High migration cost eats up 13% of remittance income

Tajuddin Tareq went to Saudi Arabia in 2017 on an employment visa. He had to spend Tk7.5 lakh as migration cost, which was equivalent to 21 months' income there.

But if the man from south-eastern district Feni could go to the oil-enriched Middle-Eastern country at the government set rate of Tk1.65 lakh, it would not take him more than five months to recoup the cost with a monthly salary of Tk35,000.

The recovery time for a Bangladeshi migrant to Saudi Arabia is five times that of an Indian migrant.

Infographic: TBS

The spiralling migration cost took away more than 13% of the money transferred by the Bangladeshi expats abroad to their home, according to an estimation of the local research firm DataSense.

The migration process rolled out at least three stages in the home country – middleman, recruiting agency and processing of travel documents – that were the main reasons behind the high migration cost, Tareq told The Business Standard over phone.

The story of the 31-year-old Feni man bears a resemblance to 6.17 lakh Bangladeshis who went abroad last year after spending more than $2.9 billion as the country received $22.07 billion in remittance in 2021.

Experts and stakeholders believe the negative impact on remittance benefits will be much higher if the hidden costs both in destinations and home countries are taken into account.

They say if the Bangladesh economy is to enjoy the full benefit of the remittance inflow, there are no alternatives to introducing bi-lateral labour migration arrangements. They said the government-to-government system minus the middlemen would reduce the migration cost, which is now the second highest in South Asia after Pakistan.

A World Bank report also suggests that public sector intermediation – such as the government-to-government agreement that Bangladesh had with Malaysia and now has with South Korea – could reduce costs and discipline the manpower export market that lacks accountability and proper monitoring.

The government in 2017 fixed the migration costs to major destinations as a temporary measure to discipline the manpower market. Then came the pandemic-led fallout in 2020 as many Bangladeshi workers lost their jobs while others faced income crunch. Fresh migrations remained largely suspended in 2020 and 2021.    

With the pandemic situation waning, the overseas labour market rebounded late-2021. But the migration cost still remained a burden for aspirant migrants as airfares almost doubled and tripled in some routes. 

Migration experts said the real migration cost would be more than the estimated amount as Bangladeshi expatriates lost their income during the pandemic.

"Our research found around 68% returnee migrants did not receive due wages while 39% received reduced wages amid the Covid-19 pandemic. On an average, a returnee migrant lost over Tk1.79 lakh in wages and other entitlements in the workplace," said Tasneem Siddiqui, founding chair of Refugee and Migratory Movement Research Unit (RMMRU).

Terming the local manpower recruiting sector entirely an "underground business", Tasneem Siddiqui said the recruiters must be brought under the guidelines to reduce the migration cost.

"Often the recruiters overcharge the aspirant migrants more than the middlemen. There should be a minimum level of accountability," she noted.  

However, an RMMRU study last year found that the cost of migration for Bangladeshi workers declined to some extent over the last several years if annual inflation is taken into account.

The study showed the migration cost of women workers fell by 18% and for male 7% in 2020 compared to 2017.

"If we look at the figures closely, we will find that the recruitment charges have not increased massively in the last 10 years," Tasneem Siddiqui told TBS.

An expensive process

The illegal "visa trading" and legal work permit (Iqama) fee in destinations consist of a major portion of cost while the high service charges of middlemen and recruiting agencies at home, documents fee like passport, police clearance, medical cost and other government fees made the whole process very expensive.

Besides, airfare hike after Covid-19 pandemic is a new phenomenon that pushes up the migration cost now-a-days.

According to a RMMRU study, the cost of recruitment varies on the basis of gender, countries of destination as well as types of visa.

Recruiting agencies argue that they usually take $300-$500 as service charge. It is the middlemen (brokers) who charge more as they are not regulated.

They claim an aspirant migrant can go to the KSA now for Tk2-2.5 lakh if there is no involvement of middlemen. But it is quite rare to go abroad without the middlemen involved.

