Finding alternative destinations for migrant workers a must - CBSL
There is a dire necessity to find alternative destinations for migrant workers rather than relying upon the Middle Eastern region, the Central Bank of Sri Lanka (CBSL) stated in its year 2020 annual report.
According to CBSL observation Middle Eastern region is often subjected to economic crises driven by the swings in oil prices and geopolitical tensions. “In this regard, exploring new labour markets and entering into bilateral agreements with other advanced economies, including Singapore, Japan and European countries are imperative to reduce the exposure of Sri Lankan foreign remittances being sourced largely from one single region,” it stated.
It also stated that progressive up-skilling of migrant workers through investments in competency development through vocational training and by providing high quality training on par with international standards, is beneficial in securing employment opportunities with higher and stable earnings. In addition, attention should also be drawn to improving the language proficiency, financial literacy and cultural preparation of migrant employees at the pre-departure training programmes,it stated.
In terms of the skills profile of migrant employees, Sri Lanka is heavily dependent on housemaids. However, the housemaid category, which accounted for the largest share of annual migrations of over 50 per cent two decades ago, has declined drastically to a share of below 30 per cent by 2020. In contrast, the share of labour migration under professional and skilled employee categories combined has almost doubled from 21 per cent to 37 per cent during the same period.
“Even though an upward trend in skilled labour migration can be witnessed, there exists a large mismatch between the international demand for jobs and Sri Lanka’s supply capabilities,” it stated. A higher demand is generated in advanced economies for specialised services such as nursing and elderly care with the changes in demographics including population ageing and increased female labour force participation rates. According to CBSL, these jobs have a relatively high earning potential than in the case of housemaids.
However, Sri Lanka has limited training institutions with international accreditation, recognised by foreign employers, to provide job-oriented training to bridge the skills gap and increase the readiness of Sri Lankan migrant employees to international markets. Despite being a relatively stable source of foreign exchange, workers’ remittances to Sri Lanka are highly vulnerable to economic and political volatilities in source countries due to over reliance on the Middle Eastern region as a destination for labour migration.
The Middle Eastern region remains the primary market for Sri Lankan migrant workers, accounting for 80-90 per cent of annual departures for foreign employment from the country and more than half of the total remittance receipts. Workers’ remittances have been the largest single source of foreign exchange inflow in Sri Lanka’s balance of payments (BOP) over the past decade.
Contrary to the global expectation of a possible slowdown in workers’ remittances in the face of the COVID-19 pandemic, Sri Lanka and a few other countries in South Asia stood out as exceptions, recording healthy remittance flows in 2020, demonstrating a sharp recovery from a dip recorded during the first half of the year.
In this backdrop, it is imperative to recognise the importance of workers’ remittances as a non-debt creating external financing source and the socio-economic challenges related to labour migration that need to be resolved in enhancing remittances to be a sustainable foreign exchange inflow to the country. During 2020, workers’ remittances increased by 5.8 per cent, year-on-year, to US dollars 7.1 billion and this year CBSL target is around US$ 8 billion