Foreign workers: What is the fuss all about?

Reading the news headlines on the TIB report on employment of foreigners leaves one highly perplexed.  The foreign workers are portrayed as if they are here to steal our money without giving us anything in return.  More worrisome are some statements attributed to the TIB such as the following:

"It is clear that more money goes out from the country than that enters Bangladesh…..The picture is worrying, it deprives Bangladesh and slows down the development process".  

Really?  According to the report, some $3.15 billion is "illegally" and $46 million legally remitted from Bangladesh every year.  Outward remittance thus amounts to $3.61 billion per annum.  How is this higher than the amount entering Bangladesh?  Let alone annual, this amount was vastly exceeded by $4.5 billion inward remittances from our workers abroad in the first quarter of the current fiscal year.  Even in a bad year such as FY17 when remittances dipped to a recent low, the total remittances flow into Bangladesh constituted 3.5 times the remittances flowing out.

How are these workers slowing the development process?  As reported, these foreign workers typically enter Bangladesh on a three-month tourist visa and find jobs here because of the shortage of people with strong managerial, technical and communication skills.  Such skills are in high demand in, among others, garments, textiles, buying houses, multinationals, power plants, telecom companies, information technology, cargo and freight forwards, health care, hotels and restaurants.  These immigrants bring with them skills that are missing from the local economy. Such brain gains power innovation, which is a crucial driver of growth.

Most of these workers come from India, who account for 41 percent, followed by China, Japan, South Korea and Malaysia.  Per capita income in all these countries are well above Bangladesh's per capita income.  It is therefor unreasonable to assume that their home country conditions pushed them to come here in search of livelihood. They are here as a result of a mutually beneficial arrangement between the employers in Bangladesh and the immigrant workers.  Surely, our employers do not pay them more than what they contribute to their revenues. They get paid for their work and remit money back home just as our workers get paid abroad and remit money back to their families here. There is no "siphoning" off money either way.

As in merchandize and nonfactor services, trade in labor services is a two-way street. We export unskilled labor because we have too many to use them locally or pay each of them well enough to make a healthy living.  We import skilled labor because our own skilled development system is dysfunctional.  We have millions of educated youth, but they are not employable because of both low quality and external inefficiency of our education and training system.

The other allegation that has made headline is tax evasion.  Yes, they do not pay taxes because they cannot tax.  They work without authorization and hence how can they pay taxes even if they wanted to?  But an odd assertion we heard from the TIB is that salaries of legal foreign workers are shown less in the official documents than their actual income.  Why do the employers do that when it means overstating their own profits by understating salaries paid to legal foreign workers? By helping these workers evade taxes, they are increasing their own tax burden unless they maintain separate set of books! 

Some good sense did find a place in the TIB presentation at the end of the day.  They recognized that employment of foreign nationals is a necessity in the face of skill shortages in Bangladesh and called for greater transparency in their recruitment.  Indeed, our regulations in this sphere need to be made consistent with the investment and production needs of the economy.

The author is an economist.