government s role in supporting the transnational networks in arranging overseas employment at lower cost should be to monitor the trends and to facilitate their working by removing any snags in the process. The labor attaches in embassies abroad should encourage this role of the diaspora. Enhancing Migration Benefits Enforcing minimum standards As part of their regulatory functions, both the BOE and the POEA have prescribed minimum standards for foreign employment contracts. These standards relate to salary including overtime payments, working hours and holidays, other benefits such as free food and accommodation, transportation from and to the sending country, compensation in case of employment injury and death, and means of settling disputes. If the contract is found to be in accordance with the standards the two agencies issue clearance certificates for the migrant to travel. Experience of enforcement of the minimum standards in the contract has actually been mixed. The biggest casualties have been the standards relating to salary and overtime payments. Further, quality of benefits such as free food and accommodation have been rather poor, with migrants sometimes offered crowded living conditions and poor quality food. Complaints by 11

12 migrants regarding contract violation and contract substitution (where migrants are asked to sign a fresh contract by the employer upon arrival with inferior terms) have persisted over time. Although the minimum standards are not fully enforced in the receiving countries they provide migrants a basis to negotiate from (Waddington 2003). Sending countries have little influence over the policies of receiving countries, where standards of rights could be very different from the sending countries and could also be different for some social groups within the country. In many Middle Eastern countries, for example, domestic workers are not covered by the labor laws. Many Filipino housemaids work under stressful conditions including long working hours without compensation, and without other benefits such as proper health cover. Efforts by Pakistan and the Philippines to reach agreements with the receiving countries on minimum standards and proper protection under the law have not proved successful so far and this remains a challenge. Social security coverage Importantly, migrants working on employment contracts of limited duration are generally not covered by any social security benefits including pension. The pension contributions by employers are tied to a minimum service period rendering most migrant workers ineligible for this benefit. In the Philippines, the Labor Department and the Social Security institution have joined hands to provide social security protection to the seafarers, including benefits such as medical treatment, accident insurance and pension. This protection is being provided irrespective of any such facility that might be provided by employers. Coverage against accidental injury and death is provided by employers, but housemaids generally do not have this coverage. This could actually be the case for migrants working in small establishments. However, even where migrants have this coverage they or their dependents have difficulties making the claims due to lack of knowledge about procedures. In order to ensure that migrants are protected against the risks, both Pakistan and the Philippines have introduced schemes providing compulsory insurance cover to migrants against disability and death during their foreign employment. This is over and above any such benefits provided by the employer. Pakistan has posted Community Welfare Attaches and the Philippines Labor Attaches and Welfare Officers in their embassies in the countries having a significant presence of their nationals. The officials guide the workers in following relevant procedures to 12

13 launch their claims. Where a worker has to be repatriated following a disability, or in case of his death, the Overseas Pakistanis Foundation (OPF) and the Philippines Overseas Workers Welfare Administration (OWWA) back home guide the worker s dependents and relatives in completing the formalities and filing the claim with the help of the officials in the embassy. The two organizations follow up the filed cases regularly with the help of embassy officials until the compensations claims are paid. OPF so far has helped more than 3,000 families to obtain death compensation, amounting to nearly Rs one billion, from the employers of deceased migrants (OPF 2005). The largest operation for compensation claims undertaken by both OPF and OWWA was for the migrants repatriated from Kuwait following the Gulf war of Both organizations guided the migrants regarding the UN Compensation Commission procedures and helped them to file the claims. OPF filed about 44,500 compensation claims and have received and disbursed to date nearly US$ million (OPF 2005). In order to help the migrants to be compensated for their lost income and assets, OPF conducted a comprehensive survey of the repatriated workers at the ports of entry and built a database, which guided the UNCC in determining the levels of compensation to be paid. The database was also the main source used for bringing the Pakistani migrants and their employers together after the war and thus helping the migrants to regain their livelihoods, as employers records had been destroyed during the war. Protection and welfare of migrants Both Pakistan and the Philippines have taken numerous measures to improve protection and to promote welfare of migrants. On protection side, pre-departure briefing of migrants is organized in both countries to inform them about the relevant rules and laws of their country of employment, procedures to be followed and assistance available through the country s mission in case of a dispute with employer. To guide the migrants about the rules and procedures regarding the pre-departure formalities, and to inform them about the laws applicable to them, POEA has been running a user-friendly website that covers most issues of relevance and interest to migrants. Statistics on migration and remittances are also available on the website. In Pakistan BOE has yet to establish its website while the OPF website is yet in its infancy. Resultantly, most relevant information is not accessible to the migrants. 13

