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Remittances not an unmixed blessing

Sri Lanka gets over $2 billion in the form of remittances from its citizens working overseas, reports PK Balachandran.

world Updated: Jul 04, 2007 18:24 IST
PK Balachandran
PK Balachandran
Hindustan Times

Sri Lanka gets over $2 billion in the form of remittances from its citizens working overseas, mostly as unskilled and semi-skilled labour. The 1.5 million men and women, working mainly in the Middle East, are the second highest contributors to the country's foreign exchange kitty, after the garment exporters.

Workers' remittances help cushion Sri Lanka's huge trade deficit of $3.4 billion, points out Dr Sirimal Abeyratne of the University of Colombo.

"Without this money, the country will be in dire straits. The remittances help hold the value of the dollar from sliding perilously," economist Dr Harsha de Silva of the think tank LIRNE-Asia told Hindustan Times.

The number of persons directly dependent on the remittances could be five times the number of workers sending money. And this is almost a quarter of the population of Sri Lanka, which is 20 million, Dr de Silva said.

The money remitted is desperately needed by the families back home because they are poor. The money gives the rural family the purchasing power it will never have had otherwise. It helps the family meet the spiralling inflation which currently stands at 17%.

"$100 is 11,000 Sri Lankan rupees. In the villages, this is a lot of money," Dr de Silva said.


However, there is a downside to the remittances, which cannot be ignored by any sensible government.

Dr Abeyratne warns that depending on the remittance of unskilled and semi-skilled workers is not a healthy sign. It only shows the extent of poverty prevailing in Sri Lanka, he argues.

There will come a time, when the remittances from the unskilled and semi-skilled workers may beat the earnings from garments exports, he warns. About 200,000 to 250,000 Sri Lankan workers are going abroad every year for work. "Receipts from private transfers" are fast catching up with earnings from garment exports, he says.

"The migration of labour shows that the government is unable to provide employment for them within the country. It helps hide the real unemployment situation in the country," points out Dr de Silva.

The Minister for Foreign Employment, Keheliya Rambukwella, recently boasted that he will increase the income from overseas employment to $3 billion soon by opening up new areas of employment.

But economists Dr Abeyratne and Dr de Silva do not think that this is an unmixed blessing.

"For Sri Lankan governments, providing overseas employment is a quick fix solution to the unemployment problem in the island," Dr de Silva pointed out.

For decades now, Sri Lankan governments have shown a marked lack of interest in generating employment opportunities for its rural and urban populations, both uneducated and educated. With the result, both sections are looking for opportunities overseas. Few of those who go intend to come back.

"Sri Lanka is one country that builds human resources by spending public money (education is free from the primary to the university level) and chases them away from the country for the benefit of another," noted Dr Abeyratne.

Remitters don't get full benefit

The poor workers send their remittances through the government banks. But these banks have a tradition of lending huge amounts of money to politically connected businessmen who tend to default on re-payment. The banks which make a fuss about lending money to the poor are easy with the rich and the politically connected.

Then there are the many adverse social consequences of female overseas employment.

"There are cases of maids being abused by their employers. Back home, families of the married maids are neglected because of the absence of the wife and the mother for years together. Children and husbands go astray," Dr de Silva said.

First Published: Jul 04, 2007 16:41 IST