WORKFORCE EXPORTS LEAD TO INCREASED REMITTANCES
SAAD ANWAR HASHMI
Mar 12 - 18, 2012
The UAE is building itself as a thriving region for trade and finance attracting inflow of workers from other countries to work and support the economy of the UAE. As part of long-term business strategy, UAE has invested in infrastructure and projects to attract and support business growth.
With influx of such projects and footprint of international companies, there is a constant need for workforce pulled from adjoining countries mainly Pakistan, India, Sri Lanka, Saudi Arabia, Egypt along with USA and Europe.
In order to attract new businesses, the government is making an effort to diversify from oil to industries, which will be substitutes to ensure long-term sustainable growth in GDP, estimated to be above 10 per cent year on year.
Dubai in particular has invested in amusement and retail infrastructure to induce spending by residents and encourage tourists to spend foreign exchange.
In recent times, Dubai in particular has built the Burj Al Arab, Palm Islands, World Islands and the Burj Khalifa as landmark projects which further assist in foreign investment and help attract workers.
With such attraction and a thriving job market, which has slowly reduced the recessionary gap, new jobs are being created in various industries.
Recruitment businesses and executive search firms to assist such companies in finding the right candidate are running profitable businesses and in high demand for professional services offered.
Pakistan receives an average of USD1.08 billion a month in worker remittances, USD6.3 billion received in the current financial year since July 2011 up to December 2011.
As Pakistan is in constraint need for foreign exchange, such remittances are viewed as positive sign to increase reserves to meet IMF payments.
In addition, lack of employment opportunities due to poor GDP has resulted in large-scale migration from the country in search of employment, through it has been seen as a blessing in disguise reflected through influx of worker remittances. Pakistan is ranked among the top 10 developing nations in the world to receive worker remittances. Through it cannot be quantifiable in monetary terms, a sizable portion of inflows through worker remittances are received through illegal channel commonly known as Hawala.
Though this continuing trend is beneficial for the economy to build reserves, reliance cannot be given to working remittances in full since the future pattern of remittances and inflows may change, therefore making such inflows unpredictable. Almost 60 per cent remittances are received from Middle East whereas 30 per cent is received from USA and UK
Workers from Pakistan find the UAE an attractive destination to work and live. Its proximity to Pakistan, ease of travel, its being an Islamic nation, and the advancements witnessed in the UAE, particularly Dubai and Abu Dhabi, are further attracting potential candidates from Pakistan. In order to create an enabling environment for new and current employees, Dubai is constantly investing in infrastructure, hotels, and entertainment to attract skilled workforce.
The compensation package offered to those moving from Pakistan or other parts of the world to the UAE gives an immediate rise in overall savings, which result in long-term financial stability for the employees moving for career options.
With a diversified workforce reaching the UAE from other parts of the world, there is also a dire need for companies to have marketing, finance and sale workforce from diversified regions, who understand the culture and carry the capacity to close sales and attract business turnover through their dealings. With respect to sales, each company is striving to have a diversified workforce capable of dealing with different nationalities who reside in the UAE.
Pakistanis have advantage in career options in the UAE since the experience gained domestically is also recognized in the UAE. UAE is fast becoming an attractive option for young talent from Pakistan and those who wish to have a head start in their careers working in a different country. For those who live in Pakistan primarily on subsistence are not only able to earn significantly more, but are also able to enhance the standard of living of immediate and close family back in Pakistan. The remittances are either sent through the banking channel or exchange companies providing remittance services or via an informal channel which is not encouraged by the central government.
As already mentioned, Pakistan attracts an average one billion dollar in foreign remittances per month, 60 per cent of which comes only from UAE and Saudi Arabia which further underlines the attractive environment attracting skills and talent from Pakistan.
It is expected that the more people will seek jobs in the UAE. It will continue to indirectly benefit Pakistan in the form of foreign flows. It must also be highlighted that investment in education to pass on such skills to talent capable of getting jobs in UAE or any part of the world will result in remittances as witnessed. The only risk faced by Pakistan, which may hinder the inflow of remittances, may be political uncertainty and the precarious law and order situation, which needs to be managed by the government.
Pakistan's export base is half of that of imports. With increase in worker remittances, the export of skills from Pakistan may just be viewed as the most valuable export, which will guarantee foreign flows to build reserves of the country. This will further assist in managing the fiscal deficit and development expenditures. Investing in education will ensure that Pakistan's most valuable export may just be its human capital.