14 In the country of employment, Pakistan s Community Welfare Attaches and the Philippine s Labor Attaches and Welfare Officers help the migrants in resolution of their disputes with employers. Where disputes are not resolved the officials help the migrants in following the legal course. This assistance is critical as migrants are not able to defend their rights in a legal system that is alien to them, which could result in a substantial loss of their investment in overseas employment or, worst, the loss of their job as well. Given the predominance of women in migration from the Philippines, and the fact that many Filipino women work abroad as housemaids and other occupations such as entertainers with little legal protection, the government has been very sensitive to the need for providing more systematic legal help to the migrants. The Migrant Workers and Overseas Filipinos Act of 1995 provides for the appointment of a senior legal officer (by the President) in the Department of Foreign Affairs to coordinate all matters relating to the provision of legal assistance to Filipino migrants. Importantly, a Legal Assistance Fund in the amount of one hundred million Pesos (more than US$1.84 million) was also created to be used exclusively to provide legal services to migrant workers and overseas Filipinos in distress. The Fund is to meet the charges incurred on hiring foreign lawyers to represent migrant workers, bail bonds, court fee and other litigation expenses. The above officials posted at the embassy also provide other service to migrants. They support migrants organizations in country of employment for providing social support to migrants. Some countries in the Middle East do not allow formal NGOs or community based organizations; there the role of these officials is very important in providing regular support to the migrants organizations that exist on an informal basis. The Migrant Workers and Overseas Filipinos Act of 1995 provides for the establishment of a Migrant Workers and Overseas Filipinos Resource Center within the premises and administrative control of the embassy in countries with large number of Filipino migrants. Besides providing the counseling and legal services, the center is responsible for providing welfare assistance including medical and hospitalization services, and other gender sensitive services to women. The center is also to help undocumented workers in getting legalized or in their repatriation. 14

15 Welfare services using migrants welfare fund contributions OPF was set up in 1979 under the Ministry of Labor, Manpower and Overseas Pakistanis to work for the welfare of Pakistani migrants and their families. OWWA was set up around the same time in the Philippines, under the Department of Labor. OPF is financed through the migrants own contribution which is mandatory and is paid at the time of clearance of foreign employment contracts by Bureau of Emigration. The welfare fund contribution charged by OWWA is also mandatory, though the law requires the contribution to be paid by the employer through the recruiting agent. In actual practice the recruiting agent charges this amount to the migrant. OPF is the main interlocutor for Pakistani migrants and their families. It has initiated a number of schemes for providing quality education to the children of migrants, and providing potable water in communities with large numbers of migrant households. It provides investment advice to the returning workers and helps the investors in completing formalities with concerned departments. It also provides soft loans to the dependents of disabled and deceased migrants for setting up a micro-enterprise. It has a large program of developing housing schemes for migrants. OWWA s main efforts have focused on providing welfare services to migrants abroad through its Welfare Officers and investment advice as well as loans to returning migrants for setting up micro-enterprises. In addition it has been running a pre-departure loan program for migrants to help them preserve their household assets while meeting the migration costs. One of its principal mandates is to organize repatriation of Filipino migrants especially in conflicts, wars, disasters, epidemics, etc. The Migrant Workers and Overseas Filipinos Act of 1995 established an emergency repatriation fund in the amount of one million pesos (more than US$1.84 million). It should be noted that OWWA is also the sole provider of one hundred million Pesos for the Migrant Workers Loan Guarantee Fund. It is also responsible to contribute fifty million Pesos to the Legal Assistance Fund for migrants. As noted above, the migrants are actually the main contributor to the funds administered by OWWA. Return migrants: Making use of human assets Migrants learn new skills during employment abroad, at least in certain occupations. A study conducted in 1988 involving return migrants and their domestic employers found that migrants who had worked abroad as mechanics, welders and machinery operators had learnt the 15

