Studies in Population, Labour Force and Migration ProjectReport No. g

PA1SThNI MIGRATION TO THE MIDDLE EAST COUNTRIES

KHWMA SARMAD

5140,

IFebruary 1985

PAKISTAN INSTITUTE OF DEVELOPMENT ECONOMICSPOST BOX 1091, ISLAMABAD

(PAKISTAN)

Project Director

Professor Syed Nawab Haider NaqviDirector, PXDE

Project Manager -

Dr. Mohammad IrfanChief of Research (Eco.omiCS)

Project Team Members

1. Dr. Iqbal Alam, Chief of Research (Demography)

2. Mr. M. Naseem Iqbal Farooqul, Research Demographer

3. Mrs. Naushin Mahmood Qureshi, Research Demographer

4. Miss NasreenAbbasi, Research Demographer

5. Nir. Ghulam Yasin Soomro, Research Demographer

6. Miss Zubeda Khan, Research Demographer

7. Miss Talat K. Alauddin, Research Economist

8. Mr. S. Mubashir All, Staff Demographer

9. Mr. H. B. Siyal, Staff Demographer

10. Mr. Khalid Hameed Sheikh, Staff Demographer

11, Mr. Ghulam Mohammad Arif, Associate Staff Economist

12. Mr. M. Javed Tariq, Associate Staff Economist

13. Mr. Ghulam Mustafa Zahid, Associate Staff Demographer

14.

Miss Rashida Haq, Associate Staff Economist

15. Mr. Zafar Mueen Nasir, Associate Staff Economist

16. Mr. Sharif-ul-Haq Grewal Research Assistant

17. Mr. Mohammad Rafiq, Senior Computer Programmer

18. Mr. Mohammad Khalid, Senior Computer Programmer

19.. Mr. Furqan Ahmed Farooqui, Computer Programmer

20. Syed Tariq Ahmed, Computer Programmer

21 Mr. Masood Ashfaque, Computer Programmer

22. Mr. Javed Akbar Gil, Computer Programmer

PREFACE

The need for endogenizing' demographic variables in

development planning is nowwidely recognized The planners have to

spread their analytical net wider to capture in one 'go' both the

demographic and socio-economic variables. This requires an explicit

recognition of the two-way link between changes infertility on the

one hand and those in labour market, wages, income distribution,

consumption, savings, investment and other variables on the other.

The research work done so far in Pakistan has inadequately addressed

itself to this two-way linkage between demographic and socio-economic

phenomena. Researchers, constrained by limitations of both data and

analytical framework, have tended to study the demographic phenomenon

of fertility in isolation from such related matters as labour force

participation, rural-urban migration and income and expenditure patterns.

These studies have failed to analyse simultaneously the demographic,

production and consumption decisions of households. For instance, high

fertility rates are generally attributed to biological determinants

alone which can be influenced by large supplies of such clinical devices

as contraceptives. Such notions about the fertility behaviour of the

households have given birth to ineffective government policies. That

the many population planning adventures, taking mostly the form of

crash programmes, undertaken so far have foundered should not surprise

anyone. Fertility, like love that sustains it, is a many splendoured

thing. It must be seen in a broader socio-economic context.

The nature of the influences of. economic forces, both

direct and indirect, on fertility behaviour should therefore consti-

tute a major area of concern for social scientists and policy makers.

To make a start in this direction, the inter-linkages between such

variables as fertility,'labour force participation and . migration and

their effects on the household income and expenditure''behaviour:mU,St

be studied. Such a study should permit us to understand better the

decision-making process of , the household, which is the basic unit in

both the demographic and economic analyses. Research studies of.,,

this genre have. already. :been carried out in rnay other developing

countries. and. have provided gainful. insights into the determinants of

household economic-demographic. behaviour. However, in' Pakistan the

present exercise is the 'first of its kind. •. ....

In order to understand better the economic-demographic';"

interface the project entitled 'Studies in Population, Labour Fo'ce

and Migration has been undertaken by the Pakistan Institute of

Development Economics in collaboration with the ILO and IJNFPA • The

project is a 'four-in-one venture based on a national sample, the

field-work for which was undertaken by the Statistics Division (formerly

called Central Statistical Office, or CSO for short) covering 10,288

households. The survey generated a wealth of data on the household

decision-making process concerning the behaviour of the connected

foursome-viz. fertility, migration, labour force participation and

income and expenditure. Every 'effort has been made to ensure relia-

bility of the data. This study, which is being brought out In the

form of a series of 'first' reports, would enhance our understan-

ding of the behaviour of households with respect to the various ways

in which they go about fulfilling their 'basic needs'. Even more

important, it should lay the foundations of economic demography

In Pakhtan, openThg up new areas of multi-disciplinary research

that could not be perceived before This study should also provide

the researcher with a sufficient feel for the real world to permit

formal economic-demographic modelling exercises. In this respect the

present reports are truly pioneering both in intent and in prupose.

Syed Nawab Haider Naqvi

p

ACKNOWLEDGEMENTS

The author acknowledges his greatest Indebtedness to

Professor Syed Nawab Haider Naqvi, the Directorof the Pakistan

Institute of Development Economics, for his encouragement to

initiate this study. He is also thankful to Dr. M Irfan, Project

Manager and Chief of Research PIDE , for his encouragement

in the completion of this study. Thanks are due to Mr. Aqil Ahmad

for typing the manuscript.

CONTENTS

Page

i. Introduction 1

II. Size and Flow of OutmigratiOn 2

III. 9c111 composition of Migrant Labour 18

IV. Replacement cbst 25

V. a,cial cbnsequeflces of International Migration 26

a. Female Labour Force Participation 26

b. Social structure and Cganization 27

c. Work, Output and Income 29

d. Education 31

VI. brkers' FLthmittances and Use 33

VII. Remittances and Inflation 42

Conclusion 45

0

I

A prominent feature of Pakistan's development experience

during the Seventies has been the large-scale outmigratiàn of workers

to the Middle East countries. The rapid pce of outtnigrtion generated

by the development programmes of the oil-rich Arab countries set in

motion strong socio-economic forces with far-reaching consequences for

the long-term development prospects of the country.

The rapid pace of outmigration was facilitated by the liberal

labour export policy, which allowed the free interplay of market forces

in the domestic labour market. But as the problems caused by outmigration

have become apparent serious doubt has been cast on the underlying assim-

ption of this policy that all labour export is beneficial for the

exporting country. C -

Because of the limitations of data it is difficult to quantity

the benefits and costs of outmigration. Bit it is obvious no that the

impact of outmigration is far from being entirely beneficial. On the

one-hand, outmigrants have benefitted immensely in terms of increased

standards of living. On the other hand, the skill loss from outmigratiori

has had deleterious impact on productivity trends and the increased

demand arising from remittances has fueled domestic inflation.

These issues are analysed in detail in this papei ' in the

context of a comprehensive review of the available literature on the

socio-economic implications of labour outmigr tation for Pakistan. The first

section presents the evidence on the stock of Pak i stani migr ants abroad

and analyses the migrant out-flow in terms of - the area of origin; In the

second section the skill composition of migrant labbur is discussed,

which is frllowed by an analysis of the effect of migration on the

domestic labour market; Next, the social consequences of migration

have been analysed; and the last , section looks at the evidence, on

the volxfte of workers" remittances and on their utilization and impct

on the economy.

