Covid-19 Impacts on Bangladeshi Diaspora and its Contribution to the Country’s Economy
Bangladesh is the world’s 11th biggest remittance-recipient nation, meaning that a significant part of its economy is highly influenced by the salaries of foreign migrant workers sent back to their families in the country. However, due to severe job cuts and deportations caused by the Coronavirus pandemic, the Central Bank of Bangladesh has reported that the remittances collected within the year 2020 were shown to be the lowest in the last decade. What was the impact of Covid-19 on Bangladeshi migrant workers, their families, and how has it changed the country’s economy?
Migrant Workers Essential for Bangladesh and its Economy
According to the Ministry of Expatriates’ Welfare and Overseas Employment, there are currently around 13 million Bangladeshis working abroad, together brining approximately $15 billion to the country’s economy. As pursuing foreign work has been highly promoted by the Bangladeshi government since as early as the 1970s, migrant workers have now become a key part of the country’s economy, contributing 12% in Bangladeshi Gross Domestic Product and generating 9% of its employment, with 700,000 new workers joining the foreign job market every year.
Although Bangladeshi migrant workers are spread across the world, the most popular destinations have been the Middle East and the Gulf Cooperation Council (GCC) countries, counting Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, as well as Lebanon, Malaysia, South Korea and Singapore. In the last two decades, short-term migration has been seen to be the most popular, with contract workers returning to Bangladesh after three to 10 years of working abroad.
Social and Economic Impacts of Covid-19
Yet the impacts of the Covid-19 pandemic on Bangladeshi diaspora in the Middle East and across the globe have drastically changed the situation of both their families and the economy of Bangladesh. Through reports done by the United Nations International Organisation for Migration, it was found that over 660,000 migrant workers were sent back to Bangladesh with no income or employment opportunities ahead, and further two million could face deportation in the near future. What’s more, it was the industrial sector that was hit the most — estimates say that over 12 million jobs were temporarily lost since the beginning of the pandemic, with more than 4 million only in the period of the country’s lockdown (from the 26th March to the 30th of May).
Considering that the government’s main strategies for alleviating poverty in the last two decades have been foreign work promotion for more skilled workers and domestic employment creation for the poorest, this negative leap comes as no surprise. The country’s poverty rate has increased from 20.5% in 2019 to 29.5% in 2020, with year-on-year remittances sent to the families monthly decreasing by 25%.
Such reduced cash flow for diaspora’s families has caused a significant financial crisis back at home. According to the Refugee and Migratory Movement Research Unit, remittances usually account for 85% of migrant workers’ families daily spending, and as much as 60% of migrant households depend on them solely. With their main source of income cut by a quarter and employment opportunities domestically and abroad significantly limited, additional 33 million Bangladeshi could fall into extreme poverty and risk severe hunger, as reported by the World Food Programme.
The Government’s Response
The Bangladeshi government replied rather quickly to this new pandemic financial crisis and announced a $85 million budget for returnees, through which it has been able to assist them with financial cash support, soft loans and skill training. The loans are available for all migrant workers who want to pursue agricultural and entrepreneurial activities generating income in the country and range from $5,000 to $8,000. The government also offers $60 one-time payment for every worker who returns from abroad.
Many domestic organisations have also been actively involved in providing support for suffering families. Brac, the largest NGO in Bangladesh, has so far given cash grants and counselling to 35,000 returnee migrant workers. Additionally, both the Central Bank and the Bangladesh Bank are making proactive efforts to ensure constant liquidity in the market and increase cashback from remittances to 2% for the workers to keep.
International Aid
Although the coronavirus response from countries hosting foreign workers has been mainly centred around helping their own domestic workers and local businesses, some of them have pledged to provide support for the Bangladeshi diaspora as well. The Asian Development Bank has set a fund of $650 million to financially support struggling Bangladeshi workers residing across the continent. In all of the GCC states, migrant workers infected with Covid-19 can use free medical care. In Bahrain, until the end of 2020 they were also able to appeal for a general amnesty period during which they did not have to pay any fees or fines.
Some countries in Europe and international organisations have also been dedicated to providing aid for Bangladesh. The United Nations Capital Development Fund (UNCDF) and the United Nations Development Programme (UNDP) announced their call to action called “Remittances in Crisis — How to Keep The Flowing”, which equips migrants with various services and relief measures, such as free cash transfers, reduced costs of remittance transactions, and financial education. The project has so far been supported by the governments of Switzerland and the United Kingdom, the Global Knowledge Partnership on Migration and Development (KNOMAD), the World Bank, the International Organization for Migration (IOM) and the International Association of Money Transfer Networks (IAMTN), and International Chamber of Commerce (ICC). Two more initiatives created by the UNDP are “Digital Khichuri Challenge”, a digital project striving to minimise stigma and discrimination against migrant workers in Bangladesh, and “Probash Bondu”, a call centre situated in Saudi Arabia providing Bangladeshi with telemedical assistance.
The World Bank has also been working on various solutions to the combat the financial crisis in Bangladesh. It contributed $500 million to the PRIDE Project — Private Investment and Digital Entrepreneurship — promoting private investments, developing new software technologies, and creating 150,000 jobs. Further $250 million went to the Second Programmatic Jobs Development Policy Credit, an initiative working closely with the Bangladeshi government to help recover the country’s economy and make it more resilient in the future.
The Road Ahead
The worldwide collaboration striving to reverse the impacts of Covid-19 on Bangladeshi diaspora and the country’s economy has proved to be successful, as the recent findings have shown that the poverty rate in Bangladesh decreased to 24.3% in February 2021. The issue of migrant workers will definitely stay as one of the primary focus points of the government’s eighth Five Year Plan, as revealed by the Bangladesh United Network on Migration.
There are further governmental plant to make a need-based domestic workforce, which would provide more feasible employment opportunities to recent returnees, most of them already skilled. The country is also working on a track and trace system monitoring both legal and illegal migration. With all this in mind, there is still hope for combating the Covid-19 impacts on Bangladeshi diaspora and a chance for a feasible restoration of the country’s economic situation.