16 use of advanced tools, instruments and machinery and new facets of how to organize their work. In job performance their employers rated tem much higher than the domestic workers with no overseas employment experience. Not only did they know the modern techniques, they performed more accurately and faster and thus saved costs. They adopted proper security measures during work and avoided accidents (Azam 1988). A similar survey conducted in the Philippines remained inconclusive regarding the degree to which the skill acquisition took place during overseas employment but pointed out that the migrants received extensive on-the-job training during the period (Carino 1988). Both Pakistan and the Philippines have not paid enough attention to this aspect of enhancing migration benefits for migrants and the country. A system of monitoring and registering return migrants with selected skills and bringing them in contact with the relevant businesses, through web based systems or other appropriate means, need to be considered as an option. Policies regarding remittances The importance of remittances for a developing country s economy is well recognized. In Pakistan, for instance, migrants remittances have helped to narrow the balance of payment deficit especially during the years of high oil prices. The higher expenditures arising from remittances benefit the local economy. From migrants point of view, remittances are important for improved livelihood of their families left behind and building assets to sustain these standards. Governments of Pakistan and the Philippines have followed the policy of encouraging migrants to send their remittances through the formal banking channel rather than through the informal fund transfer mechanisms. The policies introduced in this regard have focused on improving convenience, flexibility and profitability of the transactions that, as noted by Amjad, are the key to induce migrants to remit through official channels (Amjad 1989). In Pakistan, for instance, this was done by expanding the banking network within the country and in some countries of employment. The foreign exchange regime was liberalized and migrants were allowed to maintain accounts in foreign currency as well as in Pakistan Rupees. To induce investments from the migrants settled overseas, Pakistan allowed free flow and outflow of foreign currency in any amount. To ensure profitability, government discontinued the policy of 16

17 official exchange rate and floated the Rupee, thus eliminating the gap between official and open market exchange rates. A fourth criterion that goes in favor of the use of official channel, in addition to the 3 criteria highlighted by Amjad, is the safety of transaction by eliminating the elements of uncertainty and fraud feared by migrants when using informal mechanisms. Incentives for remittance through formal channels Recently Pakistan government has also introduced an incentive scheme for migrants for sending their remittances through formal banking channels. Migrants sending amounts of US$ 2,500 and US$ 10,000 per annum are entitled to exemption in custom duties on their personal baggage up to US$ 1,000 and US$ 2,000 per annum, respectively. In addition, separate counters for immigration clearance on arrival and departure have been established for their speedy handling. They are also entitled to free issuance and renewal of their passport on urgent basis (OPF 2005). Pakistan government also issued Foreign Exchange Bearer Certificates and Foreign Exchange Currency Certificates providing above the market rates of return on a longer term basis, with the aim to attract investment from the migrants especially those settled abroad. In the Philippines, liberalization of government policy has led to private sector companies offering services for delivering remittances to the households within 24 hours (Go 1994). Trends in remittances Since the year 2000 migrants cash remittances have been steadily increasing for both Pakistan and the Philippines. A common reason is the increase in outflows from both countries in this period. But for Pakistan apparently the events of 11 th September 2001 ( 9/11 ) in New York subsequently triggered a nine-fold jump in remittances from the United States in financial year 2002/2003 compared to 2000/2001 (Tables 7 & 8). The share of cash remittances from migrants in the United States increased from 13% to 30% during this period. Although remittance from the Middle East region increased 2.7 times during this period, there was a decline in its share in the total annual remittance from 68% to 45%. The remittances from European region, mostly from the United Kingdom, more than tripled during this period. Overall there has been a rising trend in the remittances from all the regions during 1998/99 to 2002/2003, and small declines in 2003/2004 except for the European region. The total remittance in 2003/2004 stood at US$ 3, million. 17