I. aze and Flow of Out-ILtgratic ' " '••

The various estimates of the stock óf,Pàkistan's migrants

abroad discussed in this section are based on traffic data, on data

provided by the Bireau of flnigration and' Overseas aployment, on sample

surveys in the home country and host cottrie$ and on a 10 percent

' saippleofensus (1981) data. In this section the attempts to obtain

these estimates have been discussed and the main results regarding the

provincial and rural-urban origin of emigrants have also .been'reported.

It will be seen that-most of the estimates suffer from variOus 'drawbacks

-' even those based on the 10, percent sample of the 1981 census data,, which

are the most reliable estimates, need to be-adjusted becaus Of Jimited

inter -temporal coverage.

• ,, , Table 1 gives 'the', official estimates of the total' annual out-

'flow of migrants by different channels and of the stock estimates.: The

stock series is the cuu1 ative total obtained by adding the' annual

migrant out -flow to ' the 1972 figure, which is the aggregate of estimates

by Pakistan's missions abroad of the migrant stock in the various host

countries, while-the 1981 stock figure is the census estimate. The official

figures are not adjusted for return-migration, neither is. A . migrant

profile available by country of destination. Bit as,table.shows during

the Seventies an overwhelming proportion of the' migrants went to the

)Middle EEtst countries.

-3-

Table 1

Migration Abroad Through Different Channels(Official Estimates)

IOverseas

Year Employnent Direct Public Total StockPromoters

(1) (2) (3) (4) (5) (6)

1971 3340 194 3534

1972 3359 1171 4530 689000

1973 7654 4646 12300 701300

1974 14652 1676 16328 717628

1975 21766 1311 23077 .740705

1976 38516 3174 41690 782395

1977 77664 60175 2606 140445 922840

1978 78685 47602 3246 129533 1052373

1979 80615 34586 3058 118259 1170632

1986 91482 24801 17114 133397 1304029

1981 119711 32549 821 153081 1709000

Sources: Columns 2 to 5 / 12 7Column 6 - For 1972:L16_7

For 1981: L 11_f (based on 10 percentsample of census data)

Other years: Cumulative total,

Note Emigration through public sources is on a governmentto government basis through the Bureau of Emigration.Direct emigration is arranged on an individual basis

Table 2

Destination of Migrants

(Percentages)

Area Shahid Perwaiz Gilani Irfan

Middle-East Cnountries .80 70 80

Other Countries 20 - 30 20

Sources: Column 2: L19J3: /7

4: /8 /

The analysis of migrant outflows shows that during

the Seventies the number of out-migrants increased at an annual

rate of almost 11 percent. The major impetus to this growth

was provided by . the rise in the number of migrant workers to

the Middle Fast countries, which sh9ws .signigicant inter-country

mobility arising from high elasticity of labour supply to wage.

Table 1 also shows that a large proportion of the

migrants used private channels (overseas employment promoters

or direct) for going abroad. The bulk of this outflow was

through the over 500 licensed Overseas Employment promoters who

operate on the basis of demand orders obtained from overseas

employers. About a third of the migrants went abroad on personal

initiative by obtaining work-vouchers directly from sponsers

abroad.

I

-5-

Public agencies namely, the Bureau of Emigration. and

Overseas .Emp].oynnt, which undertakes state to state labour deals

and 1he Overseas Employment Corporation chaxmelized only 5

percent of, the migrant outflow.1

pA substantial number of migrants went abroad illegally

through smuggling, by using forged documents etc. That such

migration is attracted to places which offer high wages and

employment with relative ease, suggests that during the mid-Seven-

ties most of the illegal migration was to the oil-rich Middle East countries

The illegal migrant workers are mostly uneducated and perform , non-

technical and menj1or domestic jobs. By the end of the decade

the illegal flow had to a large extent, been curtailed, thanks

to stringent policies regulating the work of the Overseas Employment

promoters and to stricter control measures in the-host countries.

The most reliable estimate of the stock of Pakistan's

migrants abroad in 1981 is based on a-10 percent sample óf the

21981 census data • But the figure of a little over 1.7 million

obtained in this way is for the total number of migrants that left

P the country during the preceding ten years and has to be adjustedupwards to take into account the 1972 stock as well as the return

migration from it.

Note': In addition to this, government efforts to promoteworkers' migration abroad, which are regulated by theEmigration Ordinance of 1979, include the operation of anOverseas Workers Foundation which caters to the welfare ofthe overseas migrants and their dependents at home.

2.± The questions regarding migration were asked to only 10percent of the population

Mm

Table 3 gives the adjusted stock figures and provides

a migrant profile by workers and dependents in the MUdle-East

countries3 . The table shows that in 1981 out of a migrant stock

of 2.3 million almost 1.6 million were in the Mi'ldle-East untries

of which workers constituted an overwhelming proportion.

Table 3

Adjusted Census Estimates of TotalMigrants Abroad 1981 and Estimates

for 1972

(Th6usands)

Region 1972 1981

24iddle-East cbuntries ¶btal 200 1579

• Workers 40 1414

Dependents 160 165

AU. Other Countries Total 489 738

%brkers 98 233

Dependents 391 505

Total 689 2317

Workers 138 1647

Dependents 551 670

Source: L87.-

Note 3 : The adjustment has been done by taking the stock estimatefor 1972 (Table 1) as the base figure, which is adjustedfor a 4.2 percent rate of return-migration. The divisioninto different categories of migrants is based on /197and the breakdown by region of destination according toP124 results / 8/.

".7-

The low dependency ratio of migrants to the Middle-Bast Countries

in 1981 as compared to that of 1972 and the corresponding ratios

for other countries, reflects the temporary nature of the migration

to these countries. This stemniedpartLy from the pc.licies of host

countries to discourage permanent settlement of , migrants and partly,

from the heavy costs of travel and adjustment, in particular for

workers with short-term contracts, which also mitigated against.

out-ud4ration of the entire family.

The division of the census sample estimates of out-migrants

by province and rural/urban categories is given in table 4 which.,

shows that 82.8 percent of the out-migrants cae from the rural

areas of Pakistan and only 17.2 percent from the urban areas The

lowest incidence of out-migration was front theprovinces of Si-.%a-

and Baluchistan, which contributed only 17.6 percent and 4.5

percent respectively to the overseas migrant stock. This compares

poorly with their shares in total population of 23.2 percent and

5.3 percent respectively. On the other hand y the incidence of

out-migration from the rural areas of NWFP (North West Frontier

Province) was quite high. Its share of 32.5 percent in total'

out-migration was almost three times rre than its share in, total

population. t3owever, the largest crti)uter to cut-m6.9ratiofl

have been the-densely populate& rural areas-of Punjab. With a

share of 41.8 percent in total population these areas contributed

33.7 percent to total out-migration or a total of over half a

million out-migrants.

I

-8-

Table 4

Stock Estimates of Migrants Abroad duringthe last Ten Years by Province and Rural!

