Analysts decry new ME foreign labour regulations

By Lalin Fernandopulle

The decision of the Gulf Cooperation Council (GCC) to pass a law to regulate foreign labour in member countries will be a blow to the country's economy as foreign remittances from Middle East countries play a crucial role in balancing the external sector of the economy, analysts said. This proposed law will be similar to the one passed by Saudi Arabia recently seeking to reserve 10 percent of the jobs for locals. According to reports the new law would include returning marginal and unskilled foreign workers to their home countries.

The GCC is a six-member grouping with Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates as its members, where most of the Sri Lankans work. According to statistics four Middle East countries, Saudi Arabia, Qatar, Kuwait and the UAE together account for 84.3 percent of migrant workers in 2012, compared with 80.3 percent in 2011.

The American Chamber of Commerce in Sri Lanka (AmCham) President, Vijaya Ratnayake said that this new law will not have an immediate impact but in the long run there could be a reduction in foreign jobs and remittances to Sri Lanka.He said it will take time to feel the impact and added that Sri Lanka should look at other countries to market its employment skills.However, the spokesman for the Sri Lanka Bureau of Foreign Employment said that they had not received official correspondence regarding the new law and cannot evaluate the impact.“We are awaiting detailed information and according to news reports the law will be applied for professional categories and not for domestic workers.

Today we send trained domestic workers who possess the NVQ Level 3 certificate and not unskilled labours,” he said.

According to statistics, private remittances from Middle East countries has been increasing from 1991. In 1991 it contributed 51.96% of the total private remittances and it increased to over 60% by 2010.

In 2011 private remittances from the Middle East recorded Rs. 335,201 million. This is the main source of foreign exchange that keeps the Balance of Payment in surplus while the trade account always posts deficits. According to the Central Bank report of 2012, the trade deficit was at $9.4 billion or 15.8% of the GDP. However, the BOP was $ 151 million.Total private receipts received in 2012 was $ 5,985 million, an increase from $ 5,145 million in 2011. Remittances from Middle East countries account for over 60 percent of them and the main market for Sri Lankan migrant workers is still the Middle East.

Several Middle East countries have taken action to reduce migrant workers by introducing new laws and standards. Kuwait will send back 100,000 expatriate workers who are considered marginal and replace them with local labour. Saudi Arabia's labour law ‘Nitaqat’ introduced recently hopes to localise labour to reduce the unemployment rate among Saudi citizens.