Overseas labor: mother's milk for poor nations
By John Berthelsen

On July 13, Abdus Sattar Laleka, Pakistan's federal minister for labor, manpower and overseas Pakistanis, took the podium in Karachi to announce that his government is seeking to "export" 200,000 professionals, skilled and semi-skilled workers to jobs overseas - Pakistan's best and brightest.

Laleka added that having 200,000 professionals and skilled workers overseas would be better for Pakistan than building four dams and two highways in different parts of the country, and that the money they send home would bring employment and relief to 500,000 families.

Overseas workers are often written about because of their vulnerability to exploitation and the misery they often endure. But there is another story. While for the developed world they are a convenience, they are a bonanza for the third world countries from which they originate, as Laleka in Pakistan can attest. The funds flowing back from overseas workers are the third world's second-largest source of development capital, behind foreign direct investment but well outpacing either capital market flows or official development assistance.

Although it doesn't answer the pressing question of how badly Pakistan needs four dams and two more highways - a lot - those 200,000 workers would join an ever-growing torrent of manpower that flows ceaselessly from poor countries to rich, with or without the sanctity of a visa, to do jobs nobody wants to do or can't be bothered to get the education to do. The World Bank says about a million people make it into the US legally every year, for instance - and another half million illegally. The figures are about the same for Europe. Vast numbers of them suffer at the short end of a hoe. But hundreds of thousands, perhaps millions, are scientists, doctors, information technology workers and engineers.

In 2001, according to the World Bank, remittance receipts from overseas workers amounted to US$72.3 billion across the globe, vastly higher than total official figures and representing an impressive 1.3 percent of world gross domestic product (GDP). Even the World Bank's figure is almost certainly low. The Multilateral Investment Fund at the Inter-American Development Bank estimates the amount of money sent last year to Latin America from the US at more than $32 billion alone. Workers from the Asia-Pacific region officially recorded sending home $27 billion in 2002, according to the Asia Development Bank.

The top recipient of fund flows is India, with official totals of $10 billion in 2001, much of it from highly skilled workers. Much more may move back into India through the so-called hawala market and is difficult to trace. Some 48 percent of all "H-1B" visas awarded to professional workers in the United States go to Indian doctors, information technology workers and scientists. India accounted for 62.5 percent of the inflows to South Asia, while the Philippines accounted for 58 percent of remittances to East Asia and the Pacific in 2001. The money comes from Indians abroad, who pay dealers and give them a code, often involving animals. Their families in India, armed with the code, can pick up the cash from the dealer's agent and bypass low official exchange rates.

In fact, the United States leads the world in remittance payments, with foreign workers sending back an official $28.4 billion, followed at a distance by Saudi Arabia at $15.1 billion. The South Pacific island of Tonga leads the world in sending workers abroad, according to the World Bank, with its overseas workers earning 37.3 percent of its GDP - although its population is only about 135,000. A series of small, lightly populated states and extremely poor states have similarly high numbers. The Philippines, with a population of 83 million, has an astonishing 7 million people working overseas - more than 8.5 percent of its population, who account for 8.9 percent of the country's annual GDP. It could be lots more. While the World Bank estimates that Filipino workers overseas send home a total of $6.4 billion a year, other estimates range far higher.

Precise figures are difficult to determine, because many overseas workers like to conceal as much of their earnings as possible from taxation. As an example, while the Asia Development Bank believes overseas Pakistanis are sending home $1.6 million annually, Shaukat Aziz, Pakistan's finance minister, believes that figure is actually $6 billion, of which $1.2 billion comes through official channels, $1.8 billion through State Bank purchases from open market and rest for smuggling and capital flight.

There may be questions whether exhortations like Laleka's are impoverishing the knowledge base of the countries they leave behind. But in the Philippines, politicians call overseas workers "modern-day heroes." Dilip Ratha, in a in a 2001 research paper titled "Workers' Remittances: An Important And Stable Source of Development Finance" for the World Bank, finds workers' remittances to be a virtually unalloyed plus, an important, stable source of external development finance.

"Remittances are often invested by the recipients, particularly in countries with sound economic policies," Ratha writes. Developing country worries about a brain drain are overblown, he writes, saying that "any output losses from immigration of skilled workers may be more than offset by remittances and the positive network effects on trade and investment".

However, there is a flip side to the coin. The Philippines has trained so many nurses in its own colleges and universities and sent them overseas that it faces a domestic nursing crisis, with less than one nurse for every 2,000 population. Nurses make $150 to $250 a month in the Philippines. They earn $3,000 to $4,000 per month in the United States - so much that Filipino doctors, who earn $300 to $800 a month at home, sometimes obtain credentials to become nurses overseas.

Both the World Bank and the ADB don't see it as a waste, however. "Remittances augment the recipient individuals' incomes and increase the recipient country's foreign exchange reserves, Raha writes. "If remittances are invested, they contribute to output growth, and if they are consumed, then they also generate positive multiplier effects. Thus, remittances offset some of the output losses that a developing country may suffer from emigration of its highly skilled workers."

Too often, however, these overseas workers are like a slim, articulate, confident 23-year-old Filipina who torched her way through university in Tacoma, majoring in pre-law and graduating as a National Merit Scholar by the time she was 20. Today, the woman, who prefers to remain unnamed, is doing laundry in a luxury flat in Hong Kong's Discovery Bay, sending money home to put her two sisters through college. Her dreams to become a lawyer are on hold. Likewise, a woman whom we will call Flora Gomez is minding children in a flat in Singapore, despite the fact that she was an accountant in a bank in the Philippines.

Hong Kong is thronged by as many as 200,000 domestic workers, 158,000 of whom are Filipinas. A startling 31.9 percent have completed college or university, 61 percent have finished secondary school. Nonetheless, 94.4 percent are engaged in elementary occupations like domestic workers. Despite their high level of education, only 4.4 percent are managers or professionals. The rest are wasting their educations as nannies because they make so little in their own country. Anecdotal evidence indicates they tend to invest in the same things - jeepneys, the ubiquitous, colorful, home-grown buses that choke the country's highways, or property.

These overseas workers face various attempts across the globe to restrict their movement, especially when economic conditions turn downward. In the US at the moment, with the IT sector in disarray, various attempts - backed by labor unions - are being made to limit their access in the US Congress. They are not expected to make much headway given the Bush administration's antipathy to labor unions and its philosophical orientation towards relaxed immigration rules. As transportation improves and rich people in rich countries like less and less to do real work, the trend across the world should continue, which should allow Laleka to breathe easier.

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