Remittances and skilled workforce

If Pakistan is to continue relying on remittances to support its current account imbalances, then increasing the quality of labour exported is of paramount importance. At least that’s what the reading is from a recent remittance report by the International Fund for Agriculture Development and the World Bank.
The report, titled ‘Sending Money Home to Asia’, places India as top receiver of remittances during CY12, followed by China, the Philippines and Pakistan. All these countries are also among the top-10 remittance-receiving countries in the world.
The data for migrants and remittances inflows used in the study is of different years, but it gives clue to a valuable insight. India and Pakistan belong to the same region with similar labour attributes, but there is a disparity between the two countries in terms of average yearly remittance sent by their migrants. India has almost twice the migrant workers as Pakistan, but the former receives five times what the latter receives in remittance inflows.
Put simply, remittance sent by an Indian migrant worker per annum is, on an average, $3,165 more than what is sent by a Pakistani migrant worker. This difference is, of course, averaged out, and doesn’t tell anything about remittance per migrant from different countries of the world. For instance, it does not suggest whether remittances per migrant are higher in US and UK than that from Middle East.
World Bank’s ‘Migration and Remittance Fact book’ (updated till 2010) shows that Pakistan lags behind India in absolute numbers of migrants working in major remittance origins. Compared to India, Pakistan also has lesser percentage of its total migrants living in the United States, Canada, and the UAE. However, in Saudi Arabia and United Kingdom, Pakistan has greater percentage of its total migrants living there than India does.
But the quantity of workforce in major remittance origins may not be the only factor behind this Indo-Pak disparity in average yearly remittance inflows per migrant. Faisal Ijaz Khan, the Chief Executive Officer of the Punjab Vocational Training Council maintains that the quality of migrant workforce is as important.
“India is sending only those workers overseas that are technically qualified for the job and are duly certified by globally recognised testing organisations. Whereas Pakistan is sending mostly the labour class abroad, with little emphasis on certification, to not just Saudi Arabia and Kuwait, but also to countries like Australia and South Africa,” Khan told BR Research.
“The problem is that an uncertified labourer ends up earning just one-third of
what a certified labourer can. That shows in the difference in average remittance inflows,” he added.
To break out of this situation within two to three years, Khan said the focus should be to train the maximum number of people keeping in mind overseas demand, and to give these people proper certification. He suggested that trained and certified migrant workforce can double the amount of remittances sent back to the country.
But for that to happen, he stressed on the need to send more certified people abroad to work in service sectors such as hospitality, healthcare, automation, customer care and software services.
While a detailed study can only identify plausible reasons behind this remittance disparity, the issue itself provides policymakers with some food for thought.