HARNESSING INTERNATIONAL MIGRATION FOR BANGLADESH Lessons from an impact evaluation of a government intermediated migration program OVERVIEW MARKET ACCESS RECRUITMENT COSTS REMITTANCE AND Each year, well over half a million Migrants from Bangladesh are POVERTY Bangladeshis engage in temporary paying some of the highest costs Remittances from abroad have international migration for low- in the world to migrate. High cost contributed to poverty reduction skilled jobs. Most migrants go to a increases debt burden among in Bangladesh. But the high cost of handful of destination countries. migrants, which reduces the benefits migration can exclude the poor from Bangladesh needs to have stable from migration. Malpractice is also migrating and lower the poverty and regular migrant labor flows rampant in recruitment. Bangladesh reduction impact even when they do. to a diversified set of destination needs to lower recruitment costs and Bangladesh needs to find a way to countries and occupations. make migration less exploitative. make migration accessible to the poor and to increase the poverty reduction impact of remittances. THE BANGLADESH-MALAYSIA G2G PROGRAM In 2012, the governments of Malaysia and Bangladesh program ground to a halt, mostly for not including the private signed a Memorandum of Understanding to recruit about recruitment sector, before the intermediation was applied to all 30,000 male workers, to be deployed in three phases, and winners. By 2018, about 10,000 lottery winners had migrated, to be intermediated completely through a government-to- most of whom were winners of phase 1. In 2018, five years government (G2G) mechanism. The workers would work in the after the lotteries had begun, a World Bank study1 followed-up palm-oil sector in Malaysia. In early 2013, Bangladesh’s Bureau with a sample of winners and losers of the lotteries in Dhaka, of Manpower, Employment, and Training (BMET) started the Mymensingh, and Chittagong divisions. Surveys were conducted nationwide registration of interested applicants and received with 3,512 applicants (or their families when the applicants were an overwhelming response from 1.43 million applicants. Two absent). By the time of the surveys, 76 percent of the phase 1 randomized lotteries were conducted, the first to select 36,000 lottery winners had migrated, compared to 29 percent of phase 2 winners and the second to classify them into phases 1, 2, and 3 for and phase 3 winners and 19 percent of the lottery losers, most of deployment. Intermediation for phase 1 began promptly. But the whom migrated on their own. COMPARING MIGRANTS’ EXPERIENCE UNDER THE G2G PROGRAM AND PRIVATE CHANNELS The World Bank study compared the experience of migrants in through arrangements initiated by the social network of family, the G2G program with that of migrants leaving through private relatives, and friends. Those without such a network are less channels. As seen in Figure 1: likely to successfully migrate abroad. Among private channel migrants, 45 percent knew someone in the destination country. ●● The G2G program was better at providing access to migration The rate was only 7 percent for G2G migrants. opportunities to those without social network contacts abroad. Overall, a quarter of the migration from Bangladesh happens ●● The G2G program made migration more affordable. Overall, migrants from Bangladesh pay an average of around BDT Differences in pre-migration experiences 390,000 to migrate. With the G2G program, migrants paid Figure 1 only BDT 45,000. The lower cost made migration more between G2G and non-G2G migrants affordable to poorer migrants. −0.267 Family/relatives in destination ●● The G2G resulted in a lower debt burden among migrants. −0.107 Migrants typically borrow to migrate, with almost a third Friends in destination borrowing from moneylenders at high interest rates. The −343 Migration cost, ’000 Taka G2G program reduced borrowing by 16 percentage points −0.161 (19 percent) and the average amount borrowed by BDT Borrowed for migration 136,000 (72 percent), and lowered average interest rates by 6 −136 percentage points (40 percent). Amount borrowed, ’000 Taka −5.96 ●● Due to reduced cost and debt burden, the study estimates that Interest rate net earnings from a three-year migration, after deducting the 0.154 Had a contract cost and interest payment, are 87 percent higher under the G2G 0.161 program compared to private channels. For a two-year migration, Permit from BMET net earnings from private channel migration are similar to the 0.133 Any insurance earnings they could have in Bangladesh. 16.0 Duration (months) of migration ●● The G2G program ensured uptake of better orientation, −1.42 training, and more appropriate social protection before Wait time (weeks) for work migrating. Compared to private channel migrants, −1. 5 −1 −. 