Migrant Labour Remittance in Qatar - Literature review Example

Migrant Labour Remittance in Qatar Introduction Due to globalization and advancement in technology, the flow and supply of labor has greatly increased over the recent decades as people have been able to transverse across borders in search for more opportunities to study, live and work in the Diaspora (O.E.C.D. 2006). The demand for labor has been on the rise in a bid to meet the rising demands for quality goods and services globally. Multinational firms have sourced quality, skilled and cost effective labor from developing nations with the intention to cut costs. Working abroad has provided the expatriates with an opportunity to not only further their education but acquire better paying jobs that help improve the living standards for themselves and their families back in their home countries (Russell, 1992). The total number of migrants globally constitutes more than 3% of the total population worldwide comprising of more than two hundred million international migrants presently (Golgstein & Khan, 1982). The increase in international migrants is attributed to increasing flow of remittances which in some developing and third world countries surpasses their foreign aid. Remittances are an essential means of alleviating poverty, improving the state of economy, enhancing social and economic sustainability and raising the living standards of people, acquired through government initiated projects from foreign revenues (Alburo & Abella. 1992). Remittances can be directed towards savings, investments, capital investments, and financing local development projects. Keeping track of migrant remittances have proven hard to do due to emerging informal channels as suggested by (Toumi, 2011). This report is a literature review on the migrant labor remittance in Qatar. In addition, the literature review will discuss the remittance that migrant workers in Qatar send to their home countries using data based on a survey that targeted workers who live and work in collective households. Literature Review Due to the amounts of remittance that are generated annually, the government in collaboration with the private sector and related international agencies, have developed and structured legal frameworks and systems to monitor remittances and safeguard the migrant workers from employment and labor malpractices and oppression (Coss & World Bank. 2008). Remittances are monetary and non-cash transfers pecuniary and in kind from an immigrant or a group of migrants from abroad to households and agencies in their country of origin. According to the United Nations Report on the WSS (World Social Situation), income transfer systems that sustain people living under the poverty line are fundamental to altering the structure of opportunities and are essential to minimizing the intergenerational progression of inequity and poverty (United Nations. 2009). Approximately more than eight percent which amounts to more than half a million people globally receive remittances from family and friends living and working abroad (Golgstein & Khan, 1982). According to (Chandavarkar, 1980), migrant remittances are reliable and stable external revenue flows compared to any other, and thus, a reliable means of financing local developments. Migrant workers in Qatar Qatar is one of the Arab emirates in the Middle East occupying a small section of the larger Arabian Peninsula. The country has been under the administration of an absolute monarchy since the mid nineteen century (Orr, 2008). The main capital city of Qatar is Doha. Qatar is among the most stable, richest and rapidly growing economies with total Gross Domestic Product (PPP) of approximately more than one hundred billion US dollars year ending 2010 and a nominal Gross Domestic product of more than 110 billion US dollars. By the year 2008, the country had recorded its eighth consecutive surplus in its budget with oil and gas accounting for more than 50% of the Gross Domestic Product, export earnings and government revenues, which puts Qatar among countries with the highest per capita income globally (Orr, 2008). Due to the conducive economic environment, the state has received considerable numbers of migrants from Southeast Asia, Africa, Europe and South Asia and has employed substantial numbers of them in its oil and gas industry, hotel and hospitality industry, aviation industry and the petrochemical industry. Migrant workers in Qatar constitute of more than three quarters of the country's workforce and majority of the residents of Qatar who work in private and semi-public sectors (E.I.U. 1996). In the year 2007, Qatar had rapid rise in population of nine hundred thousand people three hundred fifty thousand of whom are Qatar citizens. Since the majority of the migrant population in Qatar is male, the ratio of male to female is 1.8 males per every female (Grieco, 2003). Migrant Labour Remittance in Qatar According to a survey conducted that targeted workers who live and work in collective households, the migrant remittances from Qatar to the migrant's home country surpasses the value of regional trade in commodities and the value of official capital flows. The amount of remittances sent by migrants has increased tremendously and it has been easy to monitor which is associated with the decrease in remittance fees and costs and the expanding systems and frameworks in the remittance industry (Toumi, 2011). In addition, depreciation of the US dollar hence, a rise in value of remittances denominated in varied currencies, increased monitoring of money transfer globally necessitated by increased money laundering and financing of terrorism and increased migrant incomes and stocks (U.N., & E.S.C.A...P. 1984). According to (Hunda, 2011), an average migrant in Qatar is most probably male, aged between the mid twenties to early thirties, with their household size in their home country averaging at 4 with an annual income of more than three thousand five hundred US dollars and annual expenses amounting to 1600 US dollars per year. From the survey, an average migrant in Qatar has completed high school, pays a placement fee of not