Mukti

Deshi workers in the Kingdom

Posted in economics, labour by jrahman on May 2, 2013

Recently, The Economist published: “Bangladesh and Saudi Arabia: The revenge of the migrants’ employer,” on their website. The article tracks data over the last few years of Bangladeshi migrant workers to Saudi Arabia. The data is what it is, and it is fair to say that the sources can be trusted.

However, The Economist’s take on the matter, where the lower number of Bangladeshi workers migrating to Saudi Arabia can be attributed to retaliation by the Saudis to the war crimes trials (WCT) in Bangladesh that are now seeking the death penalty for leaders of Jamaat, may or may not be true. It’s not the only possible story. And I am not even sure it’s the right story. If one analyses the same data from a different perspective, the interpretation can be very different.

For the sake of being prudent, lets look into alternate explanations behind this chart.

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The peak was in 2007, and the big fall had taken place by 2009. If I recall correctly, no one was talking about hanging anyone in 2009. The WCT started in 2010, with formal trials delayed until 2011. In 2009, AL was busy hanging the August 1975 killers, not Jamaat leaders.

Looking back to 2011, the Jamaatis were quietly confident that they would survive a trial (their confidence may have been warranted). This is why I am not so sure that the WCT is the reason behind the Saudi slump.

What’s the alternative story?

Well, once we take Pakistan out and we can tell a pretty simple story — Saudi demand peaked during the boom years when oil prices were sky-high, it collapsed with the onset of the financial crisis, and hasn’t rebounded.

Of course, this is not a full story. After all, Pakistani numbers continue to be strong. Perhaps it’s the Pakistani series that needs explaining, keeping in mind what is happening to labour demand in the kingdom overall.

Are Pakistanis and Bangladeshis substitutes in the Saudi market?

Look at the numbers once again. There are 1.5m Pakistanis in Saudi Arabia, and 2.5m Bangladeshis. Yet, both countries received $3.7bn in remittance.

All these numbers are from the Economist article. Simple arithmetic tells you that the average Pakistani sends more remittance payments than the average Bangladeshi.

This suggests that the average Pakistani earns more than the average Bangladeshi. Therefore, it remains unclear whether or not they are actually substitutes in the Saudi labour market.

Now the question arises: “Why are there more Bangladeshis than Pakistanis in Saudi to begin with?”

If one looks at contributing factors (political, social, etc), it would make more sense for Pakistanis to outnumber Bangladeshis.

Here is an alternative theory.

Bangladeshi labour used to be fairly cheap and docile in earlier decades. But over the past decade, as their numbers have increased and their opportunities elsewhere have become brighter, the workers have become more vocal.

Saudi employers don’t like the concentration of 2.5m Bangladeshi Muslims (1.5m Pakistanis are presumably not homogenous, ditto for the Indians) who are becoming increasingly “troublesome.”

Steam had been building up for a while, and the 2008 crisis acted as a catalyst. Now the Saudis are looking to diversify their labour input.

Hence the observed outcome.

Is my story correct? I have no idea. But it fits the data points just as well as (if not better than) the WCT story.

Versions of this article was posted on alalodulal and published by Dhaka Tribune.

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