bangladeshi migration to saudi arabia

7/28/2019 Bangladeshi Migration to Saudi Arabia

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Asian and Pacific Migration Journal, Vol. 20, Nos.3-4, 2011 389

Emigration and theFamily Economy: Bangladeshi

Labor Migration to Saudi Arabia

Md Mizanur Rahman*

National University of Singapore

The new economics of labor migration explains migration as part of familystrategies to address income risks and capital constraints in developingcountries. However, it does not adequately take into account the risks andcosts borne by migrant families in contemporary labor migration. This paperexamines the emigration-family economy nexus highlighting the undercur-rent of risks in the labor migration process. This study draws from theexperiences of Bangladeshi families who have family members working inSaudi Arabia. The research reports that migrants often undertake interna-tional migration at great costs of their own, incurring large debts, riskingpersonal savings and family assets, and accentuating income risks and capitalconstraints, while the remittances are meager in the repair of such familyeconomy.

Introduction

The 1973 oil boom and the subsequent undertaking of an unprecedentednumber of development projects in the Gulf Cooperation Council (GCC)countries Saudi Arabia, Qatar, Kuwait, Oman, Bahrain, and the United ArabEmirates (UAE) led to an extremely rapid increase in the demand for foreignlabor (Arnold and Shah, 1986; Shah and Menon, 1999; Eelens, Schampers,

The author wishes to thank the International Organization for Migration (IOM) Dhaka,Bangladesh for providing access to the dataset of the Bangladesh Household Remittance

Survey. Special thanks go to Rabab Fatima, Regional Representative, Samiha Huda andDisha Sonata Faruque IOM-Dhaka, who provided support and were a joy to work with.


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390 ASIAN AND PACIFIC MIGRATION JOURNAL

and Speckmann, 1991). As a result, workers from relatively labor-surplus butcapital-poor countries of Maghreb, Mashreq and South and Southeast Asiajoined the labor markets of the GCC countries since the early 1970s (Shah,1994; Esim and Smith, 2004). Over the decades, the GCC countries haveemerged as a relatively permanent destination for migrant workers. In 2008,migrant workers were estimated to be nearly 77 per cent of total labor force inthe GCC countries (Winckler, 2010:12; Baldwin-Edwards, 2011:9)

Although labor migration to the GCC countries is designed to be tempo-rary, the migration phenomenon is a permanent feature of societies in theregion. This is because temporary labor migration has a structural role to playin the regions economy (Asis and Piper, 2008:426). Migrant workers in theGCC countries are hired under the kafala system for a specific duration.Additional measures such as not permitting family reunion, not allowing

marriages with locals and not tolerating procreation outside of marriageensure the transiency of migrant labor in the Gulf. The GCC member countriesvirtually follow a similar policy when it comes to hiring, retaining anddeporting migrant workers (Kuptsch, 2006; Shah, 2008; Rahman, 2011b). Thiscommon migration policy in the Gulf countries has forced migrant workersand their families (spouse, children and extended family members) to liveunder transnationally split (Yeoh, Graham, and Boyle, 2002) conditions,interrupted only by visits to the home countries during annual or end-of-contract leaves.

Since migrants and their families live under transnationally split con-ditions, migrants remit back home to support the family members left-behind.As a result, labor migration is part of a livelihood strategy, whereby millionsof left-behind families are maintaining better living standards in their home

countries (Asis, 1995; Asis et al., 2004; Hugo, 2002; Pajo, 2008; Oda, 2004). Thewidely-shared viewpoint is that temporary migration brings about economicadvantage for migrants and their families (Hugo, 2003; Schiller, 2010).However, this view of temporary migration hides the subtle and complexconsiderations that provoke the temporary migration and determine itscourse in the migration process. This is because potential migrants and theirfamilies in Asia need funds for the migration project, and investing inmigration can erode or deplete the familys economic resources.

The assumption that temporary migration benefits families links incomerisks and capital constraints in the low-income countries. However, theopportunity for temporary employment in a high-income country does notnecessarily translate into economic advantage for migrants and their migrantfamilies. This is because it does not adequately take into account the risks andcosts borne by migrants and their families in the contemporary migrationprocess. To understand the economic advantages of labor migration, we needto consider the risks that a migrant is exposed to and the implications it carries


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BANGLADESHI LABOR MIGRATION TO SAUDI ARABIA 391

for the migrant family economy. This is an overly neglected aspect of labormigration research, which this research attempts to fill.This research examines the emigration-family economy nexus by high-

lighting the undercurrent of risks in the migration process. This study drawsfrom the experiences of Bangladeshi families with family members workingin Saudi Arabia. Saudi Arabia was chosen for this study because it is thelargest destination for Bangladeshi migrant workers and the largest remit-tance-source country for Bangladesh. In particular, the study investigates thefollowing research questions: How does recruitment take place in SaudiArabia? What are the economic costs of migration to Saudi Arabia? How muchcan migrant workers earn, save and remit from Saudi Arabia? What is theirremittance behavior? How do remittance-receiving families decide on and useremittances? What role do remittances play in the family economy?