Urban Categories

(Thousands)

From From t

Province Rural Areas Urban Areas Total- Number Percent Number Percent Number Percent

Punjab 576.5 33.7 158.8 9.3 735.3 43.0

Sind 213.0 -12.5 87.3 5.1 300.4 17,6

NWFP 555.6 32.5 35,8 2.1 591.4 34.6

Baluchistan 67.8 4.0 9.3 0,5 77.1 •4,5

Federal Area 1.4 0.1 2.9 0.2 4,4 "0.3

Pakistan 1414.5 82.8 294.1 17.2 1708.5 100.0

Source: L 11../ • --

Note: The Census figures on emigration are, based ona 10 percent sample only.

The causes of the high incidence of out-migration , from

the rural areas of NWFP and Punjab have not been properly analysed.

But large tracts of these areas are characterized by poor.soil

quality and depend almost entirely on rainfall for irrigation.

Consequently, living conditions are har.shper capita income is

quite low and thezeis a tradition of Out-migration from these-

areas to the urban centres.

The results of other estimates of the stock of Pakistans

migrants abroad are summarized in Table 5.

-9-

Table 5

stimates of out-Migration byDifferent Sources

V

Source Number of Migrants Year

Shahid Perwaiz11,281,000 1977(727, 000)

Abbas and Javed 2Variant I (703,836) 1977-78Variant II (1,041,863)

Bureau of Emigration andOverseas Employment 3489,000 1977-79

PIDE41,789,722(1,246,000) 179

Finance Division5 1,400,000 1981

1,400,000 - 1981

Sources: 1. L'J

2. /1 /

3. / 15

• L7_7S. /12/

6.p L-JNote: Figures in brackets are estimates of the number of

migrants to the irah Gulf countries.

I

-10-•

Of the total migrant stock of 1.2 million in 1977

estimated by Shahid Perwaiz L19J 727 thousand were accounted

for by the Arab Gulf countries. These figures were obtained by

combining net annual outflows to the 1972 stock on the basis of

various assumptions regarding the number and destination of

illegal migrants, return migration and number of family members

accompanying the migrant worker. As a result the following profile

of out-migration was obtained '(See Table 6).,

Table 6

FOut-Migration Abroad

(Thousands)

Stock Net Uutflow Stock

1972 1973 to 1977 1977

Middle'-ast untries

Total 200 527 727

Workers -. 40 44Si 489

Rest of the World

Total 48-9 65 554

Workers 98 27 125

Total 689 592 - 12311

Workers 138 4r6 614

- -j--------j -- --- --------------------_._- _._ -

Source: L 19_/ •

-11-

Table 6 shows that during the Seventies the oil-rich

Middle-Fast countries accounted for an overwhelming proportion

(almost 90 percent) of the total net out-flow of migrants. As

a result, by 1977 these countries had a share of almost 60

percent in the total stock of pa±ta.ni mi'rartts abrcad.

Another study by Abbas and Javed Li_I has estimatedthe number of Pakistani migrants to the Middle8t countries for

1977-78 on the basis of air traffic data during this period.

The two variants of the estimate stem from different assumptions

about the number of times migrants return home on leave. But

the results are extremely sensitive to these assumptions iich

were made on the 'basis of 'informed judgernent' only. ,ioreove,

the methodology does not fully take into account the continuous

• nature of the process of worker migrati6fl_s0m migrants who me

home on expiry of work contract may return on receiving another

contract; others may renew their contracts and not return for a

much longer period Furthermore, , the sthck estimates do not

include a substantial number of migrants who went abroad by se

or by road.

Similarly, the Bureau 'of Emigration figures for migrant

stock abroad are not represrntatiVe of the actual nmber, largely

because they .nether take into account those miarants who ot.ilized

direct channels for going abroad nor ..iiIea1 grants. The

Finance Division estimate of 1.4 million migrants abroad also

suffers from similar defects and is an underestimate of the

actual stock.

We nownow look at the two migrant stock estimates obtained

from country-wide household surveys, which is a 'more reliable

mathod of estimation as it takes account of illegal miration and

also avoids the problems of doable-countin.

The estimate of over l.. :rflhion Pakistafli migrants to the

Arab Gulf countries in 1979 was derived from data based, on anation-wide survey of over 15,000 households 4 . But this figure

underestimates the number of Pakistani migrants to the Gulf countries

for two reasons one, the average household sizes of 7.6 and 8,1

for urban and rural areas respectively, which are used in thecalculation are very high in comparison to the household size of5.2 estimated by the Statistical Division /i87 If the '1attrfigure is used, the estimate for the number of migrants to the

Gulf countries in 1979 is over two and a half million5 . Secondly,

the survey neglected a large tract of Northern areas, which are

included in the sample design of the Population Census 0rgar:izaion,

but which are of special importance when estimating the migrant

stock because of the high incidence of migration.

Note 4: The estimates are of the PIDE International MigrationProject / 7 7 , while the survey was cdnduted by thePakistan Institute of Public Opinion on the pattern ofthe Labour Force Survey sample design of the PopulationCensus Organization,

5: This is calculated by using the following data of Ji'survey: Population in 1979-81

Rural population: 57.5 millionUrban population; 22.7 million

Households with one migrantRural households: 9.3 percentUrban households:15.9 percent

Average number of migrantsRural households: 1.60Urban households: 1.49.

0

4 .

Table 7

Migration by Country and Area of Origin

(Numbers in Millions)

Rural Area Migrants Urban Area Migrants - - Total Migrants

Country Number As Percent of Total As Percent of Number As Percent-of Total As Percent of Number As Per--: from Rural Areas Grand Total from Urban Areas Grand Total cent of Total

Middle East (bun-

tries 0.840 74.4 46;9 0,406 61.6 221.7 1.246 69.6

Saudi Arabia 0.446 39.5 - 24.9 0.162 24.6 9.1 0.608 34.0

(JAE

0.236

20.9

13.2 0.122

18.5 0.358

20.0

Others 0,158

14.0 8.8 0,122

18.5 0.280

15.6

Rest of the World 0.289 25.6 16.1 0.255 38.4 .4.2 0.544 30.4

Total 1.129 100.0 63..0 0.661 100.0 36.9 1.790 100.0

Source: /7/

Keeping these drawbacks in mind we now look at the.

incidence of out-migration-by rural/urban categories. Table 7

shows that almost 70 percent of the total out-migrants in 1979

went to the ziddle-Ea3t counries1 Saudi arabia , had the largest

share of Pakistani out-migrants oL 34 perceritof the total,

followed in importance by TJAE, which had a share of 20 percent

of the total Pakistani out-migrant stock.

The highest icidence of out-migration was in the-.--rural

areas, which accounted for almost 47 percent of the total.. Again,

Saudi Arabia had the largest, concentration of migrants frointhe

rural areas .of Pakistan reflecting to an extent the predominance

of unskilled lahour in the total Pakistani worker migrant popu-

lation resident in this country.

Another estimate of the stock of Pakitani migraxts

abroad has been obtained by the PIDE/PLM sty i87. which hasdrawn its data from a national survey of 10,288 households con-

ducted by the statistics Division of the government -of Pakistan6.

The 1979 stock eatimat , of a little over a million

migrants abroad has been obtained by combining the net migrant

outflow of 394 thousand to the migrant stock jfl. 1972. To this

figure the official estimates of mi.';rant out-flow during 3.980 an

1981 have beu added t jive the PUI estimate for 1981 reported in

Table 6. The main results of the P124 study are given in Table 8,

which gives details of out-migration by province and rural/urban

206'C: The 7111 &are'ers to out-migration during 1972 to 1979 and

has a flow element since it is concerned with the 197 stock,which 'flowed' during this period.It may be noted that since the survey was hot designed for thespecific purpose of analysing international migration the sampledesign did not accomodte over-sampling of areas of out-migration.

