On emigrant workers and remittances
Five charts sparking questions, conjectures and speculations
I have been looking at Bangladesh’s labor force and demography lately, and thought the readers might find a few charts on emigrant labor and remittances interesting. The key takeaways from these charts:
Need to do more work to understand the size of Bangladeshi diaspora and their location / distribution
Bangladesh government should take pro-active measures to facilitate emigration to ageing countries in Europe and East Asia.
Before the pandemic, around $6b might have been remitted through the hundi channel
Chart 1 shows the number of people going overseas every year. On average, 200,000 people used to go overseas for work in the 1990s and early 2000s, jumping to 400,000 a year in the late 2000s with several years where it crossed 600,000 or even 800,000. Since the pandemic, however, way over three million people have left Bangladesh to work. And this is through formal channels so that they could be counted!
We have been going through a massive emigration boom.
However, this is only the outflow data. I haven’t been able to find any data on the return flows. It would also be useful to know the geographic distribution of the outflows. One option might be to look at the census data of the recipient countries to calculate the stock of people of Bangladeshi origin residing in each country.
Chart 2 shows annual growth in remittances. One conjecture is that this chart should be correlated with oil prices. Another conjecture is that the correlation should be weakening over time. It is interesting to see a remittance slump in 2014-17. While global oil prices fell in 2014-15, why did the remittance slump continue to 2017?
And what were the macroeconomic impacts in Bangladesh? We know that the economy grew strongly in the late 2010s, though perhaps not by the 8 percent claimed by the fallen Hasina regime. The remittance slump of 2014-17 needs to be analyzed further.
More recently, we see the remittance spike of 2021, followed by another slump in 2022, and a non-boom in more recent years notwithstanding the record numbers of emigrant workers. The conjecture is that the recent remittance flows have been affected by hundi:
In 2021, because of lockdowns, hundi channel was closed and formal remittances grew at a record pace
This was reversed in 2022
In 2023, and to a lesser extent in 2024, remitters relied on hundi as the informal market offered a better rate because of outflow of siphoned money as well as expectations of depreciation given the bleeding of reserves
We can guess about the geographic distribution of emigrant Bangladeshis by looking at the source of remittances. In 2023, for example, the top five sources of remittance (through formal channels) were: Saudi Arabia ($3.8b); US ($3.5b); UAE ($3b); UK (#2.1b); and Kuwait ($1.6b). Total remittance that year was $21.6b.
As the world economy shifts away from oil, the importance of Middle East as a remittance source will likely decline. Chart 3 shows that there has been some shift in the composition of remittance sources in the past decade, with Western countries growing their share while that of Middle East has declined. For example, remittances from Italy grew from around a quarter million dollars in 2014 to over $1.1b in 2023.
Italy is, of course, experiencing a significant demographic change, with ageing population and declining workforce. This is also the case in several other developed countries, western and eastern alike. Bangladesh government should take pro-active measures to facilitate emigration to ageing countries in Europe and East Asia.
Chart 4 shows the rising importance of ‘other’ countries over the past decade, suggesting that Bangladeshis are travelling beyond the Middle East to work. Further, it seems that remittances from the western countries avoided the recent weakening. This is consistent with the hundi-related conjecture to the extent that such networks are less prevalent in the west.
Finally, Chart 5 shows monthly remittances (smoothened by 3 month moving average) from key regions. This can give us a back of the envelop ballpark figure for the size of the hundi remittance. Before the pandemic lockdowns, we were receiving about $1.5b a month. At the peak of the lockdowns, the figure was over $2b a month. That would suggest monthly hundi figure of about half a billion, or about $6b a year, before the pandemic. Considering the much higher number of people emigrating since the pandemic, one would expect higher hundi figures currently, abstracting from the depreciation / siphoning related factors at play in 2023 and 2024.
Data source: Bangladesh Bank. Annual data for fiscal year (for example, 2024 is the year ending 30 June 2024). Middle East: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE, Libya. Western: Australia, Italy, UK, US, Germany. Eastern: Hong Kong, Malaysia, Singapore, Japan, Korea.
Further reading
What to read to understand how countries escape the worst poverty
The Economist, 21 July 2022
জনশুমারি ও গৃহগণনা-২০২২: ফলাফল নিয়ে প্রশ্ন
ফরিদা আখতার, 29 July 2022
The number of people in modern slavery is increasing
The Economist, 20 Sep 2022
Massive plan for upazila urbanisation
Saifuddin Saif, 30 Sep 2022
Global population hits 8 billion soon, but shrinks by 2100
Frank Jacobs, 15 Oct 2022
What this 'immigrants' World Cup tells us about migration
Masum Billah, 8 Dec 2022
South Asian Muslims Herald Eid al-Fitr With a Night of Communal Revelry
Sadiba Hassan, 21 April 2023
The Fuss About Fuchka: A Bengali Street Food’s N.Y. Origin Story
Andrew Keh, 26 Oct 2023
Reaping our demographic dividends
Mahebub Hasan, 25 Dec 2023
Masum Billah, 30 Mar 2024
Bangladesh Can Boost Growth and Climate Resilience by Investing in Women
Jayendu De and Genet Zinabou, 12 June 2024
মাহা মির্জা, 3 July 2024
The more bangladesh moves away from the middle east the better. Migrants bring the middle east culture of failure and laziness with them after they come back.