The next section presents the theoretical and conceptual issues relatingto international labor migration and family dynamics followed by a briefdiscussion on data sources for this study. The discussion next moves into thetrends and patterns of Bangladeshi migration to Saudi Arabia. This sectionincludes an overview of the profile of migrant workers in the 2009 survey, adiscussion of thekafala system under which migrant workers are recruitedto Saudi Arabia, and the economic costs of recruitment. The remaining sec-tions cover the economic benefits of remittances, the implications of the costsand benefits on the familys economic resources, and the concluding sectionwhich sums up the findings of the study and their policy implications.

Theoretical and Conceptual Issues

Of the economic theories of labor migration, the neoclassical microeconomicmodel of individual choice views labor migration as the outcome of anindividuals decision to maximize actual income or expected income (Todaro,1976; Borjas, 1989). However, in the developing countries it is not individualsbut families that decide about migration, mobilize resources to support themigration of family members, and take charge of receiving and allocatingremittances (Grasmuck and Pessar, 1991:15). The new economics of labormigration (NELM) emerged to present migration as a family undertaking andto explain migration decision beyond income differentials. Rather, the NELMsees migration as a means to overcome market constraints notably credit andinsurance - in the developing countries and shifts the locus of decision-making from the individual to the family. The family or household context

links individual migrant behavior with expectations of and obligationstoward the family members left-behind (Stark, 1991; Lauby and Stark, 1988).The NELM recognizes that in the developing world, families and house-

holds are confronted with imperfect or limited access credit and insurance.


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Among other strategies, families resort to sending one or more members tomigrate to maximize income as well as to self-insure against risks to income,production and property, or to gain access to scarce investment capital. Inother words, labor migration is part of various family strategies for risk-minimization and capital accumulation (Stark, 1991).

Financial remittances (hereafter remittances) that flow back to migrantfamilies represent the benefits that help families overcome the aforementionedlocal market constraints and risks. However, temporary labor migration is notnecessarily free of risks, it does not always minimize the risk of income failure,and it does not guarantee capital accumulation. A migrant often commencesmigration for work by incurring large debts to pay many migration-relatedfees. Investing in migration entails risking personal savings and valuablefamily assets that undermines the familys income and aggravates income

risks and capital constraints. The kafala or sponsorhip system under whichmigrants are hired in the Gulf countries, the recruitment procedures theyundergo and the economic costs of the migration process pose risks anddifficulties to migrants. The kafala system has given rise to practices andconditions that render migrant workers vulnerable in the destination coun-tries lack of proper work contract, breach of contract, limited horizontal andvertical mobility in the different economic sectors, and inadequate legalmechanisms for upholding workers rights (Baldwin-Edwards, 2011; Esimand Smith, 2004; HRW, 2006, 2008, 2009). These conditions undermine thewell-being and protection of migrants, and they also have a direct bearing onthe ability of migrants to remit to their families back home. Under theseprecarious conditions, labor migration incurs more costs than benefits tomigrants and their families. As detailed in the paper, the costs and risks to

migrants and their families begin even while migrants are still in the homecountry.

Prior to migration, aspiring migrants must comply with requirementswhich involves dealing with various actors in the recruitment process(Gamburd, 2000; Rahman, 2011a). These entail expenses which migrantshope to recover once they start working overseas. Differences in the recruit-ment process and pre-migration costs have been noted in predominantly malemigrant sending countries, such as Bangladesh and Pakistan and predomi-nantly migrant sending countries, such as the Philippines and Indonesia.

Particularly in the case of domestic workers, the recruitment costs areusually assumed by the sponsor-employer which does not require upfrontpayment by the migrant worker (fees are later paid by the worker throughsalary deductions) (Lindquist, 2010; Rahman and Lian, 2009). In the case ofmale migrant workers, they generally pay a fee to the recruitment agency priorto departure (Rahman, 2011a). Lindquist elaborates on the gendered differ-entiated patterns of recruitment by showing that capital flows down in the


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migration of women while capital flows up in male migration, i.e., from themigrant to the recruitment agency and sponsor (Lindquist, 2010). The eco-nomic costs of migration, thus, are more burdensome for male migrants in therecruitment and pre-migration stage.

As indicated earlier, other than recruitment, once migrants are in thedestination countries, they may be exposed to other risks generated by un-favorable working and living conditions and limited access to services andsupport systems, which can have economic implications for migrants andtheir families. There is a need to study temporary labor migration as a processwhich takes into account potential victimization and exploitation that mi-grants experience throughout the process. This study links these consider-ations vis-a-vis family economic dynamics.

