Sunday, February 08, 2009

Economic Crisis Catching Up With Migrant Workers

Financial Times

Migrant workers play a critical role in Asia’s rural areas by traveling to big cities and other countries in search of work, and sending their pay back to their families in rural areas in the form of remittances. China alone is home to more than 130 million migrant workers, a number that grows by five to seven million each year. The Philippines is another big source of migrant workers throughout the region. Nepal reports that seventeen percent of its gross domestic product is from migrant workers’ remittances. These numbers may be on the decline, though, because migrant workers tend to engage in unskilled work thereby making them be susceptible to dismissal in hard times.

Despite past reports, the economic crisis appears to be taking its toll on Asia’s migrant workers. In January, the National Bureau of Statistics estimated that five percent of the China’s 130 million migrant workers, more than six million, were out of work. However, Chen Xiwen, the director of the Central Rural Work Leading Group, dwarfed that estimate with an announcement that more than twenty-five million migrant workers are “coming under pressure for employment.” Other surveys put the number of unemployed Chinese migrant workers near twenty million.

Officials worry about the effect of migrant workers’ unemployment on smaller local economies that have come to depend on remittances. In China, rural incomes have been rising for the last five years but there is fear that the economic crisis will stunt this growth and call for more help from the government. Officials in Indonesia are concerned that remittances will drop by ten percent in 2009 and Indian officials expect hundreds of thousands of workers to return from the Middle East this year.

Many authorities remain optimistic though, as remittances have survived past economic downturns. This is reinforced by the World Bank’s prediction of only a one percent loss in global remittance flows. Data from Taiwan indicated that the number of employed migrants actually increased by two percent on 2008. Further, officials in the Philippines expect remittances to grow in 2009.

1) Do you think China’s increase in unemployed migrant workers will affect its government’s financial stability?
2) Is the fear expressed by various authorities unfounded since remittances have generally survived economic crises?

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