less than four hundred US dollars and remits half of their earnings and income back to their home countries. Majority of migrant's income is remitted to India, Philippines, Nepal, Kenya, Bangladesh and Egypt. More than half of the migrant population in Qatar live in worker's camp, 15% live in dormitories, 18% live with non-relatives while the rest are accommodated by their family members. According to (E.I.U. 1996), majority of remitted finances from host countries to home countries are sent to migrant's parents, migrant's spouses and to migrant's siblings and very little amount is sent to extended family relatives. Due to lack of adequate information on the exact figures on remittance, it is particularly difficult to identify the exact ways the remitted funds are used. However, reports indicate that some of the remittance is directed towards savings, education and small amounts is directed towards investments (E.I.U. 1996). From the survey conducted on migrants in collective households, more than 40% of migrants are satisfied with their savings, 30% are dissatisfied, 18% are very dissatisfied, 10% do not know and the rest are very satisfied. From the data collected and analyzed, the intended use of savings by the migrants sent as remittance is meant for making homes, paying their children’s education fees, buying land and starting or supporting already established businesses (Toumi, 2011). Remitted money from divergent host countries just like Qatar, plays a significant role in contributing to growth of economies of the migrant's home country, contributing to the Gross Domestic Product of the migrant's home country, and receivers of remittance are more likely to have a bank account which enhances their access to financial services and information essential in gaining important information such as how, when and where to invest the remittances (Amjad, 1989). Nevertheless, the rising costs of sending remittances associated with the global coordinated attempts to stifle potential sources of money laundering and money meant to finance terrorism, has led many migrants not only in Qatar but also other countries such as the United States, Saudi Arabia, Australia, United Kingdom and South Africa among others, to send their remittance using informal/ unofficial channels (Ghosh & I.O.M. 2006). These informal channels include sending remittances through family connections, through friends who travel to and from the host and home country respectively and through local money lenders (Rather, et al., 2008). Lack of adequate data on remittances from migrant labor in Qatar is similar to other cases globally that are contributed by lack of sufficient records of migrants in a country owing to rise in numbers of illegal migrants and those migrated through human trafficking cartels. According to (Alburo & Abella. 1992), insufficient information on migrant labor remittances is attributable to use of data collection methods by the governments and other related agencies that are not accessible and available to the public. A survey conducted globally in all major central banks found out that there were substantial disparities in the quality of remittance information and compilation data across varied countries since some of the central banks in some countries utilized remittance data recorded by commercial financial institutions only, leaving out remitted money sent to home countries through money transfers agencies and through the post offices (Athukorala, 1993). Increased job satisfaction by workers is a factor that affects remittances indirectly or directly. This is because, when a migrant is very satisfied with their work, they tend to work harder, smarter and for long duration of times which translates to increased amount of incomes which further contribute to higher amounts of money resources remitted to migrant's home country (Straubhaar, 1986). To establish the level of job satisfaction among migrants in Qatar, the survey findings indicated that more than half of the expatriates were satisfied with their work, 15% were neutral , 10% were dissatisfied, 2% were very dissatisfied while the rest were very satisfied with their works and employment positions. In Qatar, the amount and frequency of sending remittances is influenced by the total monthly income of the migrant, their monthly expenses, the anticipated amount of savings, size of household in the migrant's home country, their age which is determines the time distance to returning and gender. Previous findings collected by (Straubhaar, 1986), show that more males send more remittances in comparison to their female counterparts, a monthly increase in income directly resulted in a monthly increment in remittances and although remittances increased with age, they did so in a reducing rate. In addition, migrant workers who routinely saved their income, they tended to remit an extra amount in comparison to those who did not save. As highlighted by (Greco, 2003), the forms of remittances used globally and still remain feasible in Qatar includes cash sent from abroad, cash brought to migrant's home country and remittance in kind. The remittances are channeled through financial institutions such as banks, financial couriers, hawalis, saving in host country and later bringing it home, through travelling friends and family networks. Previous studies done on factors influencing remittances globally as highlighted by (Straubhaar, 1986) includes the rate of wages, the foreign exchange rates, economic activities in host and migrant's home country and relative interest rates between the labour receiving and sending economies. In addition, the political risk, cost of sending remittances, employment status of the migrant's dependants in host and home country, level of education of the migrant worker, the duration of time spent abroad and the level of income of the household in migrant's home country. The level of occupation of the migrant and if the migrant lives abroad with dependents or their dependants live in the home country forms additional determinants of remittances (Straubhaar, 1986). Studies focused on the negative impacts and costs of remittance shows that