7: The .Lower PLM estimates as compared to the official figures(Table 1) are due to the problem of recall error.

Table 8

Out Migration Abroad by Province and , RuralturbanCategory

1972 to 1979

Share in Out-Migr.nts Abroad 0utM.igrant AbodProvince. Total Population All Countries id'i1e-et amatr, e- (Thousands) (Percent) (Thousand "Pere

Punjab Total 57.7 240.17 60.90 206.14 52.30

Rural 41. 140.48 35,60 127.39 32.30

Urban 15.9 99.69 25.30 78.75 20.00

Sind Total 23.2 43.19 11.00 31.14 7.90

Rural 13.2 0 0 0 0

Urban S oo S 43.19 11.00 3.14 7.90

N1F? Total, 13.3 93.74 23.80 68.54 17.40

Rural 11.3 81.15 20.60 58.9G 15.00

Urban 2.0 12.59 3.20 9.58 2.40

Baluchistan Total 5.3 17.05 4.30 9.93 2.50

Rural 4.5 i2.,43 3.20. 7.33

Urban. 0.8 4.56 1.10 2.60

Pakistan Total 100.0 394.15 100,00 315.75 80,1

Rural 71.0 234.12 S9... 193.72

Urban 2g.0 l60.03 40.8 122.03 31.0

Source: /L87

The table shows that of the over 80 percent of the tot&.

migrants, who went to the middle-East countries a)ntost 62 percent

came from the rural areas of Punjab and MVP. This constituted 87

percent of the total outtnigrants from rural areas, while the oier

two provinces Sind and a) cL r res &>. on1 10 ct•n'

and 3 percent respectively in the total- •h.ch was much less

their corresponding shares in total population. It may be noted that -

unl.ke the other provinces, the rural areas c.f eind did not rpert.

any out-migration, wLkOe incidence in the province was confined only

to the urban centres.

During the period from 1972 to 1979 the ?LM study titc

return migration at 92,396 of which 67 percent caxie fra the

iidd.le Fast countries Bt a large percentage of return Igra;

setticd in the urban areas (45 percent) than left thern (31 percent)

suggesting that the experience of living abroad enhances the desire

to live in urban areas. Moreover, during the second half of the

Seventies return-migration from the MiddLe East countries increased

in absolute numbers and also relative to the Irtcreas in

to these countries. This was due prt2.y to the laer -cir

of the migrant stock and as a result, there tE . decline. in

rru'.ber of Pakistani migrants to the M I-Izs- c ntries (? Tahle 9)

-17-

TablO 9

Migration Flows -1972-79

-------*

Out -.migration ReturnAbro.1 lied1k-'.a6t Mi'ation

Years 11 Countries -

1972 - 7019 - 5491 2462

1973 - •- 3855 2459 1325

1974 17203 9332 1454

1915 33674 25328 - 2683

1976 42841 31811 -. 3475

1977 89320 - 74367 4318 - -

1978 85512 68393 -. 32162

1979 114726 90511 44518

Source:

Note 67 percent of return-migration is from the ;Middle-Eastcountries.

II. Skill Composition of Migrant Labour

Table 10 gives the skill composition of the domestic

labour force as well as that of migrant workers to the Arab Gulf

countries from two difi:erent lt,ShOws that the manpower

engaged in production was in high demand in the Arab Gulf co-

tries and constituted between 70-85 percent of the total mqx-ant

labour, which was more or less equally distributed between skilled

and unskilled workers. It may be noted that the substantial

differences in the results of the two sources are due to data

limitations in both distributions. The Bureau data Suffer because

of insufficient occupational categories, as a result of which, the

miscellaneous category is unduly inflated. The PIDE project data

gives the skills of migrant workers as reported in their passports,

which are not necessarily the ones engaged in by the migrants in

the host countries. However, the two sets of data, while the only

ones available, provide a fair idea about the skill compositon of

migrant workers and their weight in the doustic labour market

Anng the skilled workers the category demanded most was *

that of masons and carpenters followed in imp&tance by schanicc,

e).ectricians and welders. As compared with the production wkers

the other occupational atego.i.es :. workers e nst.tut' ori.y t

sxtt3.1 proportion of tctl migrant workers professicnaj. and mana-

gerial workers had a share of between 2.4-4.3 percent in the total

while clerical, service and sales workers had shares of between

1.5-2.8 percent, 1.8-2.2 percent and 6 percent respectively.

U-19-j

Table 1.O

Profile of Migrant Workers by Occptiønl Category(19i9)

d'&. e. -'No. s toccupational Labour Force Total Z:buitri s M34ale East Countries

Categor. es 'Number (Bureau of Etu..graticI') P1E)E 4 as percent 6 as percent C

(Thousand) Percent Nmret Percent nber Percent of 2 of 2 -

(1) (2) (3) (4) (5) .(6) (7) (8) (9)

1. Professional anManagerial Jo-

1178 4.97 3773G 2.4 54Occ. 4.3 3.2 4.6

2. Clerical Worketz 1058 4.47 44220 7. £9C00 1.5 4.2 1.8

3. Production ,rc-

ii J7302 73.1 1121810 -71.5: 103950' 832 6.5 6.0

Skilled 577350 36.7 50150o 40.6 -

.Unskilled' -. 547460 34.8 5320)fl 42.6 - -5-'

4. Service Worke.s 1859 7.85 28520 1.8 27400 2.2 15

5. Sales rrs 201 8.82 - 74400 60 - 3.6

6. icdllane194 0.82 339380 20.5 35600 2. -

C- S

7. Total 3.S2 100.0 1574,660 100.0 1;749;900 )O0.06.6 5 3

-. .. L.

Source"Column 2 1127 2

coluz 4 L17

Co1uzr. - L'J *

Columns 8 and 9 of the table show that with the

exception of those in the mis cellaneous category the ether

Migrant wo:kerscori' tutc less then 10 percent of the toca3,

domestic o tt soc:t!ve ori category.

l:: J. :?tion of the, M- grallt wOrke8 a l e cofler) ..-the workers catQorv whose i!•xct on the.

Gu - wa quite substantjj. This was parti-

c: true fci- docrors nurses, accountants and enqine, in

this ctcv d of masons cat- plumbers and eiectrjc:ain th kilied workers category (See Tab l e 11) Despç the.i.itd tati'r regardin(. the Cstimnt of the sk i Il-wise compositi<

c•. t domestic labour force and ol' ".he two dis trjbutjon of theziqratt skill composition, the conarjs shows that migrant

workers in the categories of enuieer, teaher,nurses 1 msons carpenters and p1uthe cc;!*LCtituted over hale ofthe domestie11y a vailable labour in these categories and as aresult, had a sabstantjal impact on the del, . 11

balaneer

in the domestic economy.

11-T'Effect of Migration On E !oyxrnt ar3 qs

l ' 11. tJ. S nt:h. c.t.'jc &OE 0.( ii-y- totje 2r.b Gulf cou ries sJQnifica-.)\ th

situatior in Paijistaji as the dome icia1ç 1r1act would havebeen unable to absorb the new entrant to the labour fcrc, wh.ch

was qrojnq at the rate of 3 perct per annuj'. AS a

by the mid-Sevonti@s uc1ov. had been reduced to only

arouhd 2 percent of the labour force 2roi an timated 12

psrcnt during the early Seventies /17/..