Furthermore, in studying the implications of labor migration on family

economic dynamics, it is important to shed light on both the outflow of familyeconomic resources and the inflow of remittances to the family. This approach,it is hoped, will contribute to a more comprehensive understanding of mig-ration not only as a family strategy to reduce income risks and capitalconstraints, but also as a strategy that may incur costs and risks to migrantsand the family economy.

Data Sources

This research is based principally on the Bangladesh Household RemittanceSurvey (BHRS) conducted in 2009. The BHRS collected information from anationally representative sample of 10,926 migrant households. The BHRSwas implemented by the International Organization for Migration (IOM) inDhaka with financial support from Department for International Develop-ment the United Kingdom (DFID- UK). With a nationally representativesample, findings from the BHRS can be generalized to the population ofBangladeshi migrant households. In addition to the survey data, the studyalso draws from qualitative interviews of prospective migrants, returnees andmembers of migrant households in Bangladesh conducted in the second halfof 2009.

The BHRS covered migrant households from all seven administrativedivisions of Bangladesh.1 The districts in the seven divisions of the countrywere divided into two strata, with one stratum consisting of More Concen-tration of Migrant (MCM) households and the other stratum consisting of

1 Bangladesh is divided into major administrative regions called divisions and eachdivision is further split into districts. In total, there are seven divisions and 64 districts inthe country.


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Less Concentration of Migrant (LCM) households. Following this, clusterswere formed with one or moremauzas(closely synonymous with a village),depending on the clusters size as set in terms of the number of households.These clusters were selected independently from each stratum using theprobability proportional to size (PPS) method of selection. The total samplewas made up of 457 clusters (i.e., 257 from MCM districts and 200 from LCMdistricts). All households in every selected cluster were listed, identifying onlythe migrant households. Household listings were done by taking a completecensus of the households in each of the clusters. This involved visiting everyhousehold in the designated area.

In the survey, a migrant household has been defined as a household thathad at least one of its members living/working abroad for a period of at leastone year at the time of the survey. The selection of the migrant household was

made independently of the legal status of migrants in the destination country(i.e., regular or irregular). The head or other responsible member of thehousehold was interviewed in the survey. The survey covered a wide rangeof migration issues encompassing socio-economic background, applicationprocess and economic costs of migration, working and living conditions,remittances, and impacts of remittances on households. This paper used thedata for the 4,427 migrants who were working in Saudi Arabia.

Bangladeshi Migration to Saudi Arabia

Saudi Arabia, the sacred land of Islamic devotion to Muslims from all aroundthe world, is also the largest temporary migrant-worker receiving country inthe Middle East. Like other GCC countries, labor migration to Saudi Arabiastarted after the 1973 oil price hike. The growth of the foreign population inSaudi Arabia was steady and remarkable: 4.63 million foreigners in 1992, 5.25million in 2000, and 8.42 million in 2010 (Fargues, in this volume). Althoughhosting the largest number of foreigners among the GCC countries, the foreignpopulation in Saudi Arabia has never surpassed the local population. Never-theless, as of 2010, 31 percent of Saudi Arabias total population comprisedof foreigners (Fargues, in this volume). Broadly, foreigners can be categorizedinto low-skilled and high-skilled/professional migrants. The majority offoreigners are low-skilled migrants, working in construction, manufacturing,service, agriculture, and domestic sectors and living in camps with other co-workers or owners residences in the case of domestic workers.

Saudi Arabia is a popular destination for Bangladeshi migrants. The

official record of labor migration flows to the GCC countries was initiated bythe Bureau of Manpower, Employment and Training (BMET) in 1976. Accord-ing to BMET, the formal recruitment of Bangladeshi labor to Saudi Arabiastarted in 1976 with only 217 migrants. The total number of migrants who


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went to Saudi Arabia for work between 1976 and 1980 were nearly 20,000,approximately 300,000 between 1981 and 1990, about 1.18 million between1991 and 2001, and around 1.14 million for the period 2001-2010 (Figure 1).In total, 7.13 million Bangladeshi migrants sought overseas employment

between 1976 and 2010 and of these migrants, nearly 2.58 million or 36.18 per-cent joined the labor market of Saudi Arabia. Bangladeshi migrants in SaudiArabia remitted nearly USD21.42 billion to their families between 2000 and2011 (Figure 2).

Profile of Migrant Workers to Saudi Arabia

Drawing from the survey data on the 4,427 migrants working in Saudi Arabia,this section will describe their socio-demographic profile. Almost all 98.5percent of the migrants were males. Although womens participation invarious economic sectors has increased in recent years in Bangladesh, theirmigration out of Bangladesh remains insignificant. Religious conservatismand cultural perception against women migrants have restricted women fromseeking employment overseas (Ullah, 2010; Oishi, 2005).

Overall, nearly 39 percent of the migrants were in their 20s, 35 percentwere in their 30s and around 26 percent were in their 40s and above, with the

FIGURE 1BANGLADESHI LABOR MIGRATIONTO SAUDI ARABIA, 1976-2010

SOURCE: Data are from the Bureau of Manpower, Employment and Training (BMET) data,http://www.bmet.org.bd/BMET/viewStatReport.action?reportnumber=14,accessed on 23 December 2011.