remitted money from host country such as Qatar are relatively unpredictable since they are influenced by varied number of factors including legal regulations, are often utilized on purchasing consumer goods for dependants in home country which initiates a rise in demand, inflation rates and increment in the level of wages (Irving, et al., 2010). More often than not, remittances are not directed in investment in capital generating infrastructures and have the potential to replace other sources of income for families and dependants of the migrant in their home country which maximizes dependency, erodes ethical working behaviors and increases prospective negative impact of return migration. To enhance remittance data collection and compilation, reports indicate that the government of Qatar has been on the forefront in developing and implementing policies that are meant to not only safeguard migrants, but monitor and track remittances. The government in collaboration with other related agencies and sectors has initiated plans to support remittance mobilization efforts, educating the migrants on varied effective and productive use of remittances to ensure they get return on their investments as suggested by (Abella, 1989). Previous surveys and reports shows efforts to ease collection and compilation of migrant labor remittances by the government through formalizing and expanding migrant identification systems, formalizing the recruitment and deployment processes, facilitating systematic gathering of remittance data and enhancing associations of migrants and encouraging their participation in national development projects and processes (Puri Shivani & Ritzema, 2011). In addition, setting up systems for the growth and development of expatriates and fostering official remittance services that meet the needs of all concerned stakeholders inclusive of the migrant, their dependants, the host government and the home country economy. Among legal frameworks and structures that have been cited and recommended to support increment in the amount of remittances sent through official channels and to enhance transparency on matters relating to remittances, includes development and implementation of regulations that foster healthy competition and creation of a platform for dissemination of remittance data to all concerned stakeholders (Abella, 1989). Fostering bilateral communication and relations with destination countries to seek legal avenues for remittance legislations, migration laws, harmonization and support is not an option (Powell & Hendrinks, 2009). Safeguarding the labor rights of migrants is a step towards keeping track of remittances and safeguarding against money laundering and remittances sent through informal routes which are susceptible to be directed and used in damaging activities such terrorism (Puri Shivani & Ritzema, 2011). Previous studies done on ways to improve the methods of remitting money, productive use of remittances and enhancing transparency, reliability and legality of remittance data indicate that it is imperative that prior to facilitating transfer of remittances, there should be a balance of interests among concerned stakeholders in host country and in the migrant's home country (Ratha, et al., 2008). In addition, establishment of effective financial standards that focuses on secure institutions, liquidity requirements and stable financial management (Irving, et al., 2010). Studies done on best remittance practice countries include the Phillipines, India, Mexico, BAngladesh, Morocco, Kenya, Ghana and Nigeria among others. The common factors linking these countries in their efforts to foster transparent and productive remittances are establishment of fiscal and monetary policies, improved migrant labor management, effective transfer mechanisms, efficient and thorough data management and enhanced relations with migrant civil society organizations (UNESCWA. 2007). To enhance remittance efforts therefore, the government of Qatar has no choice to not only monitor remittances, but also, enhance its migrant labor management, foster effective and cost-effective mechanisms and invest in adequate data management systems (Ferrari, et al., 2007). One cannot mention remittances and fail to mention the role migrants play in the host country. The importing of foreign expatriates in Qatar has had considerable amount of benefits which includes among others the ability of the receiving country (Qatar), to acquire a basic workforce and specialists to make do for the limited number of Qatar nationals with necessary skills, qualifications, abilities, knowledge and experience. In addition, the government from sourcing foreign workers is able to activate the purchase and use of commodities supplied locally by domestic traders and improve local property markets (Athukorala, 1992). By accessing qualified, experienced, skilled and cost-effective labor force that is able to meet the international standards, the government of Qatar and business organizations is able to not only increase their capacity of production and enhance the quality of goods and services produced, but also, improve the efficiency in delivery of goods and services. Thereby, effectively and efficiently meet the changing needs, tastes, preferences, attitudes, expectations and buying patterns of both the local and global customer (Maimbo & World Bank. 2005). Be it as it may, importing foreign workers to work in varied industries within Qatar present a number of limitations and challenges that include among others increased cost of labor that are directed to salaries. There are additional costs that are felt through a rise in the cost of spending needed to expand communication and transport infrastructures and systems, educational, housing, and social and health services to accommodate the needs of the migrants (Smith, 2004). Employment of foreign expatriates is accompanied by an elaborate drain of hard currency income of the government of Qatar which constitutes to remittance sent to the expatriates’ home countries that runs into billions of dollars annually. These hard currency income would otherwise be used in other sustainable