SBP report shows significant upswing in labor migration
A report issued by State Bank of Pakistan (SBP) reveals the
increasing trend of labor migration to other countries.
The report draws attention to the recent surge in labor
migration, delving into its effects on the composition of skilled workers and
its impact on remittances.
The SBP's report reveals that Pakistan has observed a
substantial increase in labor migration during the fiscal years 2022 and 2023
when compared to the preceding two years. It's worth noting that similar spikes
in emigration have occurred in the past, including during fiscal years 2015 and
2016.
Economic
Outlook Report reveals a 21.6% decline in remittances
An analysis of the composition of skilled workers in
Pakistan's labor migration shows that highly-qualified and highly-skilled labor
collectively account for an average of only 2.0 percent of the total emigrants
between fiscal years 2020 and 2023. In this period, the number of migrants
within each skill category has risen in fiscal years 2022 and 2023 after a
notable decline in fiscal year 2021.
Several factors likely contributed to the recent surge in
emigration, including the resumption of international travel post-pandemic and
the opening up of host economies. The economic conditions in both Pakistan and
the destination countries likely played a role in this increase.
While the migration of highly-qualified and highly-skilled
individuals has been increasing between fiscal years 2020 and 2023, it's
important to note that they make up a small fraction of the emigrant
population, and their contribution to remittances is limited.
SBP
introduces incentives to attract more remittances
The majority of overseas recruits in fiscal year 2023
primarily belong to blue-collar job categories. This becomes more evident when
comparing remittances in US dollars (USD) and Pakistani Rupees (PKR).
Remittances in USD have decreased in fiscal year 2023, whereas remittances in
PKR have been on an upward trajectory.
This discrepancy can be attributed to two key factors.
Firstly, the depreciation of the exchange rate has led to lower remittances in
USD because a lower USD amount results in higher remittances in rupee terms
compared to the previous year. Secondly, the continued predominance of
blue-collar workers in the overall migration mix results in a lower average
remittance size in USD and, consequently, lower USD-denominated remittances.
Despite the challenges posed by the dominance of blue-collar
workers and fluctuating exchange rates, there is potential for positive growth
in remittances to Pakistan. As global and domestic economic conditions improve
in the future, the increasing labor migration may have a positive impact on the
flow of remittances into the country.
The surge in labor migration is a complex phenomenon with
implications for both the Pakistani economy and the foreign workforce. The
SBP's report sheds light on the evolving landscape of labor migration in
Pakistan and emphasizes the importance of these trends for the country's
economic prospects and remittance inflow.
Source: https://pkrevenue.com/