0

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100,000

150,000

200,000

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average age being 33.3 years. Bangladeshi migrants went to Saudi Arabiawithout other family members. Nearly 67 percent of migrants were married,

with wives remaining in Bangladesh. Of married migrants, nearly 87 percenthad children, with the average number of children at 2.36. Wives left behindwere primarily homemakers, taking care of the children and their in-laws (i.e., the families of their husbands). Approximately 30 percent of migrantsreceived only one to five years of schooling while 50 percent completed six to10 years. Of the remaining 20 percent, half had no formal education while theother half attained secondary and/or other vocational certificates.

In terms of occupation, around 79 percent were working before theirmigration to Saudi Arabia; they were mostly engaged in agriculture, smallbusinesses, and the urban informal economy. In Saudi Arabia, migrants wereworking in construction, maintenance, transport (driving), manufacturing(factory work), restaurants or hotels (cleaners and waiters), general labor, andgardening. Approximately 23 percent of migrants worked and resided inSaudi Arabia between one to two years, 23 percent between three to five years,33 percent between six to 10 years. The remaining nearly 21 percent had beenworking in Saudi Arabia for a period of 11 years and more. On average, the

0

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1,000

1,500

2,000

2,500

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3,500

4,000

1998-

1999

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2011

FIGURE 2REMITTANCESFROM SAUDI ARABIATO BANGLADESH, JULY 1998 - JUNE 2011

SOURCE: Data are from BMET, Ministry of Expatriates Welfare and Overseas Employ-ment (MEWOE) and Bangladesh Bank. Data from Bangladesh Bank wereavailable at http://www.bangladesh-bank.org/econdata/wagermidtl.php,accessed on 23 December 2011.


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duration of stay of migrants in Saudi Arabia was 7.03 years, which may be asufficient period to offer a clear indication of the benefits of migration formigrants and their households.

The Kafala System and Worker Recruitment to Saudi Arabia

The recruitment of migrant workers to Saudi Arabia and other GCC countriesis governed by thekafala or sponsorship system (Longva, 1999; Colton, 2010;Shah, 1994; Baldwin-Edwards, 2011; De Bel-Air, 2011).2 Under this system,a migrant has to be sponsored by is a GCC citizen. The kafeel or sponsor(which may be the employer or distinct from the employer), assumes fulleconomic and legal responsibility for the migrant worker during the contractperiod. A kafeel may be an individual, a placement agency, or a company.

The system works such that the migrant worker can only work for akafeel fora specific period. Kafeelsoften hold the workers passport and other traveldocuments. Foreign workers are not allowed to marry or be involved in sexualrelationships with locals. However, professional foreigners (expatriates) canmarry locals, but citizenship is not guaranteed and local men enjoy greaterprivileges over local women when it comes to international marriage andcitizenship issues (e.g., Hadid, 2005). The overall emphasis of the kafalasystem is control and to ensure flexibility to fluctuations in the labor market.

The kafala system has given birth to the so-called visa trading, a multi-million dollar industry in the Gulf (Shah, 2008). Visa trading involves the saleof a work visa. In the UAE, for instance, a work visa for an Indian is sold foraround USD2000 (or AED 7,500) (Shah, 2008:9). The scale of visa trading isso massive that the Saudi Minister of Labor reported that 70 per cent of the visas

issued by the government were sold on the black market (Shah, 2008:9). Thekafala system has been met with much criticism over the years. It has beenblamed for encouraging corruption, visa trading, and the importation of moreworkers than can be accommodated by the labor market (De Bel-Air, 2011;Shah, 2010; Colton, 2010). Since the system generates lucrative incomes forlocal sponsors, governments in the Gulf countries have so far failed to stop visatrading, notwithstanding the genuine interests on the part of the Gulf govern-ments to stop the practice.

Recruiting agencies and migrant networks play a critical role in therecruitment of other South Asian migrants to the Gulf countries (Gamburd,2000; Shah and Menon, 1999; Arif, 2009; Zachariah et al., 2001; Gunatilleke,

2 Further details about the kafala system and recruitment in the GCC countries can befound in Rahman, 2011a. Khan and Harroff-Tavel in this volume also provide an overviewof the kafala system.


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1992; Osella and Osella, 2000). Both actors are also involved in the recruitmentof Bangladeshis to Saudi Arabia (Figure 3). In the recruitment system assistedby a recruiting agency, the process involves the following episodes and actors.A recruiting agency in Saudi Arabia places a demand letter to its counterpartin Bangladesh. The recruiting agency in Bangladesh then searches for pro-spective migrants and asks them to submit the required documents (passport,pictures, biographic information and partial payment) to begin the process.The recruiting agency in Bangladesh relies heavily on intermediaries calledsub-agents, who act as mediators between a prospective migrant and alicensed recruiting agent. These sub-agents help prospective migrants findjobs and help agencies find prospective workers in a more timely fashion. Sub-agents charge fees to recruiting agencies for their services.

