Impact of Workers' Remittances from the Middle East on Pakistan's Economy: Some Selected Issues

Over the last decade, the phenomenon of overseas migration from Pakistan to the countries of the Middle East and North Africal has had a far reaching impact on the domestic economy. Indeed, no factor has more dramatically affected the domestic employment situation and the balance~f-payments position as the outflow of contract workers and inflow of workers' remittances from those countries. According to the Sixth Plan, as much as one-third of the increase in the labour force during the years 1978-83, i.e. the Fifth Plan period, was absorbed by migration to the Middle East [14, p. 499]. At its peak in 1982-83, official flow of remittances from the Middle-East was equivalent to 70 percent of the country's total exports of goods and non-factor services (Table 1). More recently, the slowing down in economic activity in the major labour-receiving countries together with increased competition from other labour-exporting countries has led to a decline in the outflow of migrant workers, and, with the quickening pace of return migration, there is a decline in the stock of Pakistani workers in these countries? This has put considerable pressure on the domestic employment situation. While remittances from the Middle East countries have also declined after reaching a peak in 1982-83, the absolute decline has not been substantial, although there is still considerable apprehension about the volume of the remittances in future years.