U

;:•.• ;

' r CAI

• :;:. 5•! ;;

Table 33,

19'L •: :-.,Profile of igr t er by'Ski..tl.4'

Domestically M I G • .Skill . Eloyd Bureau of Emigration lcE (17)-_. ---. (12LZ.L_ inbc . Percent- Nutbet )rcent

- (2) . ( 3)

Prof ssional .1ngeria1 Workers,

Engineers ,, ,3470 12600 . 319 3268 64 3•

PtCC its •• 12295 5400 . 43.9 .' 6853 . 55.7..

q- 0Y. 78 • . 3 ci•:'o:6

Tetbers: .43}/:. 4ft51

43OO - 90O0 2O93- •2492

Poctos720b 2.243.7Yi1

Compiter Prograniiners/ . • H •.Operators.2367

Skilled Workers

Masons

Carpenters

Electricians

unthrs

Welders

Nec.hani CE

120600 105.2 75,757 66O1

135,000 7762.1' .54

39,600: 31.5 41r.tL

1000 61S ., It" ,447 .6..6

4E'8

6,200 24 3),'W2 32.E,

114691

142271.

125728

290SIq

€ 773

241340

Sftixce cal.11m,2/12/. .: • . • ••. L'•':

Column 3-/15J .•. .... •H..

Column 5 / 7. . . . ,.. .

Ima

Unskilled labour out-iuiqratiort had a favourable impact,

in particular on the agriculture sector because of its various

indirect benefits, which incluced tb improvement in productivity

staiming trcm the rise in the c . pit;l .ratio. Ioe-er..

wheie skilled labour is concerneci out nJ..cjrr ion wac eficial only I

to the point where it ininirized dcxnestiu unemoioie.nt Th-efter,

it has contrijyuted to skilled labour shortages and rising wage

rates in the dotestic market Moreover, the rupla rit cost of

out IItrgratlon tn ei.-ms u in stoant in uucarion was also

substantial.

Table 12 which gives thu estimate-S of short.aq5 in th

various skilled labour atego :1.e. for l.92-•3 how thu ptc: c

out-migration. on the doaiesti suplceeand rocs.. The table

shows that for a large nuniber of occu t.onil gr,ups tke sliorttqe

arising front out-migration were onLy iar g .ni-l.. ilowover, the

imbalances for production workers in par ti.cula:c plunthexs and wel--

ders Were very large.

The labour out migration din he e. n:i 1el-

to push up the dsstic wage levels But 'uut ....

of out-miqration is difficult t .c,tn g.ven that........: ef

other factos like ie .i tJ.cn •t.c. so p2.z'.

role in t.he waqe increao. lahui .eo the mic ... ci

wages for different categories of workers and the onsuer pi.ce.

index. The table shows that durin g the Seventies there was a

tantial real increase in the vaau s of carpent.ers, ;,,sons .nd ucski lled

workers the three ocep fonal ategor us, which. were effected

most by out-migration.

Th1i.lci 12

Lt331,.tort1çre for Selected OccupationalCategOr.Et

CThcuLd

OCCU.

i'rofessiona1 Workers

Civil 3ngineers 17 19 4 2

Electrical Enqiners II 12 2 1

Mechanical Engineers 10 L. 3 2

Civil Engineering Technicians 41 46:6

Electrical Engineering Techni-cians .42 47 7 2

Mechanical Engineering Techni-cians 22 25 6 '3,

Doctors and Surgeons 25

.Production Workers

Well-drillers and related Workers 4

Machine Tool Setters . and opera-tors 99

Electronic Fiquipment Assemblers 26

102

Red. ,-, and ¶1V Repairmen 9

.34

Welders

25 ' 2

2

4 2

103

U. 7

29

5 2

106

10 .6

10

5

23 22

25

Source: L 14:J N .

:u

Indices o: Mon es for difr.0pttiona1 catoqories and the Ccm

SUL&ex Price Index

4

C p ntersMasons Unskilled Industrial Workers CPI.'

1971-72 100 100 '100 100 100

1972-73 103 101 110 107 :109

1973-74 152 149 134 142

1974-75 193 189 194 174 181

1975-76 239 234 296 199 201

197677 282 300 354, 212 , 220

197778 330 345 368 224 '234

1978-79 - - - 245 253

1979-80 - 302 279

1960-81 394 317

Source 47

I

Meanwhile the money wages of industrial workers lagged behind

the conser price index till 190/7. Th$swas d bc.h to low

inci.dertc of out-niigration in this category of workers as well as

to depressed production conditions When these factors were

re'e.'rsed during 1979-80 and 1990-81 real wages for this category of

umikers also began of increase.

-25-

IV. Replacement Cost of Out-Migration,

While the individual r eti-n from inter-

national out-migration, have been substantial the phenomenon has

not been without its costs At the level of the migrant and

Ihis family these costs are large.y of an intangible, psychological

- nature sterrutiinq from dislocation and the consequent long period

of separation (Se /2/) But at the social level, out-migration

of labour and in particular, of skilled labour has involved

noous ieplacernent cost.s. Jti:tiates of the replacement cost

of Pakistani migrant labour for 1979, with and without earnings

foregone, have been derived in Table 14 to be nearly Rs 5.5

billion and Rs 1441 billion respectively? The replacement cost

of migrant workers is an important component of the total social

costa which is even higher since it includes costs arising from

factors like output foregone, low utilization level of domestic

technology, low learning benefits because of high turnover of

workers etc.

n

Note 8 On an average the income differentials betweenPakistan and the Mjdd1e-st countries has ranged from6 and 7 times for skilled and unskilled workers toB tines for professionals L 7J

9: These calculations have been obtained from the officialestimates of total education costs of different profe-ssions. The figure for replace.ment cost with earningsforegone is obtained by using an earnings function,which is estimated separately (See 4).

TAble IA*

Replcment Cost of Pakistani KigrantWorkers

1979I

Average Replacement Total Number Ttal ReplacenntCost of Migrants cost of%atior

Without With Numbers in Without WithSkill Category Earnings Earnings Million Earnings tarnings

Foregone Foregune Foregone Foregn(Rus)

(1) _____ (2) (3) (5). (6)

Unskilled Workers "- - 0.626400 - -

-killed Workers 2480 8480 0.660600 1638.20 50.19

Professicnls 48685 10005 0043V 2093.46 432602

Service and Clerical

Workers 1000 27645 0.0620 869.0 1713.99

Others 2316 6256 0.387C00 896.20 2421.07

Total - 5497.24 14062.97

Source /4/

V. Social Consequences of Internat:ional Miqration

a. Feitale Labour Force -Participation

Female labour force participation rates, both in rural

and urban areas are imich lower for households receiving remittances

10.9 Percent aLi 2.6 percent as compared with 15,5 percent and

-27-

percent for rural and urban areas respectively for households not

receiving remittances (See L2J ).. However, while this was truefor all income groups in urban areas the participation rates of*

lower income groups were higher in rural areas, suggesting that

women in households receiving relatively smaller remittances had

to work more to compensate for the absence of the working male member.