Once the potential migrant submits all documents to the sub-agent, thesub-agent passes the documents to the recruiting agency for further action.Upon receiving the documents from sub-agents, the recruiting agency inBangladesh contacts its counterpart in Saudi Arabia for visa processing. Thepotential kafeel then secures the visa from the relevant authority in SaudiArabia and sends it to the recruiting agency in Bangladesh. It usually takesa few weeks from the submission of documents to the kafeel in Saudi Arabia

to the delivery of the work visa to the recruiting agency in Bangladesh. Therecruitment procedures described here are not specific to the Bangladesh-Saudi Arabia corridor. Similar recruitment procedures describe the recruit-ment of Bangladeshis and other South Asian workers to other GCC countries

FIGURE 3RECRUITMENTOFBANGLADESHI WORKERSTO SAUDI ARABIA

Prospective

Migrants

in

Bangladesh

Mediators

Recruiting

Agents

SponsorEmployer

Ka

eel:SaudiArabia

Recruiting

Agents

Subagents

Freeand

flying

visa

WorkVisaor

FreeVisa

FlyingvisaHolders

Freevisa Holders


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(Arif, 2009; Arnold and Shah, 1986; Gamburd, 2000; Gunatilleke, 1992; Oda,2004).As migration matures, many potential migrants learn more about the

process of migration and how to seek alternative services for jobs in SaudiArabia. Instead of going through agencies, potential migrants may have jobsarranged with a kafeel in Saudi Arabia through personal networks. Aworking visa arranged through personal networks is called urrovisainBengali or flying visa in English, so called because it flies directly from amigrant broker in Saudi Arabia to a prospective migrant in Bangladesh. Inother words, it bypasses local recruiting agencies and their sub-agents (fordetails, seeRahman, 2011a). Arranging a flying visa usually proceeds asfollows (see Figure 3). A migrant broker finds a job for a friend or relativeusually with his/her kafeelor the kafeelsnetwork of friends and relatives.

After successfully identifying a potentialkafeel, the migrant broker gathers therequired documents and passes them to the potential kafeelfor a work visa.Once a work visa is procured, the migrant broker sends it to the potentialmigrant in Bangladesh.

Apart from the flying visa, there is also the free visa (Rahman, 2011a).Although the free visa is not an official category, the term is widely used amongmigrant communities. Pakistani migrants call itazad (free) visa in Urdu. Thisunofficial category of visas allows a potential migrant to enter a GCC countryfor work under the kafala system, but the sponsor-employer (kafeel) whoofficially sponsors the migrant does not offer paid work. Instead, a free visaholder finds a job on his own, but by working for an employer other than hiskafeel, the migrant worker becomes illegal and vulnerable to deportation.

As discussed earlier, visa trading generates additional incomes for

kafeels, thereby driving irregular recruitment practices in Saudi Arabia. Of thedifferent visa types, it is the free visa that exposes migrants to job insecuritiesand deportation. The constellation of actors and their vested interests atdifferent points of the recruitment system increase the economic costs ofmigration. The greater the recruitment costs, the longer time migrants need torecover their expenses. The next section discusses this issue in detail.

The Economic Costs of Migration to Saudi Arabia

The economic costs of migration involves not only the actual financial costsof migration but also the embedded costs, that is, the sources of arranging thefinancial cost of migration and their potential impact on the family economy.To secure a job in Saudi Arabia, a potential migrant is required to pay part ofthe financial costs in advance this is usually about one-fourth to one-halfof the total costs to the middlemen/sub-agents. The remaining amount isusually paid in several installments depending on the progress of the visa


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application. All dues must be paid to the recruitment agency before a pros-pective migrant flies to Saudi Arabia. However, in the migrant broker-initiatedrecruitment, some fees may be waived, especially when prospective migrantsare close relatives of migrant brokers.

After paying recruitment-related fees, migrants have to wait for some timebefore they can actually leave for Saudi Arabia. The waiting time between thefirst payment and the departure for Saudi Arabia should not ideally take morethan three months. As discussed earlier, the issuing of a working visa in SaudiArabia and transferring it to the recruiting agency or the prospective migrantin Bangladesh should not require more than a few weeks. Of the surveyedmigrants, around 57 percent of migrants received the work visa and flew toSaudi Arabia within three months. However, 11 percent waited between threeand five months while 32 percent had to wait between six and 13 months, or

even longer. On average, a migrant had to wait around 5.22 months tocomplete the recruitment procedures in Bangladesh. This is because sub-agents often manipulate the waiting time to profit out of migrants initialpayments.

