KARACHI: With a significant increase in the labour migration, the State Bank of Pakistan (SBP) is expecting improvement in the inflows of remittances to Pakistan in the future.
Pakistan has witnessed a significant increase in labour migration in FY22 and FY23 compared to the preceding two years. However, according to annual migration data of Bureau of Emigration and Overseas Employment (BEOE), the recent surge in emigration is not the first of its kind, as the country has previously experienced similar spikes as well, such as during FY15 and FY16.
Some 0.8 million Pakistani workers were registered through Bureau of Emigration and Overseas Employment (BEOE) and Overseas Employment Corporation (OEC) during FY23. Out of this, the number of workers registered for Saudi Arabia, UAE, Oman and Qatar were 55.6 percent, 19.3 percent, 8.6 percent and 7.8 percent, respectively.
Sept workers’ remittances up 5pc to $2.206bn MoM
However, workers’ remittances recorded a decline in FY23 for the first time in the last six years. After reaching a record $ 31.3 billion in FY22, remittances dropped by 13.6 percent to $ 27.0 billion in FY23. Remittance flows declined from all major corridors, except for the US.
According to a report recently issued by SBP, Pakistan’s labour migration flow by skills composition shows that highly-qualified and highly-skilled labour force each account for only 2.0 percent on average of the overall emigration between FY20 and FY23.
Number of migrants under each skill composition increased during FY23 and FY22 after a significant dip during FY21. The recent spike in emigration could also be due to post-pandemic resumption of international travel and opening up of host economies.
Overall migration under occupational trades identified as highly-qualified and highly-skilled has been increasing between FY20 and FY23. As they constitute a very small portion of emigrants, they can hardly have any significant impact on remittances.
However, top occupational trades recruited for overseas work during FY23 consist of mostly blue-collar jobs. Further, comparison shows that remittances in US dollar have declined during FY23, whereas remittances in PKR were on a rising trend.
“This implies that exchange rate depreciation has lowered remittances in US$, as lower dollar amount results in higher remittance in rupee terms compared to the previous year; and the continuing dominance of blue-collar workers in total migration mix leads to lower average ticket size and hence lower US$ denominated remittances,” the SBP said.
SBP believed that provided that global and domestic economic conditions begin to improve going forward, increasing migration may improve the flow of remittances to Pakistan.
Copyright Business Recorder, 2023
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