Moreover, the desire for work was slightly higher. for women in house-

holds not receiving remittances 29 percent in rural areas and 27'

percent in urban areas as compared with only 21 percent women' in

rural areas and 25 percent in urban areas desiring work in remittance

receiving households. This suggests that the decline in female

labour force participation after receiving remittances was due more'

to withdrawl from difficult physical work than to social factors like

compulsion or seclusion. S

b. Social Structure and Organization

In places of high incidence of international out-migration

the societal structure and socio-cultural behaviour of the people

has undergone substantial change. A study on the impact of out-

- migration on the behaviour of tribesmen in NWFP shows that the

traditional values, which for centuries perpetuated a specific model

of societal structure no longer forms the basis for a valid model: of

society iTh7.

More specifically, this has meant that the traditional

political leadership has been successfully challenged on the basis

-28--

of the wealth earned in the Middle-East countries. Moreover, the

absence of husbands has led in many cases to situations in which

the honour of women a basic feature of societal code has been

compromised. This is also true of ther areas with high incidence

of international migration. A study of a small village in Guga.r

Khan area (in Punjab province) reveals that the absence of male

members in the migrants' households has led to 'loose morals'

among the women and children left behind, which is evident from

the heavy use by them of modern and traditional contraceptives L6_7.A similar finding has been reported by a study on Male-Female

Interaction based on a survey of five villages in Chakwal (in

Punjab province), which is also a high international migration

incidence area /57.

The impact of international migration on notions about

family planning has also been substantial. The survey of the

village in Gujar Khan L6J showed that while awareness of familyplanning programmes was quite high in both migrant and non-migrant

households 96 percent and 92 percent respectively only 66 percent

of women in the former households approved of it as compared to 80 -

percent women of non-migrant households. This was due to lower -

demand for children in non-migrant households because of poverty,

increased female labour force participation and high cost of

rearing children.

4

-29-

But while traditional mores are being replaced by a new and

eviaence of the prevalence ofcommercially oriented societai paradiqm there is/an, óppósing tendency

as well as people grow richer, thanks to remittances, they tend toreassociate with. th'etradjtjonaj identity with even greater coflvjctjon

and to reinforce-the related values and ideals. However, this seems -.

to be a passing phenomenon and is largely the result of a ' reactjon to

the decay of the traditional value system stemming from the moderni-

zation process set in motion by international migration.

c. Work, Output and Income

A large proportion of households, both in urban and iural

areas, reported no effect on work and output as a result of out- -.

migration of the working member of the household L 2j. The proportion

of rural households reporting no effect on work and output was less -

as compared to urban households. Moreover, 15 percent of rural house-

holds had to put in extra effort to compensate for the absence of the

working male member but 13 percent of the households reported a --

decline in output showing the dominance of the family based enterprise

in rural areas (See Table 15) in these areas 2 percent of the house- . -.

holds were able to hire labour from remittances, while at least 11

percent households reported an increase 'iiz' output as a es'ult 'of the

efficient utilization of remittances.

-30-

Table 15

Effects of Out-Migration on Households Work,Output and Income

(Percentages) U

Urban Areas: Rural Areas

ffect on Work

No Effect 82 63

Hired Labour - 2

Additional Work for Family 1 15

Effect on Output

No Effect 70 51

Decline in Output - 13

Remittances helped IncreaseOutput 6 U

Effect: on Income

No Effect 18 27

Remittances Increased Income 5 5

Additional Money for Use 55 45

Source; /2_7

Note: The figures do not add up to 100 because minorcategories are not reported in table.

- -31-

The effect of out-migration was much more on income

as is shown by the relatively smaller percentage of households

reporting no-effect of remittances on income 27 percent in

rural areas and 18 percent in urban areas. For 5 percent of

total households remittances met an increase in income as a

result of earnings from investment made out of remittances.

However, the majority pf the households 45 percènt in the rural

areas-and 55 percent in the urban areas _considered remittances

only as additional money for use, which shows a heavy consunplion

bias in the utilization of remittances,

d. Education

• .. There is no conclusive evidence about a higher education.

level of children of migrants although as table 16 shows the 'age-

specific enrollment rates of such children are higher for both

urban and rural areas as compared with those of children from

'non-migrant households /27 . It may be noted that the relative

differences between the two categories is much higher in the case

of female enrollment rates. But the comparison of the education

level of children in the two categories of households is not

possible because of lack of information on drop-out rates. And

the actual situation could be much different from that apparent

from table 16 because of a low priority to education expenditure

given by households receiving remittances (See table 16)

-32-

Table 16

Age-Specific Enrollment of Children by Sexand Area

(Percentages)'

Age-(Years) Males FemaleHousehold .1 5-9 1 10-14115'-25 5-9 10-14 115-25

Rural Areas1. Households receiving

Remittances 45.2 65.5 27.1 22.3 21.1 .9

2. Households not rece-iving Remittances 35.4 - 51.0 13.6 11.7 12.6 1.2

Urban Areas

1. Households receivingRemittances 77.0 84.0 39.0 61.1 69,4 14.0

2. HOuseholds not rece-iving Remittances 58.34 75.0 29.0 47.1 55.1 17.0

Source: L2_7

In another study the effect of international migration

on children's education, as reflected in the relatively higher

drop-out rate of such thildren has been found to be negative

LJ • This is explained as arising from the lack of .interestin edUcation and a reassurance of getting work abroad. Bu the

eçosure of the-migrant tc the outside world has not helped to

change attitudes towardS female education, which has remained at

a low level.

-33-

VI. Workers' Remittances

During the years from 1970-71 to 1982-83 workers

remittances increased by almost 14 times from only Rs 231.8

million in 170-71 to Rs 3.0 billion in 1982-83. The actual amount

remitted would be much higher if the imports by migrants under

personal baggage rules are also included. Moreover, because of

individual preference and overloading of official channels of

remittance commercial banks and post offices many thigrants used

unofficial channels, like individual agents for remitting earnings 10,

Remittances have been mostly from non-profesèional wor-

kers in the Arab Gulf countries, who have financial commitments

at home, while skilled professionals tend to hold on to their

savings.. For the former category of migrant workers almost half the

income is consumed while the rest is remitted.

Table. 17 shows that average remittance per worker.

increased consistently during the years . 1973-74 to 1977-78,

suggesting-a relative increase in the income-saving, unskilled

and semi-skilled categories of migrant workers in the MLdd.le Eekst

coantries.. The higher average remittance per worker also cpntri-

buted substantially to the significant rise in the total yo1une

of remittances, which increased at an annual rate of around..

70 percent during the years 1974-75 to 1977-78.

10: . .. .NoteIn the NW?P 48 percent of the migrant workers usednon-banking channels for remittances L 71.

-34-

Table 17

Remittance per Worker

Year Remittance Percentage Increase

1973-74 62215.3

1974-75 71719.7

1975-76 85831.6

1976-77 112960.4

1977-78 1811

Source: L19J

The overall liberal policy framework was also a

factor that induced a greater inflow of remittances. And

even though a large portion of the remittances is s€able with

low elasticity of response to policy change emitters gained

substantially because of devaluation. As a result, the

importance of remittances in the econoiny rose substantially.