Since the demand for visas is higher than the supply of visas, potentialmigrants are forced to make extra payments to secure a job placement,generating additional revenues for subagents. For migrants, advance pay-ment and the delay in deployment increases the costs of migration as theyoften borrow from moneylenders who exact high interest rates. The increasedcosts undermine the family economy as sourcing additional funds putpressure on family incomes. Once prospective migrants start paying the firstinstallment, they are almost pressured to continue with the recruitmentprocess since it is impossible to recover their expenses should they decide to

withdraw their application. This exposes potential migrants to victimizationand exploitation even in the country of their origin.

Figure 4 presents the economic costs of migration to Saudi Arabia. It mapsout three important aspects about the economic costs of migration, namely, thesources of funds, the contribution of multiple sources to the needed funds, andthe allocation of the costs that go into formal service fees and intermediary fees.Based on data from the 2009 survey, the average cost of migration to SaudiArabia amounted to BDT (Bangladeshi Taka) 206,058 or USD3,000.3 TheBangladesh Government set BDT 84,000 (USD1,230) as the maximum recruit-ing fee for migrants going to Gulf countries and Malaysia (Martin, 2010:12).However, financial transactions between a prospective migrants and recruit-

3 All Bangladeshi currency (BDT) figures were converted into USD in early 2010. Theexchange rate at the time was USD1=BDT68.68


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ing agencies are not strictly monitored by government agencies. As a result,

the government-set fee is not followed by recruiting agencies.The average cost of migration to Saudi Arabia (BDT 206,058 or USD3,000)

was an amount that was virtually beyond the personal savings of migrants.Most migrants had to rely on multiple sources to raise the funds for migration.According to the survey responses, the major sources of securing funds wereas follows: selling land (27 percent), mortgaging land (23 percent), taking aloan (72 percent), and disposing of other family assets such as livestock andjewelry (19 percent). Only nine percent of migrants used personal savings tomeet the expenses of migration. Figure 4 also outlines the contribution of eachsource to the total costs of the migration project. Of the total costs, 24 percentwere sourced from the selling or mortgaging of land, 52 percent came fromloans and other sources such as contribution from in-laws, dowry, and sellingof family assets (e.g., livestock and jewelry) constituted nearly 20 percent. Fourpercent were derived from personal savings.

Considering the high cost of migration, this study further investigates themajor areas of expenses in the recruitment process to offer a glimpse into the

FIGURE 4ECONOMIC COSTSOFMIGRATION

Economiccostsofmigrationto

SaudiArabia:(BDT206,058)

US$3,000

Personal

Savings4%

Loan

52%

ServiceFees(24%) IntermediariesFees(76%)

%Contributionofmulti lesourcestototaleconomiccosts

Disbursement

Land

24%

Land

50%

Loan

72%

OtherSources

19%

Personal

Savings(9%)

%Contribution ofmultiplesourcestorepaymigration

relatedcosts

Others

20%


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distribution of economic costs across different service providers. The studydivides the economic costs of migration into: (1) formal service fees thatinclude government fees, passport fees, wage earners contribution and otherrelevant mandatory service fees in Bangladesh, and (2) mediators fees thatinclude fees charged by intermediaries and recruiting agencies for theirservices. The former accounts, on average, for about 24 percent of the totalcosts, and the remaining 76 percent represent intermediaries fees.

It is important to note that, regardless of the channels of recruitment,intermediaries fees also include kickback fees which are inherent in theeconomic costs of migration to Saudi Arabia (for details about visa-trade, seeShah, 2008; De Bel-Air, 2011). The bulk of the intermediaries fees actually goesto the recruiting agencies or sponsor-employers on the Saudi side (see also, DeBel-Air, 2011; Gardner, 2010). Although the Bangladeshi media often blames

the recruiting agencies in Bangladesh for exorbitant fees, they are in factmaking a tiny profit while the bulk of the profit goes to the other side of therecruitment end that deserves more in-depth investigation.

Considering the enormous costs of securing an overseas work contract,potential migrants need to tap different sources to raise the needed amount.To invest in migration, migrants sell off family assets, borrow from moneylenders who charge high interest rates, and exhaust personal and/or familysavings. The migration project can undermine family economy in two ways.First, it diminishes regular family incomes because income-generating assets,such as land, livestock, and the like are sold or mortgaged to raise money forrecruitment-related fees. Second, loan repayments severely constrain familyresources. To ascertain some of the impacts of migration on the familyeconomy, this study looked into the size of landholding and loan status of

migrants and their families.Land is a crucial income contributor and status marker in South Asia

(Oda, 2008). Nearly 50 percent of surveyed migrant households sold ormortgaged land to repay the migration expenses, which means that thesehouseholds have been deprived of regular incomes from land. Additionally,the land-ownership pattern is very polarized in Bangladesh. Rapid popula-tion growth and the inheritance law have caused the fragmentation of landover time and the number of landless households has been over 50 percent inBangladesh (Monsur, 2008). In the survey, nearly 42 percent of householdshad no agricultural land, that is, they were landless. The remaining 58 percentmay be considered marginal land-owners as they own certain amount ofagricultural land. On average, they owned approximately 181 decimal of agri-cultural land, which is much lower than the minimum land a rural householdrequires for subsistence for a family of five members in Bangladesh (Bertocci,1972).


