Labour ex­port

The Pak Banker - - FRONT PAGE -

Over the last few years, Pak­istan's labour ex­port has been on the de­cline. Ac­cord­ing to the lat­est data pro­vided by the Bureau of Emi­gra­tion & Over­seas Em­ploy­ment ( BEOE), labour mi­gra­tion to KSA dropped 53 per­cent in 10MFY18, leading up to a 10 per­cent drop in re­mit­tance flows from the KSA in 11MFY18.This fol­lows a 61 per­cent year-on-year de­cline in labour mi­gra­tion to KSA in FY17. Pak­istan's labour ex­ports to the King­dom of Saudi Ara­bia (KSA) has been weak­en­ing since the end of 2015.

The rea­sons for the fall in Pak­istan's labour ex­ports are mul­ti­far­i­ous. These in­clude im­po­si­tion of taxes per de­pen­dent per month on ex­pa­tri­ates and their de­pen­dents and higher taxes on pri­vate com­pa­nies that em­ploy for­eign work­ers. In the case of former, the tax was Saudi Riyal (SAR) 100 in 2017, with planned in­crease of SAR 100 each year to an even­tual SAR 400 by 2020. In the case of former, a tax rate of SAR 200 per for­eign em­ployee per month was im­ple­mented in 2017, and it is slated to in­crease to SAR 700 by 2020. Com­pa­nies in the king­dom are also be­ing taxed if they have em­ployed more for­eign work­ers than Saudi na­tion­als.

Re­cently, the KSA and the United Arab Emi­rates have in­tro­duced VAT mode tax­a­tion (@5%) on whole­sale and re­tail sales, in­clud­ing restau­rants, since the start of this year. Other GCC coun­tries such as Bahrain and Oman are also go­ing to roll out VAT soon - Bahrain by win­ter 2018 and Oman by spring 2019. These taxes will nat­u­rally in­crease the cost of liv­ing for the mostly semi or un­skilled work­ers that Pak­istan sends to these coun­tries, which will ei­ther de­ter work­ers from go­ing to these coun­tries or send lesser monies back home be­cause of VAT's hit on their wal­lets.While re­mit­tance in­flows from the UAE haven't fallen sharply in the fis­cal year to-date, it has surely slowed. Sooner or later, re­mit­tance in­flows from that cor­ri­dor will start fol­low­ing the trends in KSA, since labour mi­gra­tion to the re­gion fell 20 per­cent year-on-year in 10MFY18, fol­low­ing the de­cline of 7-8 per­cent in the last two years.

Con­sid­er­ing that the KSA, the UAE, and the GCC at­tract more than 90 per­cent of Pak­istan's to­tal labour ex­port and more than 60 per­cent of to­tal an­nual re­mit­tances, these trends need to be stud­ied by the govern­ment. Ef­forts like the Pak­istan Re­mit­tance Ini­tia­tive can do only so much when labour ex­ports are tank­ing.The BEOE is cur­rently work­ing with pro­vin­cial tech­ni­cal and vo­ca­tional train­ing author­i­ties to train work­ers in ar­eas where de­mand for im­ported man­power ex­ists. In ad­di­tion, the govern­ment is look­ing for so­lu­tions to re­duce the cost labour­ers have to in­cur to se­cure a job in these coun­tries and re­gions; these costs are sev­eral times higher than what labour­ers in India or other peer economies have to in­cur. These are steps in the right di­rec­tion and may bear fruits as well. But without a com­pre­hen­sive mi­gra­tion pol­icy and re­li­able data and re­search, the re­sults of these ef­forts may be far from de­sir­able.

The govern­ment needs to de­velop a na­tional mi­gra­tion pol­icy, in con­sul­ta­tion with the var­i­ous stake­hold­ers in­clud­ing for­eign of­fices, pro­vin­cial vo­ca­tional train­ing in­sti­tu­tions, and the academia to be able to strate­gize labour ex­ports for at least the next decade.So far, Pak­istan has been ex­port­ing labour­ers to this re­gion, but the re­gion is chang­ing fast. The UAE and the KSA are not ex­pected to wit­ness sharp growth in hard in­fra­struc­ture re­quir­ing con­struc­tion work­ers and semi- skilled labour­ers. These economies will now in­creas­ingly need ser­vice econ­omy work­ers - and that's an area where the likes of India and Philip­pines have an edge. We have to plan ac­cord­ingly.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.