5 0 .5 1 G2Gmigrants were more likely to migrate with necessary clearances, training, orientation, employment contracts,and Note: Figure shows the impact of G2G intermediation on outcomes indicated in the vertical axis. Sample limited to migrants only. Each point shows the impact in standard-deviation proper insurance. They were also likely to start work earlier units. The labels next to the point represent the (non-standardized) impact of migration. For instance, G2G migrants were 16.1 percentage points less likely to have borrowed for upon arrival and have contracts that allow for extensions. migration compared to non-G2G migrants. The bars show 95 percent confidence intervals. Figure 2 Impact of government intermediated low-skilled migration on selected outcomes 211% Monthly earnings of migrant 195% Total household income 22% HH consumption per-capita −0.178 Poverty rate ($5.50 per day) 0.042 Bought real estate 28% Value of house −0.095 HH has outstanding loans −0.055 Note: Figure shows the impact of HH split since 2013 migration on outcomes indicated −0.057 in the vertical axis. Each point Applicant married since lottery shows the impact of migration on 0.495 the outcome in standard-deviation Female decisionmaking index units. The labels next to the point −0.119 represent the (non-standardized) HH has non-farm business impact of migration. The bars show 95 percent confidence intervals. −.5 0 .5 1 1.5 HH = household. THE OVERALL IMPACTS OF G2G MIGRATION In addition to comparing G2G migration with migration ●● increases investments in the human capital of children, intermediated by private channels, the study assesses the but lowers household entrepreneurial activities. Migration absolute impact of G2G migration on migrants and their families. increases educational expenditures on children, particularly The impact of migration measured by the study represents the on girls, by 20 percent. However, the absence of migrants combined effects of government intermediation and access to – who tend to be more entrepreneurial – lowers household employment abroad. investments in entrepreneurial activities. There are some indications that once the migrants return, such investments As seen in Figure 2, G2G migration: are likely to increase. ●● leads to substantial income gains for migrants, which in turn increases household income and living standards. Migration increases migrants’ income by about three times and doubles their household income, mostly through increased remittances. Consequently, household consumption per-capita increases by 22 percent. The household lives in a better home and is more likely to have purchased land. Poverty, measured at higher poverty lines, falls drastically. ●● reduces indebtedness and increases financial security. Though migrants borrowed to migrate, they have paid back their loans. Households of migrants are 10 percentage points less likely to have outstanding loans, putting them in more secure financial condition, with better access to funds in case of need. Photo courtesy to IOM. ●● empowers women. Migration of male members increases the role of women in the households. They are more likely to be a household head and have a greater role in household decision-making. POLICY RECOMMENDATIONS The study demonstrates the large benefits of low-cost temporary international migration for low-skilled work. This highlights the important role that the Government of Bangladesh has to play to increase access to such opportunities, make it more affordable and accessible, and make it an effective tool for poverty reduction. To achieve this, the government needs to: i. Increase access to migration ii. Lower the cost of temporary iii. Offer affordable financing options, opportunities for more people international migration. The gains in combination with lower costs, for through bilateral agreements from migration estimated in the the poor, who are likely to benefit with more countries and in more study resulted from the lower costs the most from migration. Migration occupations. Successful agreements of migration under the G2G program. costs, even under a government are likely to be those that are To ensure such gains from migration, intermediated program, might also beneficial to the destination the government needs to take still be a barrier for the poor. countries. Targeting occupations active steps in lowering the costs. Introducing affordable financing in the destination countries where Further studies on various ways to options, including options where poor the local supply of labor is scarce lower costs, including learning from migrants pay from their earnings and where the demand for certain international experiences, will be abroad, can improve their access services is increasing would be essential to identify the right mix of to migration opportunities. Such an effective way to increase policy options that suits the current financing schemes, when combined the migration of workers from context. Government and civil with lower costs as well as other Bangladesh. society/ NGO-provided recruitment services to the migrants and their alternatives – possibly targeted families, can drastically improve to specific populations – alongside the poverty reduction potential of robust and well-regulated private international migration. recruitment, could potentially be effective in achieving the objective. REFERENCES 1 Shrestha, M., Mobarak, A. M., & Sharif, I. (2019). Migration and Remittances: The impacts of a government  intermediated international migration program. World Bank. Cover photo © Trinn Suwannapha/World Bank KWPF KOREA-WORLD BANK PARTNERSHIP FACILITY