During this period, they constituted the fastest growing

component of total foreign exchange earnings and were an

important source of funds, which enabled the economy to adjust

itself to the various shocks both.external and internal (oil-

price increase, deterioration in the terms of trade, separation

of the East Wing, nationalization of many major manufacturing

--35-

units etc.) suffered during the early Seventie1,

The extent of the contribution of remittances to

-Pakistan's balance of payments is shown in table 18 as per-

centage of the trade gap, which was covered to a large extent

thanks to the inflow of remittances. The table also shows

the absolute and relative magnitude of the remittances in terms

of percentages of the GNP, total foreign exchange earnings and

net foreign aid inflow.

During the years from 1977-78-to 1982-83 rémittàriceg

accounted, on a.naverage, for 7.3 percent of' the p a•

- financed 70 percent of the trade gap. As thesingle 'most

important source of foreign exchange earnings constituting 40

percent of the total, remittances helped to. ease the foreign

exchange constraint at a time when traditional sources of

foreign exchange were declining in importance.

• - During the years from 1978-79 to 1982-83 the annual

increase in remittances slowed down substantially and in.,.,',

1981-82 it was only 7.4 percent.. In the subsequent year the

real-increase in remittances was not much, but because of-a

20 percent devaluation of the rupee the nominal increase in

remittances was 25 percent-. 'The slower increase in remittances

NOtSU: It may be noted that while the government did notderive any direct financial benefit from remittancesit gained indirectly because of the accumulation offoreign exchange, which has ixrnense importance infinancing the import bill and repaying foreign debts.

-36-

during 1981-82 and 1982783 was due largely to the .sluggish.

growth of the construction sector in the Arab Gulf countries

because of the Iran-Iraq war. However, the magnitude of the

remittances was still quite high in 1982-83 they constituted

7.7 percent of the GNP and ' a little over 40 percent of the I

total foreign exchange earnings but financed a relatively

smaller portion of the trade gap. This was due partly, to the

liberalizing effect of remittances, which increased imports

directly, as well as indirectly by stimulating consumption.

The marginal propensity to consume out of remittances was very

high (2.32) and since consumption of migrants was 4argely.

through imports the relationship between remittances .a I?d imports

was strong L9_" As a result, some of the balance-Of-Payments

gains from remittances were off-set by the higher import demand.

Use of Remittances

As remittances are in the form of direct transfers of

personal income their impact on the economy is far more complex

when compared with that of ot1'er foreign exchange flow (foreign

aid, direct foreign investment) even though the effect on

the balance of payments is more or less the same. -

The evidence on the utilization of remittances, while

quite fragmentary, suggests that very little was spent for

enhancing the productive capacity of the economy. The greater

part of the remittances is spent on consumer goods, which

have a high import content, and on real estate purchases.

-37-

Table 18

Workers' Remittances

(1970-71 to 1982-83)

I I

Volume of Annual Per- As Per- As Per- As Per- As Per-I -. Remittan- centage Ch- centage centage centage centage

Year ces (Mill- ange of GNP of Total of Net of-Tradeion Re.) Foreign Aid Inflow GAP

Exchange . SEarnings

(1) (2) (3) (4) (5) (6) •.. (7)

1970-71 231.8 - 0.5.. 5.6 . - .. 95.7

1971-72 508.8 119.5 1.0 12.9 11.3 32.7

1972-73 1238.0 143.3 2.0 11.9 76.4 . . 99.4

1973-74 1371.2 10.8 1.7 9.7 46.2 292

1974-75 2100.8 53.2 2.0 14.2 2.9 . 187

1975-76 3308.6 57.5 2.7 18.6 43.1

1976-77 5719.2 72.9 4.1. 28.7 95.3 . .44.9

1977-78 11447.4 100.2 6.8 408 239.9 179,7

1978-79 13830.3 20.8 7.1 39.4 307.7 64.3

1979-80 17255.7 24.8 7.5 36.7 414.0 69.3

1980-81 20947.4 21.4 7.7 37.9 1143.4 76.5

1981-82 22500.0 7.4 . 7.1 42.1 1285.7 65.2

1982-83 28125.0 25.0 7.7 40.4 1520,3 . 70.9

Sources:., For the years 1970-71 to 19 7 -75: L10J

For the rest of the years: Calculated from L 13j and L 20 J.

-38-

Iowever, there have been some indirect economic benefits of

remittance-use in particular, from the expenditure on construction

activities, which has stimulated the growth of the housing and

related industries through multiplier effects.

Table 19. shows that 14.4 percent of total remittances

-were spent on construction activities, either in the form of p

direct construction or purchase of residential house or in the

form of improvement in the house The other components of the

expenditure on real state purchases, which accounted for almost

22 percent of the total, were expenditures on commercial real

estate, constituting 5.7 percent of the total and agricultural

land, which accounted for 1.6 percent of total expenditure. In

another study it was found that a much larger proportion of

remittances 76 percent was utilized for the constructjàn/

': purchase of new houses and renovation of old ones; Another 15

percent went for the purchase of land, while the purchase of

livestock and construction of wells accounted for 7 percent and

2 percent respectively of the total expenditure L6/ •'

Consumption expenditure features most prominenti.y,jn

the remittance use schedule. That 'recurring consumption' is

the dominant item in this category, with a share of 57 percent

in total expenditure, is due to the fact that remittances of

unskilled and semi-skilled workers, which is a signifiàant

migrant group, has enabled to raise their consumption standards

significantly from relatively austere living conditions. It has

also been noted elsewhere that the inflow of remittances has

raised a large number of people from poverty and increased their

nutritional intake

-.39-

Table .19

Use of Remittances S

Expenditure Percent of Total

1. Consumption 62.19

a. Recurring consumption 57.00

.b. Marriages. 2.35

S c. Consumer durables 2.84

2. Real Estate 21.68

• a. Construction/purchase of S

residential house .. 12.14

b. Irovement in house

c. ComercjaI real estate 5.72,:

d. Agricultural land L.55

3. investment/sa'ings S 12.95 •'

a. Agricultural investment 3.305

b Industrial/couujercjal investment 8.21

c. Financial. investsnt/saving

4. Residual . .

Source: S .

-40-

Only 13 percent of the remittances were either invested

directly, or indirectly through savings, which has been defined

as idle purchasing power converted into 'secure financial

instruments'. One reason for this is that migrant workers,

because of their age and skill composition, are not inclined

towards investment in productive assets ( See L 7_/ )

The effect of remittances on consumption by urban/rural

categories has been studied on the basis of the PLM survey,

which provides data on the spending preferences of households

for the two categories /27. The results are summarized in

Table 20, which shows that most of the remittances are consumed,

while investment is largely in the form of construction activity.

Over 83 percent of rural households and almost 70 percent of the

urban households receiving remittances, accorded highest pre-

ference to the purchase of food, clothing and household goods

or improvement in the house • The emphasis on the expenditure

on construction is explained partly by the importance of a

good house as a status symbol and partly by the desire of

remittance receivers to live better.

