Bangladesh’s expatriate income, driven by a robust labor market, showcases its global economic significance
The state of global economic activity itself was somewhat different among major economies – in the United States, the economy was not only able to avoid repeated contractions in response to the active tightening of monetary policy since 2022 but also recorded higher-than-expected growth rates in the first two quarters of 2023. In contrast, Germany fell into a mild recession in the first quarter of 2023, and the overall growth performance of the euro area and the UK was extremely weak.
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In connection to the global remittances chart, we do see that in the first three quarters of 2023, the state of the labor market in advanced economies continued to return to their pre-pandemic levels, at least in terms of major headline indicators. The post-pandemic employment recovery in these economies was quite rapid compared to the prolonged labor market recovery following the global financial crisis of 2008-2009.
In early 2021, the unemployment rate in many developed economies except the UK has steadily declined, while employment rates that reflect the economic activity of the population have reached historically high levels. But the same map of Bangladesh tells us a different story as we do see that Bangladesh holds the seventh position globally in terms of expatriate income, with the majority sourced from the United States. According to a report by the World Bank and Nomad, the legal channels of expatriate income in Bangladesh are expected to reach $23 billion or $2.3 billion, reflecting a 7 percent growth. The United States contributes the highest remittances, followed by Saudi Arabia and other Gulf Co-Operation Council (GCC) countries, including Kuwait, Bahrain, Qatar, Oman, the United Arab Emirates, and Iraq. Despite a negative trend in 2022, the World Bank predicts a growth rebound in Bangladesh’s remittances this year.
India leads in global expatriate income, anticipated to reach $125 billion or $12.5 billion. The surge is attributed to strong labor markets in the United States and Europe, along with lower inflation in high-income countries. However, economic challenges in Saudi Arabia and Kuwait may adversely affect Bangladesh’s expatriate income.
Bangladesh’s Expatriate Labor Market
Bahrain, Kuwait, Oman, Qatar, Malaysia, Singapore, Saudi Arabia, Jordan, Romania, and the United Arab Emirates are the primary destinations for Bangladesh migrant workers.
It is noteworthy that Jordan and Lebanon serve as significant hubs for female workers, while Saudi Arabia remains the largest labor market for Bangladesh. Although Kuwait, Malaysia, the United Arab Emirates, and the Maldives were once major labor markets, many Bangladeshis continue to work legally and illegally in these countries.
Earlier, Finance Minister AHM Mustafa Kamal mentioned that the government has provided professional, skilled, semi-skilled, and low-skilled training to a total of 8,147,642 workers and established 73 training centers throughout the country.
Simultaneously, approximately one million women workers have seized job opportunities abroad. AHM Mustafa Kamal emphasized the government’s commitment to exploring new labor markets, successfully sending Bangladeshi workers to countries such as Poland, Seychelles, Albania, Romania, Slovenia, Uzbekistan, Bosnia Herzegovina, and Cambodia.
Expatriate Labor Statistics of Bangladesh
Prime Minister Sheikh Hasina informed parliament that over 14.9 million workers were currently employed in 176 countries globally, with approximately one million women securing job opportunities abroad during this timeframe. In September, Expatriate Welfare and Foreign Employment Minister Imran Ahmad stated in parliament that the number of Bangladeshis working abroad was 15.5 million. Meanwhile, the Bangladesh Bureau of Statistics (BBS) recently highlighted in the National Report of Population and Housing Census-2022 that the count of expatriates residing abroad stands at 15 million. According to the Bureau of Manpower, Employment, and Training (BMET), a total of 15.86 million individuals acquired BMET licenses for overseas work from 1976 to October 2023.
The Bangladesh Overseas Employment and Services Ltd. (Boesel), the government recruiting agency, facilitated the foreign employment of a total of 18,593 individuals in 2022, comprising 615 professionals and 17,978 skilled workers.
Due to various initiatives implemented by the government in 2022, a historic figure of approximately 1,113,374 workers secured employment overseas, contributing to remittances exceeding 10 billion dollars by the end of the fiscal year 2022-23. Remittances, crucial to Bangladesh’s economy, stand as the second-largest source of foreign exchange earnings.
The Refugee and Migratory Movements Research Unit (RMMRU) highlighted in its 2019 Labor Market Report that between 1976 and 2019, 1.28 million workers migrated abroad for employment. However, this figure doesn’t capture the current number of Bangladeshi workers abroad, as many are short-term contract workers returning home after their contracts end. RMMRU further emphasized that, although there are 173 countries of immigration, 95% of migrants moved to only 14 to 15 countries, with few workers going to other nations.
A migrant’s overseas work contract typically spans two to three years, requiring a return to the country and reapplication upon expiration. Consequently, the same individual may work in three to four countries during their career, leading to multiple counts.
Nevertheless, the absence of year-wise returning worker information poses challenges in determining the actual number of resident workers abroad. The complexity is heightened by workers returning due to job loss, deportation, or voluntary return, making accurate statistics hard to attain. The BBS reported that 5.05 million people were abroad in the six months preceding the census period, excluding those who permanently returned to the country in the previous two years.
Bangladesh’s Inflow of Remittances
Bangladesh’s economy depends heavily on expat earnings, which make up the second-largest source of foreign exchange profits. The evolution of Bangladesh’s remittance inflows is covered in the following.
The Inflow of Remittances Over the Years
According to a Bangladesh Bank report, In November 2023, remittances stood at 1977.56 million US dollars.
According to a World Bank report, remittances to Bangladesh are projected to exceed $23 billion in 2023.
Remittance’s Impact in Bangladesh
In recent times, remittance has stood out as a crucial economic factor in Bangladesh, influencing economic growth, contributing to the balance of payments, bolstering foreign exchange reserves, elevating national savings, and accelerating the velocity of money. Over the past two decades, remittance has accounted for approximately 35% of export earnings. Notably surpassing foreign aid, plays a pivotal role in reducing reliance on external assistance. Remittance has gained substantial momentum in Bangladesh, emerging as the second-largest contributor to foreign currency earnings, following the garment sector. When subtracting the cost of imported raw materials from the foreign currency earnings of the garment sector, remittance emerges as the primary source of foreign currency earnings. The daily increase in emigration from Bangladesh is a key driver behind the escalating remittance earnings. The proportion of remittance in Gross National Income (GNI) experiences a continuous upward trajectory. It positively impacts virtually all macroeconomic indicators of the country.
Conclusion
Bangladesh’s expatriate income, driven by a robust labor market, showcases its global economic significance. Despite challenges and fluctuations, the government’s proactive measures, extensive training programs, and exploration of new labor markets have propelled the overseas employment sector. Remittances, standing as a vital economic pillar, contribute significantly to national development, acting as the second-largest source of foreign exchange earnings and playing a pivotal role in sustaining economic growth and stability.
