Sri Lanka foreign remittances down 7.2-pct up to Nov raising questions
ECONOMYNEXT – Sri Lanka’s worker remittances fell 7.27 percent to 6,080 million dollars, in the 11 months to November 2017, down 476 million US dollars from 6,556 million dollars a year earlier, amid a tightening labour market and unrest in the Middle East, official data showed.
In November expat Sri Lankan workers remitted 562.19 million dollars marginally down from 567.3 million US dollars a year earlier, showing some recovery.
But in September remittances plunged 16.69 percent to 481.38 million US dollars and in April 12.1 percent to 593.4 million US dollars.
Central Bank Governor Indrajit Coomaraswamy said geopolitical factors (unrest in the Middle East) as well as low oil prices in 2016 may be contributing to lower remittances.
Discussions with foreign job agency associations had shown that stricter regulations may also be preventing expatriate worker departures, he said.
Unskilled female workers who depart as housemaids to the Middle East (and also the Maldives which has a stronger currency than Sri Lanka) form the bulk of expat workers.
In the second quarter of 2017, unemployment was 4.5 percent down from 4.6 percent a year earlier, with male unemployment at 3.0 percent and female 7.1 percent.
Out of the economically inactive population 74.4 percent are female, and 25.6 percent are male. This may show a lack of opportunities or regulations that may make it difficult for females to seek jobs.
Coomaraswamy said he saw no problem with reduced departures so long as they found employment in traded sectors.
Sri Lanka’s traded sector like manufactured exports has not seen a lot of new investment and existing firms are facing labour shortages because they are unwilling to pay high enough salaries.
Sri Lanka has also seen real wages go up in recent years though in 2015 and 2016 the currency collapsed from 131 to 150 to the US dollar, which tend re reduce the real wages as prices of goods go up.
In some sectors that has seen new investments, such as construction, salaries have moved up, with the daily wage of a skilled mason going to about 2,000 – 2,500 rupees a day (400-500 US dollars).
Sri Lanka is now importing construction workers from China and Nepal at close to 800 – 1000 dollars a month with food and lodging, but their productivity is multiples of local workers, industry sources say.
Governor Coomaraswamy said job agents were of the view that foreign employers perceived Sri Lankan female workers to have a stronger work ethic compared to their male counterparts.
Deputy Governor Nandalal Weerasinghe said discussions with job agents showed that there was demand for foreign domestic worker jobs, at around 300 US dollars because they also come with food and lodging though domestic salaries are now 20,000 or more.
Sri Lanka’s has a large number of expatriate workers due to chronic currency depreciation by a money printing central bank which denies workers a living wage.
Similar trends have been observed in other chronic currency depreciating countries like the Philippines and Indonesia which have some of the worst central banks in East Asia.
Philippines’s Central Bank has also said worker cash remittances through banking channels fell 8.3 percent to 2.19 billion in September, after also falling in April, reports said.
Some Filipinos have been deported from Saudi Arabia in September and several money transferring services have ended with tighter banking regulations, the report said.
In Sri Lanka economic controls and protectionism has pushed up cost of living costs and reduced domestic job creation while expropriation has harmed foreign investment, despite the end of a war reducing risks. (Colombo/Jan01/2018)