economic development initiatives (Puri Shivani & Ritzema, 2011) Studies indicate that migrant are a significant risk to the stability of the receiving country, they are more likely to influence the existing culture with their own deep-rooted ideologies, ideals and conduct and thus, impact on the structure of the society of the host country and they influence its foreign policies (Choucri, 1986). The remittance figures send through normal channels are execrated to rise tremendously with the influx of migrants such as Nepalis coming into Qatar who are obtaining working permits to work for infrastructure and construction development projects as preparations for the FIFA world cup that will be hosted by Qatar in the year 2022. Despite the fact that the Qatar government does not report remittance data to the International Monetary Fund (IMF), media reports indicate that the Qatar Central Bank recorded an outward remittances flow amounting to more than seven billion US dollars in the year 2010. The outward remittance is anticipated to increase doubly with the ongoing construction in preparations for the 2022 World Cup as more migrants are expected from Nepali, India, Philippines, China and other South and Southeast Asian states. The rise in outward remittances for migrant labor in Qatar is associated with the increase in the level of wages for workers and there are enhanced efforts by the related government agencies and authorities to offer greater monitoring and screening to selection and hiring practices and processes and improving the working conditions for the expatriate workers (Ferrari, et al., 2007) Research done by (Puri Shivani & Ritzema, 2011), .indicate that sending countries need to not only encourage their locals to seek better employment opportunities abroad, but also educate them on issues pertaining financial management and encouraging the migrants to sign service contracts. This will help the migrants manage their finances better and plan accordingly how the remitted funds back to their home country are going to be used and invested. Research done by the Social and Economic Survey Research Institute (SESRI) in conjunction with the Qatar University indicated that migrants not only enjoyed a quality living in Qatar, but also, remit more than half of their total year income. The report titled ' migrant labor workers in Qatar' indicated that on average, migrants remitted more than nine thousand in Qatar currency riyal annually, an amount totaling to more than fifty five percent of their annual income (Hunda, 2011). In addition, the study found out those migrant workers who are on constant communication with their dependants in their home countries sent more remittances compared to foreign employees who did not maintain regular communication. Averagely, those who communicated often remitted more than ten thousand Qatar riyals and non-frequent communicators sent remittance amounting to an average of seven thousand Qatar riyals. Forty seven percentages of the migrants who were the respondents said they sent remittances to their parents once every other month while 42% of the population sample indicated they remitted money once every month (Hunda, 2011). The frequency of remittance increased when the money was remitted to the migrant's spouses which were an average of 50-70%. From the study, more than ninety percent of the migrants remitted funds meant to take care of their dependants' basic needs while the rest indicated they remitted funds for emergency reasons, education and helping family relatives as supported by (I.O.M. 2003). More than fifty seven percent of the migrant in Qatar according to the SESRI report use exchange houses to send their remittances to their dependants in their home country, more than thirty five percent used remittances transfer through banks and other formal financial institutions while the rest of the migrants used friends, family connections and informal remittances transfer which includes the Hawala systems (Hunda, 2011). The study covered a variety of issues relating to remittance indirectly such as the migrant's duration of stay in Qatar, the quality of living in Qatar and the migrant's financial situation. From the report's findings, eighty percent of foreign workers in Qatar wish to extend their stay in the country. When asked about their financial situation, fifty five percent of the migrants said that they considered their financial condition fair, twenty three percent of them stated that their financial situation was good, more than twenty percent of the migrant rated their financial situation as somewhat better while the rest indicated that current financial situation was somewhat worse that is had been years earlier (E.I.U. 1996). Conclusion Due to advancement in globalization through development of ethnological, transport and communication infrastructures, more people are able to cross borders to search for better employment and educational opportunities. The focus in developing nations has not only been on encouraging its local people to seek better employment opportunities abroad, but also, on educating them and encouraging them to invest and send remittances to their home countries. Remittances are monetary and non-cash transfers pecuniary and in kind from an immigrant or a group of migrants from abroad to households and agencies in their country of origin. Remittances from migrant working abroad have developed immense benefits that includes among others improving the state of economies of the migrant's home country, boosting the living standards of migrant's dependants in home country and remittance revenues are a reliable and regular source of external inflow after foreign direct investments for governments. The report has analyzed previous literature and studies done on migrant labor remittance in Qatar. References Abella, M.I. 1989. "Policies and Practices to Promote Remittances" Philippine Labour Review, 13(1):1-17 Alburo, F.A. & Abella. D.I. 1992. "The impact of informal Remittances of Overseas Contract Workers' Earnings on the Philippine Economy" New Delhi, ARTEP. Amjad, R. 1989. 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