Pay for the papers

An aspirant migrant often has to pay the middlemen at home to get the travel documents ready.  

"A police clearance costs at least Tk15,000 though the government fixed rate is only Tk500," Tipu Sultan, a recruiting agency owner, told TBS.

He said there are government designated medical centres for aspirant migrants to the Gulf countries. Though the centres are supposed to charge Tk10,000 per person, middlemen take more than the amount.

The recruiter said costs for passport and medical clearance in the neighbouring countries are less than Bangladesh.  

Though there is no formal system of "visa trading", it is widely practised in destinations as some agents buy visas from employers and sell it to recruiting agencies of origin countries. 

Shamim Ahmed Chowdhury Noman, former secretary-general of the Bangladesh Association of International Recruiting Agencies (Baira), said they do not trade visas. "We mainly bring demand letters from the recruiting countries and it costs us. But there should be a maximum $500 ceiling for it. The market will not be affordable until it is brought under a legal framework."  

But a local recruiter said he has to pay the Saudi employer around Tk1.20 lakh per visa as the "visa procurement fee".  

The Transparency International Bangladesh said more than $2 billion was laundered out of Bangladesh to six major labour-recruiting countries to illegally purchase work visas in 2016.

"In 90% of the cases, visas are purchased illegally, whereas visas actually have no cost," it claimed.

Excessive labour supply also to blame

The labour migration costs from South Asia to the most popular destinations are among the highest in the world, limiting the poor's access to overseas jobs and exposing migrants to high debt burdens.

The cost of migration for Bangladeshi workers is second highest in South Asia after Pakistan, says a World Bank report.

The average costs of migration from Bangladesh, Nepal and Pakistan are equivalent to 6-12 months of wages at the destination, it states.

The official statistical agency of Bangladesh puts the period even longer.

A Bangladeshi average migrant needs to work 17.6 months abroad to recoup the cost of Tk4.17 lakh as estimated by the Bangladesh Bureau of Statistics (BBS) in 2020.

Bangladeshi migrants spent 2.6 times the amount fixed by the government for Saudi Arabia, 2.5 times for Malaysia and 2.2 times for Singapore, according to BBS data.

Mentioning oversupply a major reason for the higher migration cost for Bangladeshis than others, former Baira leader Shamim Ahmed Chowdhury Noman said we can accommodate 6-7 lakh people a year while 30-40 lakh migration aspirants come to us annually.

"Labour migration in Nepal costs less than us as the labour supply there is less than the demand. Nepalese migration aspirants get free visas. They sometimes even get money from the employers to join their workstations abroad," he added.     

"Other countries can dispatch an employee within a maximum of 2-4 weeks. But it takes us about 45-60 days causing the already high costs to escalate further," Noman said.

He said the country should now move towards migration of skilled workers as the cost of sending skilled people abroad is "very low".

A short-lived good initiative

In its 2019 study paper, the World Bank showed how the government-to-government agreement signed between Bangladesh and Malaysia in 2012 made migration more affordable and lowered debt burden among migrants. 

The initial agreement was to recruit about 30,000 workers for Malaysia's palm-oil sector under this scheme, but it ended with about 10,000 workers, chosen from all over the country through a transparent lottery system.

Each of the migrants paid only Tk45,000, compared with Tk3.90 lakh charged by private recruiters per person, the study said.

Then came the "G2G Plus" system in 2015. But Malaysia cancelled it in 2018 raising an allegation of at least Tk5,000 crore corruption by recruitment syndication.

Referring to bi-lateral labour agreements that guide temporary labour migration in the United States, the European Union, and the Organisation for Economic Co-operation and Development (OECD) countries, the World Bank study suggests the government should have effective monitoring in private sector recruitment of migrant workers under bi-lateral labour agreements with major destination countries.

Besides, it stressed on the government's role in introducing affordable financing options to make overseas jobs accessible for the poor.