22 Oct, 2009 13:26:15
Oct 22, 2009 (LBO) - Sri Lanka's migrant workers and their remittances are unlikely to be seriously affected by the global economic slowdown, the Institute of Policy Studies said in a report.
"Despite the emerging evidence that there will be a sharp decline in global remittance flows, Sri Lanka appears not to be at significant risk of experiencing a sharp downturn in inflows in the near term," it said in a report.
The bulk of migrant workers from Sri Lanka are in the Middle East region, engaged in low skilled jobs and as housemaids, the report on the state of the island economy by the think tank said.
"This category of workers typically tends to save less in the host country which ensures that a high proportion of their income is remitted back home to support their dependents," it said.
"This scenario can be expected to continue in the current environment of an economic slowdown, as most migrant workers are supporting the basic needs of their dependents back home."
According to the Central Bank, workers’ remittances increased by 9.9 percent to 2,195 million US dollars in August 2009 from a year ago.
The IPS also noted that remittances are sent by accumulated flows of migrants over the years, and not only by new migrants of the last year or so.
"This can make remittances more stable over time," the report said.
Sri Lanka may also not face the additional stress of significant numbers of returning migrants due to job lay-offs.
Job losses so far are seen mainly in employment sectors that are more sensitive to economic cycles.
These include private construction work, manufacturing, financial services, retail and trade and tourism related services, and it is migrants in these particular sectors that are affected.
But the IPS said the numbers of Sri Lankan migrants in these sectors are not particularly significant.
The report said that evidence of past economic downturns show that migrant workers are often the most vulnerable in terms of job losses and treatment in the host country but that Sri Lankan workers are likely to be unaffected given the nature of their work.
"The bulk of Sri Lanka's migrant workers - comprising of housemaids that account for 47 percent of Sri Lanka's temporary workers - is less likely to be immediately affected by the global economic downturn," the IPS report said.
"This is particularly so due to the type of occupation where the locals are reluctant to engage in similar work. Such jobs are not taken up by many locals for both social and economic reasons."
But unskilled migrant workers, especially those in the construction industry, may be affected by the slowdown in construction and service sectors in Gulf economies such as Dubai which has been badly hit by the recession.
The report also said that recent studies suggest that in some sectors like health care, household domestic employment where demand for workers is more stable, loss of employment opportunities will be minimal.
However, the report said in some sectors workers might face problems like reduced wages or non-payment of wages or reduced working days