Remittances hurt by falling oil prices
Remittances fell 2.54 percent year-on-year to $14.93 billion in the just concluded fiscal year as weak oil prices continue to bleed countries hosting the majority of Bangladeshi migrant workers.
This was the sixth time remittances, Bangladesh's most reliable source of foreign funding, went negative since 1975-76, according to Bangladesh Economic Review.
The full-year income from remittance declined although June receipt of $1.46 billion was the highest in the last 23 months and even 1.39 percent higher from the same month a year ago, largely because as it coincided with Ramadan and Eid-ul-Fitr festival, the biggest spending season in the country, when migrants workers tend to send more money to their beneficiaries at home.
The drop in remittance income from last fiscal year's comes in contrast to the rising number of people going abroad for jobs.
The outflow of migrant workers jumped more than 62 percent year-on-year to 6.84 lakh last fiscal year from a year ago, according to data from the state-run Bureau of Manpower, Employment and Training.
Zahid Hussain, lead economist of the World Bank Bangladesh, said the decline in remittances in the last fiscal year appears to be mainly a result of the prolonged decline in oil prices.
The oil price decline, which dropped to its historic low in January this year from its historic high in mid-2014, affected incomes in Gulf Cooperation Council economies, weakening the demand for labour workers.
"To contain the budget deficit, they [GCC countries] reportedly put on hold many public infrastructure projects, thus reducing demand for labour and labor incomes. This has adversely affected the ability to remit on the part of Bangladeshi workers."
Bangladeshi migrant workers residing in Saudi Arabia, the UAE, Qatar, Oman, Bahrain, Kuwait, Libya and Iran together accounted for about 60 percent of the total $15.32 billion sent in by the migrant workers in 2014-15.
Remittances from the UK and the US however showed healthy growth.
Although Bangladesh sends a sizable number of workers every year abroad, remittance income has not kept pace with the increasing number of people going abroad, as they are mostly little trained and lowly educated.
About 91 percent of migrants are blue-collar workers in Saudi Arabia, the UAE, Malaysia, Oman, Kuwait, South Korea and Singapore, according to a survey of Bangladesh Bureau of Statistics conducted in 2013.
Most of them -- 87.8 percent -- received no formal training before leaving the country.
As result, a Bangladeshi worker sent $2,078.95 in 2015, whereas it was $5,194.24 for an Indian, $3,300 for a Nepalese, $3,241.94 for a Pakistani, $4,950 for a Filipino and $4,730.77 for a Vietnamese.
According to the budget document, there are about 70 lakh Bangladeshis currently working abroad. Of them, 31 percent are skilled, 14 percent semi-skilled, 2 percent professionals and 52 percent lowly skilled.
This prompted the government to take initiatives in recent years so people going out of the country for jobs are trained.
In its first, the government has also given a roadmap about its plans on outbound migration in the budget for the current fiscal year.
The government plans to raise the number of skilled migrant workers to 50 percent by 2030. The country is also exploring opportunities in new markets.
Bangladesh is going to host the ninth Global Forum on Migration and Development in December this year.
Remittances sent by migrant workers play a crucial role in the country's economy, helping reduce the overall incidence of poverty as well as maintaining a healthy balance of payments.
Remittances helped reduce the poverty level in Bangladesh by 1.5 percent and account for about 66 percent of the foreign currency reserves, providing the nation with a strong and stable external position, according to a recent study by the World Bank.
Average remittances to receiving households in Bangladesh are worth twice per capita income and equivalent to almost 80 percent of receiving household's income, evidence of the vital importance of remittances to Bangladesh's economy, the WB said in 2014.
Remittances constitute the lion's share -- 78 percent -- of the income of the receiving households; the rest of their income comes from agriculture and services, according to a BBS survey conducted in 2013.