Issues in Focus

End of the Gulf dream?

Print edition : August 04, 2017

At the passenger departure terminal at Thiruvananthapuram airport. Photo: S. GOPAKUMAR

Billboards for money exchange line up the Changanacherry-Alappuzha road at Perunna in Kerala. The economic slowdown in Saudi Arabia and Kuwait has also adversely impacted Indian migrant workers in those countries. Photo: K.K. Mustafah

A poster on a car bound for the Kochi International Airport with a Gulf-bound passenger reads: “Congrats to plumber Diveesh heading for the Gulf”. Photo: K.K. Mustafah

Stagnating wages, rising costs of living, a growing trend of imposing restrictions on foreign workers and the declining fortunes of the Gulf itself have resulted in a decline in the number of emigrants from Kerala and a weakened remittance flow into the State.

A DECREASE in the number of emigrants from Kerala, especially to the Gulf countries, and a fall in remittances in the two years from 2014 are some of the key findings of the Kerala Migration Survey (KMS) 2016 that have caught much media attention in recent months.

The survey, undertaken by the Centre for Development Studies (CDS), Thiruvananthapuram, found that the number of emigrants had fallen by over 1.5 lakh, return emigrants by 2.14 lakh and remittances by Rs.7,853 crore (see tables).

Emigration from Kerala steadily increased after 1998, when the first migration survey, conducted in that year put the number of emigrants from the State at 14 lakh and annual remittances at over Rs.13,000 crore. The KMS 2016 found, for the first time, a decrease in the number of emigrants from 24 lakh in 2014 to 22.4 lakh in 2016 and a fall in remittances from Rs.71,142 crore in 2014 to Rs.63,289 crore in 2016. The number of return emigrants also came down from 12.5 lakh in 2014 to 10.3 lakh in 2016.

However, remittance flows had weakened all over the world during the two years. According to the World Bank, remittances to developing countries dropped by 2.4 per cent, to $429 billion, in 2016, after a decline of 1 per cent in 2015. India, the largest remittance-receiving country, had in fact recorded the maximum fall with a decrease of 8.9 per cent.

Is the dwindling of funds from abroad a temporary phenomenon? How seriously will it affect the “money order economy” of Kerala, which had 2.1 million, or 86 per cent, of its emigrants working in the Gulf countries in 2014?

In the past decade, international migration patterns from India changed dramatically, with Kerala, which had been sending the largest proportion of workers abroad for a long time, being overtaken by comparatively poorer or more populous States such as Uttar Pradesh, Bihar, Tamil Nadu, Rajasthan, Punjab and Andhra Pradesh.

Yet, the concern that the results of the CDS’ survey has caused is not surprising. India, whose per capita income is one of the lowest in the world and where the rate of unemployment is high, received the largest quantum of remittances (an estimated $72 billion in 2015), more than the $64 billion that reached the more populous China that year, according to the World Bank’s Migration and Remittances Factbook 2016.

However, until a few years ago, only some States in India contributed substantially to emigrant outflow on a large scale, especially to the Gulf countries, and which resulted in the huge inflow of remittances. They included States such as Kerala, which, researchers say, is among the most remittance-dependent regions in the world.

Ever since the Gulf oil boom of the 1970s when the first regular stream of young, unskilled or semi-skilled emigrants began to leave for West Asian shores in search of jobs, Kerala had come to depend heavily on its workers’ remittances, which had offered a lifeline to thousands of poor households, improved lives and livelihoods, and became a source of funding for the State’s development.

For India as a whole, the huge remittance that came in thus was not so big when considered as a proportion of its gross domestic product (GDP). But, for industrially backward Kerala, where educated unemployment was high, the remittances constituted an estimated 36.3 per cent of the net State domestic product and contributed significantly to household consumption. Interestingly, remittances were 1.2 times the revenue receipts of the State government, 1.5 times the government’s annual expenditure and over five times the amount the State used to get until recently as revenue transfer from the Centre.

Any sign of the State losing even a part of this inflow is always a concern in Kerala, but researchers at the CDS, one of the few organisations in the country that conducts periodic surveys to monitor migration from and to a State, have been forecasting a fall in emigration numbers for some time now, irrespective of whether the recent downturn proves to be a temporary one or not. During the global financial crisis of 2009, for example, remittance flows fell but revived somewhat in later years.

The Migration and Development Brief published by the World Bank in April 2017 says that remittance flows to developing countries have been impacted in recent years by weak economic growth in Europe, the Russian Federation, and the Gulf Cooperation Council (GCC) countries as well as exchange controls, burdensome regulations and anti-migrant policies in many countries.

Reasons for the fall

According to the report, the recent fall in remittances to India and the South Asia region as a whole was a result of lower oil prices, fiscal tightening in the GCC countries, “nationalisation” policies aimed at lowering the unemployment rate of nationals that slowed employment of foreign workers and impacted remittance flows to South Asia.

It also says that remittance growth in the region is “likely to remain muted” because of low growth and fiscal consolidation in GCC countries. India’s remittance growth in 2017, for example, is forecast to be only 1.9 per cent. The economic slowdown in Saudi Arabia and Kuwait has also adversely impacted Indian migrant workers in those countries.

The bulk of migration from India (as also Kerala) has so far been to the six GCC countries. The KMS 2016 found that 41.5 per cent of Kerala emigrants were in the United Arab Emirates (UAE), 22.5 per cent in Saudi Arabia, 8.4 per cent in Qatar, 7.6 per cent in Oman, 5.5 per cent in Kuwait and 3.8 per cent in Bahrain. In contrast, only 3.8 per cent were in the United States, 1.5 per cent in the United Kingdom, 1.2 per cent in Canada and 0.7 per cent in Australia. All the GCC countries, except the UAE, registered a fall in emigration during the 2011-16 period, the survey found.

