Loss of jobs and foreign remittances
By Skandha Gunasekara With an estimated 18,000 migrant workers losing their employment, Sri Lanka is facing a sharp decline in foreign remittances and is now compelled to look at mitigating its damage to the economy. Following the outbreak of Covid-19, Sri Lankan migrant workers, particularly those in the Middle East, have been seeking to return to Sri Lanka, while a significant number – approximately 30% of those waiting to return – having lost their jobs.
“There is a very rough calculation on this. All the people waiting there (overseas) are not categorised as those who lost jobs. These numbers are very low – that is about 30% of the total crowd remaining to return to Sri Lanka. Maybe about 15,000-18,000. There are more than 45,000 waiting to return,” Sri Lanka Bureau of Foreign Employment (SLBFE) Deputy General Manager and Director of Media R.K.K.M.P. Randeniya told The Sunday Morning.
He said that while the loss of jobs is a worrying factor, steps have already been taken by the Government to try to recover some of the lost employment opportunities.
“We have informed our missions abroad, as well as the relevant recruitment parties and the employer to somehow re-employ them and ensure the availability of the legal framework to re-employ, as well as to get service extensions for others.”
Regarding the repatriation process, Randeniya said the Government had already restarted the repatriation process that was partially halted following the eruption of the second wave of Covid-19 in the country.
“The Ministry of Finance and the Bureau have collectively prepared a plan, giving priority to the domestic situation, as per the instructions of the National Operation Centre for Prevention of Covid-19 Outbreak (NOCPCO).”
He said that repatriation flights had begun operating as early as last Tuesday (10) with two flights coming into the country.
“We are going to have another plan to restart the repatriation process. In fact, we have already restarted the repatriation process to some extent. On Tuesday night, two flights came to Sri Lanka with expatriates, one of which was from the United Arab Emirates (UAE) with around 275 people. In the future too, the Covid-19 National Centre (NOCPCO) will monitor the local situation and grant approval in accordance with the ground situation.”
Randeniya said the initial arrangements are to have a flight come down once a week with expatriates, adding: “Due to the current situation in Sri Lanka, we cannot bring down flights every day, especially charter flights. So, we will bring down a plane with 200-300 Sri Lankans every week.”
On Friday (13), Army Commander Lieutenant General Shavendra Silva officially announced that Sri Lankans stranded overseas would be repatriated to the island systematically.
Analysing the impact of the loss of jobs of migrant workers, former Central Bank of Sri Lanka (CBSL) Deputy Governor and senior economist Dr. W.A. Wijewardena noted that Sri Lanka had been dependent on foreign exchange of migrant workers to bridge the trade gap.
“Sri Lanka has been depending on migrant workers’ remittances for more than three decades. It is nothing new. We have been able to reduce the credit gap. Sri Lanka had a very wide trade gap of about $ 10 billion in the last five years. That trade gap had been narrowed by the remittances that had come to Sri Lanka down to about $ 3 billion. That has been a relief for Sri Lanka’s economy,” Dr. Wijewardena said.
While acknowledging that the number of jobs lost is not very high, he said that Sri Lanka would now have to bring in measures to address its balance of payment (BOP) issues, which is made harder due to the drop in foreign remittances.
“Our BOP is in a deficit, which means we have to use our foreign reserves to make the payment outside the country, and the situation will be worsened when we receive lesser amounts of foreign remittances. Although losing 15,000-18,000 jobs is not a very large number, it will affect the remittances inflow. So, when we don’t get the remittances from abroad, it means that now, we will have to introduce more exchange and import control to cut down the trade gap because from the other side, we have to make an adjustment there.”
He said that Sri Lanka, while being aware of the fact that those countries that employed Lankan labourers too face economic difficulties at present, must now look at re-employing the returning migrant workers domestically.
“In the short term, there is not much we can do. We have to be mindful that the countries that employed Sri Lankan labour are also in trouble and their economies are not expanding. As a result, they are not in a position to employ people from outside. We will have to decide how we would be able to accommodate those returning migrants for productive employment within the country.”
Dr. Wijewardena predicted additional job losses for migrant workers in the days to come. Noting that it is mostly the Middle Eastern countries, as well as Singapore, South Korea, and the European Union that employ Sri Lankan labour, he said that these countries too are making internal adjustments to their economic contractions.
“Internal adjustments will require them to employ more domestic labour instead of foreign labour. This will affect Sri Lanka very badly. That is why we must find ways of employing them in productive categories within Sri Lanka, after they return to the country.”
Referring to the proposed pharmaceutical hub in the south of the island, Dr. Wijewardena commended the new venture and asserted that Sri Lanka must now seek new fields of expertise to expand to.
“Any returning migrant worker who has been employed in high-tech industries outside Sri Lanka can be easily absorbed into this new pharmaceutical hub. On top of that, lots of people are being trained in Sri Lanka in biotechnology and biomedical science offered by private and state universities, and their numbers are increasing every year. As a result, the Hambantota pharmaceutical hub will not have any difficulty in hiring the required high-skilled labour force.”