18 The total migrants remittances for the Philippines in 2004 were US$ 8, million, which are more than double of that for Pakistan in the same year. The difference was much larger in 2001 with remittances for the Philippines being 6 times higher than for Pakistan. Post 9/11 there was an increase in the remittance from the United States to the Philippines as well with the remittances increasing 1.3 times from 2001 to 2003, which is not as dramatic as in case of Pakistan and was in line with the overall trend for the country (Tables 9 & 10). Given a much higher scale of migration from the Philippines as compared to Pakistan the pre-9/11 differential in the remittance was much more in line with the overall trends. The narrowing of this differential in the post-9/11 years is mainly due to the sharp increase in remittances from the United States and the United Kingdom from where Pakistani migrants probably have started shifting their investments in view of the an unfavorable change in the overall political and social climate. Following 9/11, governments have moved to check transactions taking place outside the banking channels. But the remittance transactions even through the banking channels have come under greater scrutiny. The banks in both countries are required to report any transactions above certain limits to the central banks. In case of any suspicion the government can order investigation into these transfers. In the Philippines migrants workers have been lobbying in Congress against these measures (Go 2003). Remittances and investments Migrants use of remittances for productive purposes has been a policy objective of both the Philippines and Pakistan, though measures for policy implementation need to be strengthened further. To begin with, informing and guiding migrants regarding the investment opportunities in the country and assisting them in completion of formalities for establishing business enterprises need to be taken up more systematically by OWWA in the Philippines and OPF in Pakistan. Simplification of the formalities also remains a concern. The Migrant Workers and Overseas Filipinos Act of 1995 provides for the establishment of a Replacement and Monitoring Center for reintegration of returning migrant workers and providing guidance regarding the investment opportunities. The Department of Labor and Employment, OWWF and POEA have been charged with formulating a program for the use of technical skills of the returning workers, their livelihood and entrepreneurial development and 18

19 productive investment of their savings. The Center was to work with the private sector and was also responsible to establish a computer-based information system with the skills profile of returning workers, which could be used by the private sector and government establishments in meeting their skills needs. In Pakistan, OPF initially established an Industrial Division charged with the responsibility of guiding the migrants settled overseas and the returning migrants towards productive business investments, including joint ventures with the private and public sectors in Pakistan. The Division has not been able to perform in the desired manner despite a great need for the services it was to offer. OPF, however, did publish a Guide for Investment for migrants, which provided information on the government procedures and names and addresses of concerned departments and organizations. Given the potential for investments by migrants a much more organized and comprehensive program is needed to be instituted by OPF. In order to facilitate travel and investments by the migrants of Pakistani origin settled abroad and not having Pakistani nationality, the government has introduced a scheme of Pakistan Origin Card. The holder of the card does not require a visa to enter Pakistan and can stay in the country indefinitely, and has the right to open bank accounts in Pakistan and foreign currencies, and undertake property and business transactions (NADRA 2005). A novel investment initiative by migrants An indication of this potential is provided by a business investment undertaken by a group of Pakistani migrants settled overseas. A small group of 5 doctors of Pakistani origin working and living in the United States conceived the idea of establishing a hospital The idea involved providing state of the art treatment facility in Pakistan and to train younger doctors and medical students in the country in the use of modern technology. They thought it was the best way to pay back their homeland. They mustered support from other doctors and health care professionals of Pakistani origin in then United States. After going through the feasibility preparation and other formalities, acquiring over 11 acres of land in Islamabad in 1987, planning and designing the project by a hospital development company in Princeton, New Jersey the Shifa International Hospital was incorporated in 1987 as a private limited company, with over 450 contributing members, and converted into public limited company in 1989 listed on the stock exchange. 19