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Apart from landholdings, 72 percent of migrant households took outloans from money lenders (69.05 percent) and NGOs (2.75 percent). At the timeof the survey, nearly 61 per cent of migrants had outstanding loans to repay;the average loan amounted to BDT157,057 or USD2,286 (USD1=BDT68.68).Although more than some 77 percent of the migrants were working in SaudiArabia for a period of three years or longer, the majority of migrant householdswere still saddled with sizable debts. It is important to note that the interestrate for migration loans is different from other types of loans, such as those foragriculture, business, weddings, and festivals (Rahman, 2009). Since migra-tion is perceived to yield high returns, moneylenders charge up to seven to 10percent interest per month or roughly 100 percent per year. If the interest iscompounded, the debt will double in less than a year and triple in less thantwo years.

In the decision to seek overseas employment, there is indeed a trade offbetween the possibility of higher incomes and the potential destruction of theexisting family economy. Many choose migration in the hopes that remit-tances can compensate for the potential collapse of the existing familyeconomy. Whether the hope that they pinned on remittances is realistic isdiscussed in the next section.

Remittances to Migrant Families

We have so far seen the outflow of family resources and its implications on thefamily economy. Successful migration can outweigh the pre-migration coststhrough the remittances migrants are able to send their families. However,the amount and frequency of remittances are important variables for theeconomic well-being of migrant families. The amount of remittances is contin-gent on the monthly incomes of migrants overseas. Therefore, this studyexamined the monthly remuneration of migrants in Saudi Arabia. On average,the monthly remuneration of the migrants was BDT18,723 or USD273. Whilethis amount is several times higher than a job would have offered in Bangladesh,if the monthly salary is estimated against the economic costs of migration,which was on average BDT206,058 or USD3,000, a migrant would needroughly eleven months to recoup his/her financial cost of migration, if otherexpenses are controlled.

Figure 5 presents a schema of remittances and their implications for thefamily economy. First, the figure presents the average amount of remittancesper transfer and the frequency of remittance transfers in a year. Second, the

study maps out the major uses of remittances, notably family expenses,repayment of loan, medical, education and income generation. Third andfinally, the paper discusses the implications of remittances on remittance-receiving families in terms of food, education, and incomes. On average,


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Amountofremittanceseachtime:US$324

Frequencyofremittances:FourtimesinaYear

RemittancestoMigrantHouseholds:US$1,296inayear

LoanRepayment

(31%)Medical(22%)

FamilyExpenses(88%)

Education(19%)

ImprovedFoodConsumption(74%)

EnhancedEducationalOpportunity(67%)

IncreasedIncomes(27%)

InflowofRemittancestoHouseholds

LocalIncomeGeneration

(18%)MigrantHouseholds:MajorUseofRemittances

FIGURE 5REMITTANCESANDTHEFAMILY ECONOMY:THESAUDI ARABIA-BANGLADESHREMITTANCECORRIDOR

migrants remitted approximately four times a year. The average amount ofeach transfer was BDT22,258 or USD324. If average remittances and fre-quency of remittances are calculated, a migrant household received aroundUSD1296 in a year. Given the annual flow of remittances to migrant house-holds, a migrant needs roughly 2.31 years to recover the actual financial costof migration if other expenses are controlled. In actual fact, it takes migrantsmore than 2.31 years to repay loans because of the deficit in family incomes.

This study also explored who migrants usually remit to and who man-ages the remittances in the households. A migrant usually remitted to theperson who was the head of the household in Bangladesh. As per the survey,on average, 31 percent of migrants remitted to their spouses (i.e., wives) it maybe recalled that nearly 32 percent of migrants in Saudi Arabia were married,as discussed earlier about marital status of migrants in Saudi Arabia. Inter-estingly, 55 percent of migrants remitted to their fathers (67 percent of migrants


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in the sample were unmarried). The remaining migrants remitted to othermembers of the family, such as sisters and brothers and, in some cases, to otherclose relatives. The control and management of remittances, especially whenmigrant workers (remitters) are away, are critical to understanding intra-household relations and its gendered outcomes. In terms of making decisionsabout the management of remittances, 71 percent of recipients revealed thatthey made the decision themselves, two percent made the decision as in-structed by the migrants overseas, five percent of recipients who were notfamily members (migrant in Saudi Arabia remitted to outside family members)made the decision themselves, and 22 percent said that migrants and recipi-ents mutually decided on how to manage remittances. The latter figure waspredominant among recipients who were wives of migrants, hinting atimproved gender relations between the wife at home and the overseas-based

husband.The use of remittances is an important indicator of the familys economic

resources. Migrant families used the funds for a myriad of purposes, such asfamily basic expenses (food and clothing), purchasing land or property,repayment of debts, savings, house construction, funding the marriage of asibling, education, medical treatment, religious festivals (e.g., Eid-ul-FitrandEid-ul-Azha), purchasing cattle and so on. The five major areas of use ofremittances are family expenses, followed by loan repayment, medical treat-ment, education and local income generation. Eighty-eight percent of house-holds used remittances for their familys basic expenses, 31 percent for loanrepayment, 22 percent for medical treatment, 19 percent for education, and 18percent for local income generation.

