Labour Migration in South Asia: An Overview

Labour Migration in South Asia: An Overview S.K. Sasikumar, Senior Fellow V.V. Giri National Labour Institute (sasikumarsk2@gmail.com) Presentation to the SARNET Training Programme on Labour Economics: Theories, Methodologies and Research Issues Institute for Human Development November 05, 2015

Contextulaising Contemporary Labour Migration Accelerated movement of people in search of employment emerging as a key feature of the contemporary world of work However, there is a structural disarticulation between economic growth and labour migration Migration Paradox arising mainly due to: Measurement Issues Most migration indicators measure stocks of migrant population and severely underenumerate migration flows While life time migrants is adequately represented, that of short term, seasonal, circular and commuting migration is inadequately measured 2

Contextulaising Contemporary Labour Migration Growing informalisation of employment relations and absorption of overwhelming proportion of migrants into informal economy Blurring of sharp distinction between labour supplying and receiving regions Conventional way of conceptualising labour migration being inadequate to represent all forms of mobility of labour 3

Theories of Migration Two broad theoretical streams : Models examining the initiation of migratory movements Models analysing the perpetuation of such movements across space and time 4

Theories Examining Initiation of Migration Neo Classical Macro Theory Key Proponents: Lewis, 1954; Ranis & Fei, 1961; Harris & Todaro, 1970; Todaro, 1976 Key Propositions Migration of workers is caused by differences in wage rates between regions Labour markets are the primary mechanisms by which migration of labour are induced other markets do not have important effects on migration The way for governments to control migration flows is to regulate or influence labour markets in sending and/or receiving countries 5

Theories Examining Initiation of Migration New Economics of Migration Theory Key Proponents: Stark & Levhari, 1982; Stark, 1984; Stark & Bloom, 1985; Katz & Stark, 1986; Taylor, 1986; Stark, 1991 Key Propositions Families, households or other culturally defined units of production and consumption are the appropriate unit of analysis for migration research, not the autonomous individual Wage differentials is not the necessary condition for any migration to occur; households may have strong incentives to diversify risks, through migration even in the absence of wage differentials Government can influence migration rates not only through policies that influence labour markets, but also through those that shape insurance markets, capital markets etc. 6

Theories Examining Initiation of Migration Dual Labour Market Theory Key Proponent: Piore, 1979 Key Propositions Migration stems from intrinsic labour demands of advanced regions Labour migration is largely demand based and is initiated by recruitment on the part of the employers in advanced regions or by governments acting on their behalf Wage differentials are neither a necessary nor an essential condition for labour markets to occur 7

Theories Examining Initiation of Migration World Systems Theory Key Proponents: Wallerstein (1974); Portes and Walton, 1981; Petras, 1981; Castells, 1989; Sassen, 1988, 1991; Morawska, 1990 Key Propositions Migration is a natural consequence of capitalist market formation in the developing/backward regions; the penetration of the global capital into peripheral regions is the catalyst for movement Flow of labour follows the flow of goods and capital, but in the opposite direction Migration ultimately has little to do with wage rates or employment differentials between regions; it flows from the dynamics of market creation and the structure of the global economy 8

Theories Examining Perpetuation of Migration Network Theory Key Proponents: Hugo, 1981; Taylor, 1986; Massey, 1990; Gurak and Caces, 1992 Key Propositions Once begun, migration tends to expand over time through network connections As migration becomes institutionalised through the formation and elaboration of networks, it becomes progressively independent of the factors that originally caused it, be they structural or individual Governments can expect to have great difficulty controlling flows once they have begun, because the process of network formation lies largely outside their control and occurs no matter what policy regime is pursued 9

Theories Examining Perpetuation of Migration Institutional Theory Key Proposition As organisations develop to support, sustain, and promote movement, the flow of migrants becomes more and more institutionalised and independent of the factors that originally caused it 10

Internal Migration : Key Features Migration plays a significant and increasing role in the repertoire of livelihood strategies of millions of people in South Asia Major Data Sources National Census Specialized Surveys like NSS Surveys in India NSS Survey (India) 2007-08 estimates that there were 326 million migrants in India in 2007-2008, constituting nearly 28.5 per cent of the population 11

Internal Migration: Key Features Migration per 1000 Persons in India (NSS Rounds) 12

