Puzzling case of more migrants and less remittance

The more Bangladeshis go abroad for jobs, the more remittance receipts should there be for the country. But the data suggests otherwise.

Let's start with 2015 when the total number of Bangladeshis who migrated for jobs abroad stood at 555,881, according to the Bureau of Manpower Employment and Training.

That year, the country received $15.27 billion in remittances, according to data from the Bangladesh Bank.

The following year, 757,731 migrant workers left the shore. But the remittance receipt was 10.9 percent lower at $13.61 billion.

Fast forward to 2021, when a record 1,135,873 Bangladeshis left for jobs abroad. But the remittance inflow was 1.5 percent lower year-on-year at $21.25 billion.

The general government view is that the migrant workers use the informal channel to send money home as they find it easier -- and hence the lower official remittance numbers.

To encourage them to use the formal channel, the government in fiscal 2019-20 introduced a 2 percent cash incentive, which they increased to 2.5 percent in fiscal 2021-22.

It is not clear how this incentive worked but industry insiders give a more practical reading of the contradictory trend of higher overseas jobs and lower remittance.

They say when more workers go abroad, there is a higher demand for hundi in the destination countries.

Much of the financial transaction in the industry is informal, said a veteran recruiting agent on the condition of anonymity. 

A portion of the recruitment cost is paid to the visa traders, who can be either the employers themselves or the brokers in the destination countries.

"Selling or buying job visas is illegal, but it is a widespread practice that has been going on for years," he said.

On average, the recruitment cost of a Bangladeshi is $4,903 or Tk 4.16 lakh, while the average monthly salary is Tk 23,093, according to the Bangladesh Bureau of Statistics national survey in 2020.

And it takes 17.6 months for a worker to recoup the amount he had to spend.

On average, 50-60 percent of the recruitment cost, which is equivalent to $2,943, is used to "pay" the visa traders in the destination countries, recruitment agents said.

The insights the recruiting agencies shared on the relationship between the rise in overseas jobs and the decline in remittance is logical, said Nurul Islam, a former director of BMET.

"We have been talking about visa trading and hundi for a long time but little has been done to address this perennial problem," he added.

It is natural that there is a higher demand for hundi in the destination countries as the visa traders need to be paid more for the jobs created, said CR Abrar, who directs the Refugee and Migratory Movements Research Unit at the University of Dhaka.

Thus, hundi is made more lucrative than banking channels for sending remittance, said Abrar, also a professor of the university's international relations department.

About $2 billion is paid to visa traders through hundi in a year if the average migration cost is assumed to be $2,943 and the number of jobs created abroad is 655,000.

"This is the amount of foreign currency that Bangladesh could have earned annually if the illegal visa trading could be stopped," said a recruiting agent.

While there is such a perception in the public, there is no proof to back up the perception, said Ali Haider Chowdhury, secretary general of the Bangladesh Association of International Recruiting Agencies.

He declined to elaborate further.

There is no exact information on the nature of hidden payment that migrants need to pay at home or abroad said Md. Mezbaul Haque, Bangladesh Bank spokesman.

"If that is the case, it is obvious that they will send fewer remittances than what they are supposed to," he added.

In the years when more Bangladeshis go abroad for jobs, it creates a proportionate demand for hundi in the countries the migrant workers are headed to.

Thus, the amount of remittance declined in that particular year, and that has been the case in the last eight years except for 2021.

Studies found that when the recruitment cost is high, more people migrate to a particular country and a portion of them don't actually get jobs, said Syed Saiful Haque, chairman of WARBE Development Foundation, a migrant advocacy group.

"The fact remains that they have already faced loss by making high payment as recruitment cost," he said, adding that many also become illegals and are deported.

For example, 6.12 lakh of the total 11.35 lakh Bangladeshis who migrated last year went to Saudi Arabia. And, many of them were also deported -- a process that continues as of now, according to Haque.

Last year, 58,000 Bangladeshi migrants were deported, mostly from Saudi Arabia, according to BMET.

"Visa trading and the resultant high recruitment cost are the most dangerous factors in the labour migration sector. This creates a vicious cycle of fraudulence, abuses and economic hardship," Haque said.

He suggested that the government take the issue seriously and break the vicious cycle in consultation with the migrant workers' host countries.

"We know, however, that there is high recruitment cost. That is something that the expatriates' welfare ministry should look into," he told this correspondent.

Contacted, Expatriates' Welfare and Overseas Employment Minster Imran Ahmad said the ministry is trying to bring down the recruitment cost.

However, the issue of informal payment or hundi is something that is dealt by the Bangladesh Bank.

This also involves criminal activity and that should be handled by the home ministry, he said.

"My ministry's main task is to send people abroad and we have been doing it successfully. Last year, a record number of Bangladeshis went abroad for jobs and this year we are hoping for another record."

Asked how far the ministry is successful in bringing down the recruitment cost, Ahmad said: "You see, the migrants also have to take responsibility here. If they are willing to pay more, unscrupulous agencies will take advantage of it. Our people need to be aware of it."