According to a report, “The Future of Migration from India: Policy, Strategy and Modes of Engagement”, published by the India Centre for Migration, Ministry of External Affairs, in 2013, the attractiveness of the Gulf countries for emigrants has come down because of a combination of factors, such as stagnating wages, rising costs of living, a growing trend of imposing restrictions on foreign workers and the declining fortunes of the Gulf itself. The Nitaquat law in Saudi Arabia and increasing Emiratisation in the UAE as also the absence of justiciable workers’ rights, including the freedom of assembly, raise serious questions about the human rights record of the Gulf countries, the report said.

Kerala’s concerns

But apart from such issues that affect all regions of the world equally, Kerala has special reasons to be cautious about the current fall in the number of emigrants and reorient its policies. The State has the lowest population growth rates in India. Its fertility and mortality rates have fallen to very low levels, and an ageing population is growing fast, with an average Keralite expected to live beyond 70 years.

Demographers have been forecasting significant changes in the age structure in Kerala, including a decrease in the school-age population, a decrease in the proportion of the labour forces in about two decades from 2001, a decline in the young working-age population, a doubling of older working-age population in two decades ending in 2021 and more unemployment among the older age than among the youth “in the foreseeable future” (see “Shades of grey”, Frontline, August 24, 2012).

In contrast, many of the States that are overtaking Kerala in terms of the number of unskilled, semi-skilled or skilled workers that reach the GCC countries have a demographic advantage with their growing population of youth in the 20-34 age group (a key factor in determining the number of emigrants from any State, country or region). Paradoxically, States such as Uttar Pradesh and Bihar, which have overtaken Kerala in terms of the number of emigrant workers, are now exactly in the same demographic context that Kerala found itself in in the 1970s, with the advantage of an ascendant working-age population in the 20-40 years (see “Pointers to a negative growth rate”, Frontline, September 16, 2015).

Professor Irudaya Rajan, an expert in demography and migration studies, told Frontline that the CDS, which has conducted seven large-scale migration surveys in Kerala since 1998, was planning to organise another survey in 2017-18 with the support of the State government. Over the past two decades, the quantum of emigrants has “shown an increase but, significantly, with declining trends”, he said. For instance, the increase during 1998-2003 was 476,559 persons, whereas it was 354,934 persons during 2003-08 and 206,903 persons during 2008-14. However, between the last two surveys, there has been a decline in the stock of emigrants for the first time—by 128,623 persons.

Data provided by the annual reports of the External Affairs Ministry also show that the proportion of the emigration clearances granted to emigrants of Kerala origin to the total clearances given in India stood at 21.29 per cent in 2008 (it was 37.49 per cent in 1997) and then declined steadily over the past few years to reach 4.83 per cent in 2016. According to the emigration clearance data, one out of every five emigrants who left India in 2008 was a Keralite. In 2016, this dropped to one out of 20 persons.

Irudaya Rajan said: “The rest of India in general is experiencing ‘demographic dividend’, whereas Kerala is experiencing ‘population ageing’. The fertility rate of Kerala is below replacement level (less than two children over the last 20 years). As a result, the proportion of children below 14 years, which was 42.6 per cent in 1961 (the first Census of Kerala after its formation in 1956), declined to 35.0 per cent in 1981 and 23.4 per cent in 2011, during the latest population Census. The child proportion (the future working youth) declined by almost half in 50 years. On the other hand, the migrant-prone age group (20-34) increased from 22.5 in 1961 to 27.1 in 1991 (when Kerala experienced a demographic dividend) and declined to 23.1 in 2011—almost reaching the same level of 1961 (the end of demographic dividend). This is one of the reasons why Kerala now has an influx of internal migrants from other states of India, what we describe as ‘replacement migration’.”

Another facet of the issue, he said, was that after the global financial crisis in 2009, the wages in the Gulf failed to bounce back to original levels. Given the high wage rates in their own State, wages in the Gulf today are not as attractive to the Kerala emigrant as they were some time back. But they are still attractive to the new migrants from comparatively poorer regions of India such as Uttar Pradesh and Bihar or neighbouring countries such as Nepal and Sri Lanka.

“Given the conditions in Kerala and the rising educational and skill levels, its young emigrants are also increasingly reluctant to embrace unskilled, blue-collar jobs. Instead, in the last few years, many Keralites used their work experience in the Gulf countries to move to English-speaking countries such as the U.S., U.K., Canada, Ireland, Australia and New Zealand, where, unlike in the GCC countries, they can apply for permanent resident status. This is an emerging trend—‘step migration’ by Keralites—from Kerala to the U.S. or the U.K. and such other countries via, say, Dubai. Educated women from Kerala, too, are moving out in larger numbers, with countries such as the U.S. and the U.K. being their preferred destinations.”

So, should Kerala and India as a whole be concerned because of the fall in the number of emigrants and remittances in a State long considered as a key emigrant region? Irudaya Rajan said: “From our studies for over two decades, what we believe is that because of the demographic trends, the population of the State would soon stabilise at around 36 million to 37 million, and emigration from Kerala (to the Gulf mainly) would stabilise at around 2.3 million to 2.4 million. Nearly 90 per cent of emigration from Kerala now is to the GCC countries whose economy depends a lot on the price of oil, and the current price regime may continue for long. Therefore, Kerala could be affected very much in the coming years. But there is no cause for alarm, I think. Kerala only needs to refocus on improving the ‘quality’ of its emigrants rather than placing hopes on their ‘quantity’.”

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