Internal Migration : Key Features Rural-Rural migration still the dominant form of mobility However, during 1999-2000 to 2007-2008 increase noted with respect to: rural to urban migration (18.8 per cent to 19.5 per cent of total migrants) urban to urban migration (12.9 per cent to 13.1 per cent of total migrants) 13

Internal Migration: Key Features Increase in long distance (Inter-State migration in recent years) Percentage of inter-state migration (rural to urban) increased from 19.6 per cent in 1999-2000 to 25.2 per cent in 2007-2008 Percentage of inter-state migration (urban to urban) increased from 19.9 per cent in 1999-2000 to 22.9 per cent in 2007-2008 14

Internal Migration: Key Features Marriage related migration pre-dominates in both rural and urban migrants 84 per cent women cite marriage as reason for migration in 2007-2008 Among male migration, economic reasons is one of the most important reasons for migration In 2007-2008 28.5 per cent of rural male migrants and 55.7 per cent of urban male migrants reported economic reasons for migration 15

Internal Migration: Key Features Increase in short duration out migration during 1999-2000 to 2007-2008 An estimated 15.2 million are short duration out migrants of which 85.1 per cent were males and 71 per cent were rural out migrants 16

Internal Migration Key Features Principal Destination of Short-Duration Migrant (%), 2007-2008 Source: NSSO, Migration in India, 2007-08. 17

Internal Migration: Key Features Percentage Distribution of Short-Duration Migrants by Industry in Principal Destination, 2007-2008 Source: NSSO, Migration in India, 2007-08. 18

Internal Migration: Emerging Issues Labour Market Substantial proportion of migrants engaged in low end occupations in receiving regions In construction more than 90 per cent of the migrant workers are engaged as unskilled workers/helpers Prospects for upward occupational mobility more or less absent for migrant workers 19

Internal Migration: Emerging Issues Labour Market Several occupations in major receiving regions becoming migrant-centric (domestics, informal transport, hawkers) Certain institutional mechanisms and agency system ensure a steady flow of seasonal migrants to cater to the implicit demand for migrants in receiving regions Capitalist penetration in rural areas creating a pool of mobile population who are in search of some means of livelihoods 20

Internal Migration: Emerging Issues Labour Market Growing scarcity and irregularity of employment for migrants in the destination regions Wage-cost reduction, a key incentive to deploy migrant workers Prevailing wages in most migrant-centric occupations tend to be below the prescribed minimum wages Increasing intolerance towards migrant workers 21

Internal Migration: Emerging Issues Income and Savings Migrants earnings are generally reported to be much higher than their earnings in source areas Maximizing remittances is one of the key objectives of migrants Nearly one third of the total earnings are estimated to be remitted back to the households in native regions 22

Internal Migration: Emerging Issues Income and Savings Migrants remittances do not necessarily always add to the resource base of migrant households as they are used to adjust earlier debts Weak entitlement of migrant households to proper institutional credit in backward regions Income and consumption of migrant households generally higher than that of similarly place nonmigrants Migration reduces income inequality between labour and non-labour households in receiving regions 23

Internal Migration: Emerging Issues Living and Working Conditions It is widely reported that migrant workers encounter difficult living and working conditions Long hours of work, live in open spaces with inadequate water and bad drainage Work in unhygienic conditions and suffer from serious occupational health problems Many migrants report social isolation and humiliation Migrants are also often stigmatized and criminalized 24

Internal Migration: Emerging Issues Living and Working Conditions Women migrants more often than not are more vulnerable due to the harsh living and working conditions Several micro level studies report that migrant workers are often sexually exploited but are silenced about it for fear of loss of work or domestic violence 25

Internal Migration: Emerging Issues Weak Entitlements Migrants often encounter weak entitlements Most of them are deprived of benefits of social and economic security They are often denied entitlements under public distribution system in the destination regions 26

Internal Migration: Emerging Issues Weak Entitlements Many studies report denial of entitlements to migrant workers in public spaces like government hospitals Recent estimates indicate that migrant workers spent a significant percentage of their income for private health care 27

Internal Migration: Emerging Issues Organisation and Awareness Large segment of the migrant workers remain unorganized and hence have very weak bargaining power Awareness among the migrant workers on their rights and entitlements are relatively very low Weak implementation of various labour legislations targeted towards migrant workers 28