20 The hospital, starting in June 1993 with only eight consultants in seven specialties, now has more than 70 highly qualified consultants covering most specialties. It has 150 beds with quality care and outdoor patient facilities in 35 different specializations. It has 7 operating rooms, 50 bedded intensive care unit 37 specialist clinics, and a physiotherapy center. The hospital offers most modern biomedical technology especially in the field of diagnostic imaging. It also has an ongoing open heart surgery and renal transplantation program. The medical team involves a number of expatriate physicians, surgeons and other health professionals who spend a fix period of the year working at the hospital. Young local doctors and medical professionals work with them receiving on-the-job training. In 1993, a not for profit organization called Shifa Foundation was also established to collect donations for subsidizing the treatment of poor patients. Importantly work was started in 1998 for establishing the Shifa College of Medicine in modern clinical methods and technology. The work on the project is said to be progressing as planned. Planning has also begun for starting an educational program, which initially will involve establishment of 250 schools for providing quality education to poor students. These initiatives will be funded through contributions from Pakistani migrants settled overseas as well as local sources. Conclusion and Recommendations Management of migration needs to be further improved with focus on policies aimed at minimizing the risks and maximizing the benefits of migration to migrants. The following measures are proposed. Providing full information to migrants regarding migration related rules and procedures as well as opportunities and risks are the first step towards their empowerment and minimizing their vulnerability. Philippines have done well by establishing a comprehensive web-based system and organizing pre-departure orientation of migrants on these lines which should serve as an example to other sending countries. A strong role of mass media, civil society organizations and government monitoring bodies is essential to achieve these objectives. Additionally, the rules and procedures need to be as simple as possible so that migrants are able to deal with them comfortably; this measure would also help to minimize corruption associated with government processing and would help to bring the cost of migration down. 20

21 Lowering the cost of migration should be a central focus as it erodes the pre-migration assets of migrants. A reduction in the cost would improve the chances of sections lower in social hierarchy to benefit from migration as well. In this context, the role of migration networks and diaspora need to be further investigated and supported and realistic policy needs to be introduced to regulate recruiting agencies. The nexus between high cost of migration and irregular migration including human smuggling and trafficking in persons needs to be better understood and addressed through more integrated policies. Irregular migration in general and trafficking in persons and human smuggling in particular embody the worst form of exploitation and human rights violations. Protection of migrants during employment abroad is a more complex issue, requiring bilateral agreements with receiving countries. Enforcement of minimum standards in contracts and ensuring migrants rights under the law cannot be achieved without affirmative action by receiving countries. Multilateral agencies can play an effective role in establishing a dialogue between sending and receiving countries. In the meantime, sending countries need to provide support services to migrants in countries of employment to mitigate the effects of their rights violations. The establishment of resource centers in its embassies by the Philippines to provide a package of relevant services is a good example to follow. Given a heavy and still increasing participation of women in migration, especially in the Philippines, and the increased responsibility of women in left-behind households, migration policies and strategies need to be gender sensitive. More investigative studies are needed to determine the vulnerability of women in various occupations abroad and of the women in left behind families to develop suitable policy interventions and provide appropriate support services. Making use of the improved human assets resulting from migration remains a challenge. Systems are needed to identify areas needing high grade skills, as well as related opportunities, and to disseminate this information to the migrants, including return migrants and diaspora. Brining remittances into the formal banking channels helps to avert the risks of fraud associated with informal mechanisms of the transactions, which deprives migrants of their hardearned savings. Pakistan s example of improving accessibility of the formal channels, providing flexibility of keeping the savings in foreign exchange and domestic currency and bringing the bank exchange rates at par with the market, as well as providing incentives in the form of tax relief on selected imports is a good one to follow. 21