The economics of our rising migration cost seems relatively straightforward at first glance.
There’s a massive surplus of demand but a minimal supply of jobs. Millions of people are able and ready to work abroad, yet only a relatively small number of placements are available overseas.
As a result, we are overly beholden to foreign employers, costing expatriates an average of 12-24 months of their prospective salary as advance payment to get abroad.
The cost of migration for Bangladeshis remains one of the highest in the world. And here are a few things we could address.
Over-regulation
The government of Bangladesh has rigorous controls over the migration process. Some regulations are understandable, but most are out-dated. The government issues licenses for recruiting agencies and has multiple complicated steps with many pitfalls for the unwary aspiring expatriate. These steps are often cumbersome and cause hassle for migrant workers, requiring middlemen to support them.
Stringent control over who can market abroad also inhibits competition. As a consequence, a handful of licensed recruiting agencies rule over certain destination countries. In these countries, only a select few recruitment agencies can participate in marketing and processing workers. They have free rein to dictate the price of their efforts in this non-competitive process.
No doubt, some regulation is needed to protect migrant workers from destination country adversities, but we should look for ways to cut red tape where possible.
For example, a large portion of foreign jobs are sourced by the candidates themselves or via their relatives or friends who are already there. However, due to current legislation these migrants are compelled to use a licensed recruitment agency to complete their domestic processes before they can journey abroad. This is unnecessarily costing them large sums of money.
At the same time, the government should make things easier for recruitment agencies and endorse them as leaders of our economy. The recruitment agencies should be allowed similar benefits as exporters, such as loosening capital controls so they can invest abroad and schedule road shows or travels to meet prospective employers. Our licensed recruiting agencies need liberal policy support parallel to what readymade garment exporters have received.
There is currently no incentive to innovate. The government of Bangladesh strictly sets how much recruitment agencies can charge from aspiring migrants (although this is never followed) -- eg Tk 160K for Saudi Arabia, 120K for Dubai, etc. The recruitment fee structure does not incentivize recruitment agencies and marketers to go after higher-paid skilled jobs as they are specified to charge the same amount.
As government-mandated fee structures are never obeyed, rules should rather focus on mandating recruiters to disclose final amounts collected from the expatriate. Removing the impractical rules could legitimize the manpower market, create surplus revenue for the government, and bring much-needed transparency to the migration processes.
Visa trading
Nearly 60-80% of all expatriate workers migrate to Gulf countries. Most jobs in these countries are purchased -- the visa is bought by the highest bidder and peddled to our aspiring migrants. The underlying psychology of visa trading stems from surplus demand and is still very attractive for our migrant workers who are keen to work abroad. Having millions of migrants waiting to travel overseas creates an environment for ample bidding liquidity. Thus, the prices rise.
Part of the attraction of wanting to work abroad is built on misinformation -- rural workers are often misled and given inaccurate information about their salary, benefits, and contract terms, resulting in them spending more than they will ever recover. This brings disappointment to large pools of migrants.
The government could focus on building a system, with the help of Bangladesh high commissions abroad, that allows for accurate employment contracts to be directly sent to the end user/expatriate. The aspiring migrant could then better rationalize their investment with all facts provided to them via an automated system.
The middleman (dalal)
A significant portion of the migration cost is mistakenly attributed to the dalals, who are often vilified as the singular enemy of this market. This is not, however, the case: Dalals play an essential role in the manpower business -- most recruitment agencies who hold foreign job placements are located in Dhaka city, with no mechanism of gathering or recruiting migrants who mostly live in the rural parts of the country.
The middleman plays a major role in assembling all these candidates and aiding them in fulfilling the over-regulated government processes. They negotiate salaries and benefits on behalf of the migrants. There are reputable middlemen, but dubious ones also. During this process, some money is often taken by the middleman before the migrant even reaches the office of a licensed recruitment agency in the city of Dhaka. But it’s an old system that has been working in the country for the past 30 years, only flourishing because of the complexities of the rules and regulations created by the government.
There is an apparent disconnect between the employer and the migrant. Few platforms are working to formalize the role of the middleman whilst encouraging migrants to approach employers in the city directly by enabling safe and trusted communication channels. This would result in considerable savings in the long run.
What more can we do?
- Diversify: Destination countries have a part to play in jacking up the prices -- and they demand excessive amounts to secure positions. The sooner we depend less on one or two destination countries, the better for our migrant workers.
Many untapped countries worldwide would like to hire from Bangladesh. But the government process is too complicated and erratic. There could be a transparent system where prospective employers log in, search and select candidates, and track their progress. Genuine employers are hungry for a clear and transparent path to hiring from Bangladesh.
Marketing efforts by the government in unison with licensed recruiting agencies would ensure new destination countries are accessible -- but the process needs to be deregulated and made open for all to enter the market and source jobs.
- Digitalize: Some mandatory government processes should be digitalized for all stakeholders, such as the foreign employer, local recurring agent, and the aspiring migrant. Allowing job seekers to complete procedures by themselves would liberalize the migration process.
Migrants are less likely to be led astray or duped if they have a firm grasp of the migration process. In fact, it is encouraging to note that there are already a few tech products in the market that are working alongside the Ministry of Expatriate Welfare and BMET and have gone some distance to making domestic operations easier for aspiring migrants. But more needs to be done.
- Break our current psychology: Foreign employers know that we are misinformed -- and they know that we will bid and pay to go abroad -- whatever the cost may be. And they relish it. If accurate salary and contract length information were presented to migrants, they could decide for themselves and successfully scrutinize the details.
As more countries open up for Bangladesh, visa trading costs should decrease, but we must focus on marketing our workforce by creating transparency within the domestic process.
We need to speed up liberalizing rules for all stakeholders -- recruitment agencies, foreign employers, and our aspiring migrants. Liberalization will bring changes to the robust economy of the migrant enterprise, on which so much of our nation's economic well-being rests.
Namir Ahmad is associated with Making Our Economy Right (MOER), a free market think-tank.