Internal Migration: Emerging Issues Organisation and Awareness Recent evidences point to increasing effort towards encouraging collectivity among migrants and improving their awareness Such instances though minimal have positive influences on improving the social and economic conditions of migrant workers (organising of construction workers, organising of street vendors, organising of domestic maids, organising of contract workers) 29

Key Areas for Policy Intervention Improve the synergy between development and internal migration Improve labour market outcomes Ensure basic entitlements to migrants and their families Improve the economic, social and political environment in favour of migration 30

International Labour Migration South Asia : Most significant source and host region of migration in the world South Asia Gulf, a major corridor of contemporary international labour migration flows, including migration of women workers Nearly 14 million South Asian migrants in GCC countries in 2013 Majority of migrants belong to unskilled/low skilled/semi skilled categories Almost the entire flows are temporary (fixed term contract) in nature 31

Proportion of South Asian Migrants in Total Migrants in GCC Countries (in per cent) GCC Countries 1990 2000 2010 2013 Bahrain 62.3 63.6 63.3 63.3 Kuwait 62.3 63.5 63.3 63.3 Oman 83.0 80.7 83.1 83.1 Qatar 62.3 63.5 63.3 63.3 Saudi Arabia 41.6 46.0 50.3 50.3 UAE 62.6 64.1 64.0 64.0 Total Migrant Stock 8,856,887 10,549,781 20,758,167 22,357,811 Source: UN Population Division. 32

Proportion of South Asian Women Migrants in Total Migrants in GCC Countries (in per cent) GCC Countries 1990 2000 2010 2013 Bahrain 14.4 16.6 13.9 13.9 Kuwait 19.5 17.5 15.0 15.0 Oman 12.4 12.8 11.7 11.1 Qatar 13.8 15.1 10.1 10.4 Saudi Arabia 13.9 15.3 13.6 13.3 UAE 14.6 15.4 13.0 12.9 Source: UN Population Division. 33

Proportion of South Asian Women Migrants in Total Female Migrants in GCC Countries (in per cent) GCC Countries 1990 2000 2010 2013 Bahrain 50.5 53.9 50.2 50.2 Kuwait 49.9 53.9 50.1 50.1 Oman 59.2 61.2 58.6 58.6 Qatar 50.4 53.9 50.1 50.1 Saudi Arabia 41.6 46.0 46.0 46.0 UAE 50.9 54.7 51.1 51.1 Source: UN Population Division. 34

South Asian Migrants in GCC: 1990-2013 (Percentage of Migrants to the Total Migrants) Source: UN Population Division. 35

Features of Remittance Flows and Remittance Costs Global Remittance Flows Source: World Bank Growth of remittance flows to South Asian region higher than overall growth rate of world remittances during the recent years In South Asia, India is the largest recipient (US$ 70 billion) followed by Pakistan($15 billion), Bangladesh($14 billion), Sri Lanka ($7 billion) and Nepal ($5 billion) Lack of reliable information on the contribution of women in remittance flows 36

Features of Remittance Flows and Remittance Costs Remittance to South Asian Countries from GCC, 2012 Source: World Bank Half of the recorded remittance flows to South Asia originate from the GCC region 37

Features of Remittance Flows and Remittance Costs Remittance as a Percentage of GDP of South Asian Countries 1995 2000 2005 2012 Afghanistan - - - 1.9 Bangladesh 3.2 4.2 7.2 12.2 Bhutan - - - 1.0 India 1.7 2.7 2.7 3.7 Maldives 0.6 0.4 0.2 0.1 Nepal 1.3 2.0 14.9 25.0 Pakistan 2.8 1.5 3.9 6.2 Sri Lanka 6.2 7.1 8.1 10.1 Source: World Bank 38

Features of Remittance Flows and Remittance Costs Remittance to South Asia as a Percentage of Reserves, 2013 Source: World Bank 39

Features of Remittance Flows and Remittance Costs Cost of Sending Remittances Note: SAR: South Asia Region, LAC: Latin America and the Caribbean, ECA: Europe and Central Asia, EAP: East Asia and Pacific, MENA: Middle East and North Africa, and SSA: Sub-Saharan Africa Source: World Bank Cost of sending remittances declining across the world Transfer costs are lowest in South Asian region Reduction in transfer costs could be attributed mainly to use of technology backed financial products, increased competition in remittance industry and commitments by international entities such as G8 and G20 to reduce cost of remittances 40

