Rising worker migration, stagnant remittances
5 months ago | By Tanya Shan
Despite a high number of Sri Lankans immigrating during 2022, the country’s remittance inflow for the year is much less than the remittances received in 2020, The Sunday Morning learns.
This, despite 2020 being a year which threatened most Sri Lankan migrants’ overseas jobs due to Covid-19-related lockdowns and job cuts.
Minister of Labour and Foreign Employment Manusha Nanayakkara recently stated that 2022 had witnessed the highest number of Sri Lankans leaving the country ever since it gained independence in 1948.
According to Nanayakkara, as of mid-December, about 300,000 Sri Lankans have left the country for overseas opportunities.
However, despite the increase in migration, the Central Bank of Sri Lanka (CBSL) statistics fail to show a similar growth in remittances. During the period from January to October 2022, the remittance inflow has been recorded as $ 2.9 billion compared to $ 4.8 billion in the same period in 2021. However, total departures for foreign employment during January to October 2022 were recorded at 251,151, which exceeded the annual departures in the pre-pandemic period.
As per CBSL data, worker remittances in 2021 amounted to $ 5.491 billion, in comparison to $ 7.104 billion in 2020, recording a decline of 22.7%. Total departures for foreign employment stood at 117,952 in 2021 under the categories of skilled (38,333), unskilled (30,431), domestic aid (29,493), professional (7,830), clerical and related (6,114), middle-level (3,962), and semi-skilled (1,789), in comparison to 53,875 in 2020.
It is evident that remittance inflows are on a declining trend as opposed to departures for foreign work opportunities.
Reasons for leaving
Commenting on the disparity in numbers, University of Peradeniya Department of Economics and Statistics Professor Ananda Jayawickreme stated that the main reason was the state of politics and lack of trust in the Government.
“Last year, we did not receive the remittances we used to receive previously. This issue came up due to governance-related problems. People have doubts about the Government and its corruption. Those who left the country already have no confidence in this Government. People who are leaving or planning to leave are frustrated. These are the people who overwhelmingly supported Gotabaya Rajapaksa,” Jayawickreme noted.
According to him, many Sri Lankans called for a different system of governance and had hopes for Rajapaksa but ultimately, they were let down and left frustrated.
Jayawickreme reiterated the importance of changing the Government: “If you feel that the Government is dedicated to the people, then you will want to send money to the country. What we see is that this Government is in power without the mandate of the people. Ranil Wickremesinghe is not an elected member. The Government should prioritise the people’s choice. Otherwise, people will neither support it nor follow its policies,” he noted.
Speaking to The Sunday Morning, University of Colombo Faculty of Arts Department of Economics Senior Lecturer and Attorney-at-Law Dr. Shanuka Senarath also stated that people needed to have confidence in the economy to send money into the country.
When it comes to foreign remittances, he pointed out that it was notable that Melbourne, Australia was the city where most Sri Lankans resided, other than Colombo. Apart from Australia, there are a considerable number of Sri Lankan migrants residing in the UK, the US, New Zealand, Canada, and Europe (especially in Italy).
Nevertheless, a higher percentage of remittances come from the Middle East, according to Dr. Senarath. Thus, those who have migrated for work in the Middle East are the ones who send remittances to Sri Lanka and not those who are residing in other countries, a matter which Dr. Senarath considers a social issue as the people who have migrated for work in the Middle East have done so with the sole purpose of sending money to their dependents in Sri Lanka (which is a monthly average of Rs. 40,000 per family).
“At the same time, migrants residing in other countries have done so for different reasons such as education. These Sri Lankans who have migrated to work in other countries (apart from the Middle East) are mostly engaged in white collar jobs. They do not send money to Sri Lanka, choosing instead to spend it within their respective countries of residence, but they do bring some money when they return to Sri Lanka,” Dr. Senarath explained.
Sri Lanka Bureau of Foreign Employment General Manager Priyanka Senanayake told The Sunday Morning that the number of departures for work purposes had exceeded 300,000 and that there were various reasons for the continued disparity between the departures and remittances, with the use of illegal channels such as undial and hawala for remittances likely being one.
“Either they are sending money through illegal channels or not sending at all. We used to get above $ 700 million per month. Remittances should be a concern of the CBSL. However, we have implemented several measures including the Value-Added Tax (VAT) relief and vehicle import permits for those who send money. We are also hoping to provide loans for these workers. Even though this is not our mandate, we are doing it as a social responsibility,” Senanayake added.
The Ministry of Labour and Foreign Employment recently issued a circular allowing migrant workers to import an electric vehicle with the intention of promoting migrant worker remittances. Through this move, a licence is issued to migrant workers who import an electric vehicle, equivalent to 50% or less of remittances transmitted through legal channels.
If a migrant worker has transferred more than $ 3,000 in remittances per month, they will be allowed to import an electric motorcycle.
Meanwhile, those who have transferred more than $ 20,000 per month will be permitted to import an electric car priced at half the amount transmitted to Sri Lanka, up to a maximum of $ 65,000.
However, the circular also stated that these migrants should also purchase or import a solar power system to provide the electricity required to charge the vehicle they imported, as these electric vehicles were not allowed to be charged through the national grid.
Minister Nanayakkara stated that although the Cabinet had approved the provision of a duty-free allowance in relation to the amount of money remitted by migrant workers to Sri Lanka, the officials of the Ministry of Finance and the CBSL were yet to take the necessary measures for it. The Minister mentioned that it had been around four months since Cabinet approval had been granted to provide this duty-free allowance for migrant workers.