Next in preference is the expenditure on weddings

while only an insignificant minority, both in rural and urban

areas, preferred to purchase land or a business.' Expenditure on

education of the migrants' children has 'no importance at the

first preference level for rural areas and only marginal

importance for urban areas The reason for this is partly to

be' found in the system of free education in government schools

-41-

Table 20

Use of Remittances by Preferenceand Area

Remittance UsePreference 1 2" 3 -4 5 6 7 - 8 9 - 10 II 12 13 14

Rural Areas

First 100.00 6.69 - - 40.18 42.99 - 3.76 - - 1.79 2.52 - 208

Second 10000 2.73 10.70 1.27 15.66 25.21 - 4.59 - - 0.40 10.40. 0.66 28.73

Third 100.00 2 ..45 4.52 1.61 3.51 8.69 2.57 604 1.09 - - 8.08 - 61.43

Urban Areas

First 100.00 1.05 0.92 - 26.44 43.53 1.09 8.28 - -2.12 7.64 - 8.93

Second 100.00 3.97 0.85 1.81 11.97 20.60 - 9.35 1.72 1.8 3.62 8.80 - 35.50

Third 100.00 3.74 0.84 1.7 5.58 3.90 - 8.28 1.54 -- 7.53 2.82 64.09

Source L2J

• Co1 nn.

1. Total 8. To pay off debts2. To pay for weddifls ,: To 'buy farm/non-farD. equipment3. To pay for school fees 10. To buy seeds fertilizers, pesticide,

4. To pay for medical expenses . ii. TO. buy S land/businesSS. To buy food/clothing ' 12. Others6. To buy household goods or improve house 13. Savings7 • To pay for luxuries like ornaments 14 • No response.

-42-

which requires little expenditure. Moreover, the majority of

migrants' children would be of pre-school age given that the

average age of the migrant is 29 years L_' . But still, the

small expenditure on education of migrants' children reflects a

low priority attached to education.

VII. Remittances and inflation .

Table 21 gives the annual inflow of remittances,

increase in money supply, the inflation rate and the excess of

the growth rate of money supply to the growth rate of the commodity

producing sectors. The latter gives an indication of the extent

of stagflation experienced by Pakistan's economy as the problem

facing Pakistan, in particu.lar'during the early Seventies was

not only that of inflation but also of stagnation in the commo-

dity producing sectors.

The table shows that there was a high correlation between

remittances and the increase in money supply. But since remi-

ttances are not taken into the foreign exchange reserves of the

country the money supply cannot be increased directly against, the

foreign currency deposits. However, remittances increase the

money supply indirectly, which creates inflationary pressures if

this increase is not matched by a similar increase in the level

of commodity production. During the early Seventies these pre-

ssures were particularly strengthened because of the stagnation

in the commodity-producing-sectors.

-43-

Table 21

Remittances and Inflation:

• Remittances Increase in Growth of Growth of excess Inflation(Million Rupees) Money Supply Money Supply Coodity of 4 Rate

(Million Rupees) Producing and 5Sectors

(1) (2) (3) (4) (6)

1970-71 231.8 1795.2 10.80 -1.42 12.22 6.15

1971-72 .508.8 7857.7 42.66 1.35 41.31 4.70

1972-73 1238.0 3733.1 14.21 4.25 9.96 15.70

1973-74 1371.2 3320.3 . 11.06 5.24 5,82 32.78

1974-75 2100.8 4144.8 12.44 -1.26 13.70 2366

1975-76 3308,6 4175.0 11.14 3.48 7.66 8.58

1976-77 5719.2 10122.0 24.30 1.98 22.32 11.27

1977-78 11447.4 11890.0 22.97 4.64 18.34 632

1978-79 • 13830.3 12863.0 20.20 3.90 16.30 6.74

1979-80 17255.7 14162.0 18.51 7,88 10.63 9.33

1980-81 20947.4 13309.0 14.68 6.04 8.,64 13.28

1981-82 • 22500.0 36384.0 3499 6,79 2820 9.95

Source: - Column 2 - Table L1 7Column 3 to 6 for the years 1970-71 to 1979-80 Lb_iFor the-rest of the years and for column (7): L137. -

-44-.

The impact of excess liquidity created by hone

remj ttancs was Substantial in the non-essential, luxury

goods sector Since prices of essential commodities were kept 4

low through Subsidies. And in so far as remittance expertaj.... *

ture has been mainly on luxury consthner items, which have a

significant demonstration effect, the inflationary pressures,

because of- remittaes were strengthened, This was par'ti-.

cularly true for luxury consumer goods, land and housings

which witnessed strong price increases,

13

Id

-45-

• CONCLUSION

During the Seventies the large scale outflow of migrant

workers from Pakistan, in particular to the ddl e-Est, is

evidence of significant inter-country nbility because of high

elasticity of labour supply to wage.I

The benefits of labour out-migration have included a

substantial positive rate of return to the migrant and a decline

in unemployment. In the agriculture sector this has meant that

families left behind are now much better off financially, but

productive modes of subsistence have in most cases, been discarded

and replaced by cash incomes remitted by migrant workers.

The outflow of unskilled rural labour has: beenuite-

beneficial in so far as it has contributed to the improvementin

productivity stenming from the rise in the capital : labour* ratio.

Ibwever, the impact of out migration on the agricultur e sector has

not been entirely beneficial.

In certain areas of high incidence of out-migration

extreme shortages of rural labour have emerged causing a decline in

agricultural production. There is some evidence of female replace-

ment of the new job opportunities arising from out-migration. This

is a significant develbpment with important socio-economic consequences

and contrasts sharply with the prevailing conservative socio-cultural

rural context. There is stronger evidence on increased mechanization

and capital intensive -modes of farming in response to the withdraw). of

labour. On this basis it is fairly reasonable to infer that the enhanced

D

pace of agricultural transformation in labour scarce areas is

largely attributable to out-migration.

In the urban centres the increasing depletion of the 1. about

force in vita], production sectors has had an adverse effect on

productivity trends. Qisiderable costs have to be incurred for

training programmes to offset the growing shortages of skilled labour.

The deleterious impact of out-migration is only partly reflected

in the replacement cost of migrant. workers. Less tangible socie-

economic effects of out-migration have also had unhealthy domestic

consequences.

The unemployment situation has been eased to a large extent

because of out migration but this has not been an unmixed blessing.

This is particularly true about skilled workers. ]h this category it

is usually those already employed who migrate causing increased

occupational nobility and employment of inexperienced labour. The

relatively higher proportion of skilled production workers in the total

out migrating labour force is, therefore, a major disadvantage of out-

migration. it reflects the loss of costly human capital, which has

adverse consequences for productivity and the country's development

effort.

A major benefit of out-migration is the increasing volume

of workers' remittances. As a valuable source of foreign exchanges

remittances have eased the foreign exchange constraint and provided

a potential soiree for increasing the rate of domestic savings and

investment. }bwever, the rising trend of consumerism and slow gover-

nment response in harnessing this important source for capital

-47-

accu1at0fl and ec<)f101fl.0 growth have a ravated the divergence

between the private and social returns from outrnigration.

mt ernatiOflal outmigration has had profound effects on

the domestic economy but its impact has not been entirely bene-

ficial This review has shown that the enormous private gains from

out_sd.gratiO1 have been secured at considerable social cost. ThIs

situation has been partly the consequence of the t constrained action

of market forces generated by high demand foi: iabom i11 the capital

rich Prab mtrie$. After more than a decade, policyfliaker s are

only now begining to perceive the full play of socio-economic forces

set in motion by out migration. A comprehensive policy-package is

needed for proper management of out migration of skilled labour and o

remittance flows as well as to minimize the undesirable impact of out

migration on the domestic economy-

'S

-4

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