Remittance Utilisation Recent remittance utilisation surveys in different South Asian countries report: Remittances have had a major impact in poverty rates reducing In Pakistan, probability of households becoming poor decreases by 12.7 per cent if they receive remittances Remittance increases income and consumption expenditure In Bangladesh, average remittances to receiving households are worth twice the per capita income and equivalent to almost 80 per cent of the receiving household s income 41

Remittance Utilisation Remittances have contributed to higher educational enrolment, increased completion of schooling and development of education based social norms In Nepal, 25 per cent of the remittances is reported to have been utilised in children s education Remittances contributed to improved quality of housing of migrants/return migrants households In Kerala, India, proportion of households possessing quality houses shows a steady increase with the number of emigrants in the households - from 24.2 per cent for households without an emigrant to 65.2 per cent for households with more than two emigrants/return migrants 42

Remittance Utilisation Substantial proportion of remittances still being used for settling debts incurred in connection with recruitment costs In Nepal, 70 per cent of emigrants had borrowed money from neighbours/relatives/family members to finance their migration Propensity to save among remittance receiving households reported to have increased considerably in recent years 43

Remittance Utilisation Most of the savings kept in the form of deposits in the banks Only a very limited proportion are invested in new business ventures or existing family business enterprises 44

Reintegration of Migrants and Developmental Payoffs Inadequate attention to the issue of reintegration of returnee migrants Lack of institutional mechanism for collecting data of returnee migrants and their characteristics Return migrant flows is as significant as labour outflows Considerable gender differentials in terms of aspirations of returnee migrants regarding reintegration 45

Reintegration of Migrants and Developmental Payoffs New models of reintegration being evolved in many South Asian countries Establishment of Probashi Kalyan Bank in Bangladesh Incorporation of reintegration of returnee migrant workers as an important component of National Labour Migration Policy in Sri Lanka 46

Reintegration of Migrants and Developmental Payoffs Investment plans under Overseas Pakistanis Foundation in Pakistan Entrepreneurship Programmes for returnee women in Nepal Collaboration between Ministry of Overseas Indian Affairs and Confederation of Indian Industry for investment facilitation 47

Emerging Good Practices and Way Forward Reducing Remittance Costs Need to ensure that remittance recipients does not bear any costs of conversion Given that transferring remittances using mobile technology is one of the least expensive options, urgent need to spread the use of this mode by all RSPs Remittance price comparison websites can increase market transparency and encourage greater competition 48

Emerging Good Practices and Way Forward Increasing Remittances through Formal Channels Even today, substantial amount of remittances are transferred through informal channels Critical to provide non-bank RSPs like cooperatives and micro finance institutions enhanced access to domestic payment system infrastructure Pakistan Remittances Initiative, an innovative model for facilitating and supporting cheaper and convenient flow of remittances 49

Emerging Good Practices and Way Forward Encouraging Savings and Investments Innovative banking practices is very critical for reaching to unserviced migrant workers ICICI, a private bank in India, reaching out to migrant workers by operationalising remittances kiosks/atms in major worksites and dormitories and providing multi-lingual support 50

Emerging Good Practices and Way Forward Encouraging Savings and Investments In Bangladesh, establishment of Probashi Kalyan Bank is linking processes involved in different stages of migration cycle In Bangladesh, many new financial and investment products have been created for migrants and their households 51

Emerging Good Practices and Return and Reintegration Way Forward Sustainable reintegration call for reliable information, particularly on financial resources, skills, entrepreneurial capabilities, investment plans and motivation Major social partners like trade unions, employers organisations, private sector and migrant associations should be actively involved in formulation of reintegration plans Counselling forms the backbone of any reintegration plan 52

Emerging Good Practices and Return and Reintegration Way Forward Skill assessment of the workers in the predeparture and post arrival can be an effective tool to ensure successful reintegration with optimum use of new and acquired skills Reintegration should be viewed as a dynamic entity and monitored through certain key indicators Host country governments and private sector can play important role in facilitating effective reintegration 53

Emerging Good Practices and Return and Reintegration Way Forward Happy Return Programme of Korea provides an effective framework for reintegration. The programme prepares the migrant workers for their return and successful reintegration Workers are provided vocational training and counseling services and certificates documenting their work experience prior to their return After return, workers can register with HRD Korea to find employment with Korean enterprises in their own countries 54

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