In addition to economic purposes, remittances were also used for reli-

gious festivals (six percent) and marrying off brothers or sisters (1.31 percent).Nearly six percent of households saved part of the remittances for future use.The use of remittances suggests that migrant households prioritized theexpenses as per local requirements. For instance, it may seem unproductiveto spend hard-earned remittances for religious festivals or the marriage ofsiblings. However, social expectations in the communities of origin and localperceptions about development (such as capacity to marry off grown-upsisters) are important to consider as these touch on notions of honor andprestige (Gamburd, 1995; Rahman, 2009). Therefore, there is a need to incor-porate the local meaning of development in the broader migration anddevelopment debate.

Remittances showed some visible impacts on migrant families in termsof food consumption, education, and local income generation. Around 74 per-cent of families reported having improved food consumption and nearly 67percent of families reported having enhanced educational opportunities.However, the role of remittances in income generation was mixed: nearly 27


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percent of migrant families reported an increase in incomes through establish-ing new sources of incomes, investing or expanding existing sources ofincomes and deposits in banks/ buying stocks or saving certificates. How-ever, given the extent of landlessness and indebtedness, the low use ofremittance for income generation purposes is not surprising.

Conclusion

This study has addressed the attendant risks in the temporary labor migrationprocess and its economic implications for migrant families in Bangladesh.The study particularly highlights the nature and extent of risks that migrantsare exposed to in the migration process. While the NELM explains migrationas a strategy to minimize risks to incomes and failures in the local markets,

it ignores the risks and costs to migrants and their families. This study hasshown that migrants often incur large debts and exhaust personal savingsand family assets that undermine family incomes and aggravate income risksand capital constraints.

The research has shown that in the recruitment process, migrants areexposed to victimization and exploitation in at least two moments: (1) thedeliberate delay in the deployment of migrants increases the economic costsof migration, and (2) the offer of a free visa to migrant workers, which actuallyhinders them from legally working in Saudi Arabia.

The issue of the economic costs of migration not only exposes migrantsto victimization and exploitation but also undermines the family economy.The study has indicated how the financial costs of migration expose migrantfamilies to risks of losing local incomes and incurring debts. In terms of theimplications of remittances on the family economy, the study reports that 74percent of migrant households enjoyed improved food consumption, 67percent had enhanced educational opportunities, and 27 percent had in-creased incomes. The receipt, control, and management of remittances alsohave implications for family relationships, especially between husbands andwives.

At the policy level, this study has identified three areas that require policyintervention. First, specific policy intervention is required to stop labormigration under the free visa category. Second, the financial cost of migrationis excessively high and government may consider imposing restrictions onmaximum recruitment costs and to enforce these measures. Third and finally,government may introduce soft loans for all applicants for overseas jobs so

that prospective migrants will not be overly burdened by excessive interestrates. This will also help retain existing regular income flows to householdsand enable them to benefit from remittances.


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By providing gainful employment to around eight million migrants,mainly from South Asia, Southeast Asia, Maghreb and Mashreq regions, andallowing them to remit around USD 29 billion in a year (as in 20104), SaudiArabia is indeed making a vital contribution to socio-economic transforma-tions in the migrant source countries throughout the region. While thiscontribution deserves more recognition from sending countries, the higheconomic costs of migration and reports of maltreatment of migrant workersin Saudi Arabia are also a matter of concern for many sending countries (fordetails, seeHRW, 2008). Therefore, there is a need to adopt policy measuresto ensure the fair treatment and to promote the welfare of migrant workers inSaudi Arabia. As a host country, the responsibility for improving the statusof migrant workers principally lies with Saudi Arabia. Furthermore, SaudiArabia is the birth place of a great religion that enshrines and promotes core

human values, including fair treatment, and this also puts much hope forimmediate attention.

Research on migration and its implications on family economy in theSouth Asia-GCC migration corridor is an understudied area and much workis required to understand the risks that migrants and their families assume inthe migration process. This study should be seen as an initial attempt toconceptualize emigration and the family economy and there is much scope tofurther the analysis of the topic.

4 Zawya Leading Business Intelligence on the Middle East and North Africa, http://www.zawya.com/story.cfm/sidZAWYA20110908030328/Foreigners_in_Saudi_ remit-ted_over_29bn_in_2010, accessed on 12 September 2011.


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