To the recent moves that the central government would deploy its own resources in covering remittances from international labor migrants, the AL government has announced that it will recruit international laborers alongside private recruitment agencies. The move is designed to result in lowering the individual and social costs of transacting with these private–often sordid, criminally so– recruitment firms.
The move brings to bear on labor contract negotiations the huge economies of scale that the government enjoys. As a result, the government wants to argue, the deadweight administrative costs of different competing and colluding private firms will decrease.
At the moment private firms charge many times the fees fixed by the government. This is partly because the market demand can clear that cost. Relatedly, the worker who wishes to find employment in Southeast Asia has precious other support structures to satisfy his desire or so construed, his need. Government intervention, in this regard, will spur on efficiency in the private market if the government is able to hire and manage international migrant laborers in a cost-restraining, effective way.
This problem and its solution seems more appropriate now, during the global financial and labor down-turn. Though the sheer number of Bangladeshis employed abroad has dropped precipitously, the demand for employment in other countries is still staggeringly high. And since remittances are a large source of government revenue, any efficiency that the government can generate through streamlined hiring and management practices will be useful for individual and social welfare.
The Daily Star’s reportage provides the statistics that help summarize both the problem at large and its putative solution:
“The unofficial statistics shows, private recruiting agencies are charging fees two to five times higher than the fees fixed by the government.”
“According to the Bureau of Manpower Employment and Training (BMET), the number of Bangladeshis gone abroad for jobs was 8.32 lakh in 2007, 8.75 lakh in 2008, and 4.75 lakh in 2009. In the first four months of this year the number was 1,34,787.” (One lakh is 100,000 units of some good)
Since remittances ring up as “$10 billion annually in the last three years” the government is in the right to encourage schemes that encourage heavier, and more regular, efficient, remittance payments.
Indeed the the government has asked the interested parties within foreign missions to set about work orders for international migrant workers who will soon begin to seek work through government tutelage. If this massive scale move works, it will have generated efficiencies that will raise government revenue will decreasing transaction cost in the private recruitment market.
There are side benefits of course to this move. Many unlicensed recruiting firms swarmed into the market in the 1980’s when the demand for international employment took off into the stratosphere. Due to unsavory practices, many international workers found it necessary to switch from their contracted jobs to other, floating, legally non-sanctioned jobs. As a result of a growing number of these defaults, many host countries have sharply curtailed their practice of hiring Bangladeshi workers. The government move promises to help alleviate that source of tension in the government budget rolls, as well as within its diplomatic corps.
This is just another example of the central government flexing its muscles to reach a more efficient frontier of public and private economic activity. In announcing the move, the government should be applauded.
