Azhar Khan, senior migrant researcher for the Arab States at the International Labor Organization said the remittances sent home are immensely valuable to the families that are left behind.
“Remittances constitute the single largest source of income for those left behind,” Khan told The Media Line. “They are really big. They play a major role in the households,” he said.
“India is by far the largest recipient. They receive some $20 billion (annually),” he said, qualifying that the number is only an estimate.
Khan also explained the reason why people leave their native countries.
“It is related to the development of their own countries. They can’t get a job and they need an income and here is an opportunity to earn some money to send home,” Khan said.
Anjalika Bardalai, an India expert with the Economist Intelligence Unit said that remittances are not only important on the micro level but also on the macro economic level.
“Remittances are an important source of economic support in that they boost private consumption, which is the largest component of the economy,” she told The Media Line “for example, both India and Pakistan.
“In 2009, workers’ remittances to Pakistan totaled $8.7 billion,” Bardalai said. “Within this total, remittances from Saudi Arabia were $1.7 billion; from the UAE, $2 billion; and from other Gulf Cooperation Council countries, $1.2 billion,” she said.
“So remittances from the Middle East comprised more than half of the total,” she said. “These data are from the State Bank of Pakistan and do not even capture the full picture, because not all remittances go through official channels.”
“They also bolster a country’s current account position; for example, according to our Bangladesh analyst, Fung Siu, Bangladesh runs a current account surplus solely because the transfers surplus, driven by remittances, is so substantial,” Bardalai added.
“(Siu) estimates that remittances are equivalent to about 10 percent of Bangladesh’s Gross Domestic Product,” she said.
The population of the United Arab Emirates is 8.1 million. The Indian embassy in the United Arab Emirates estimates that about 33 percent of the total population and over 50 percent of the work force in the United Arab Emirates are Indians.
The majority of expatriates from the Indian subcontinent who have migrated to the Gulf to seek work are employed in the construction sector, which became a major part of the Gulf economy as it started to diversify the economy away from a dependence on oil.
UAE was the first of the Gulf nations to invest heavily in real estate to both house the increasing number of expatriates who had arrived to fuel the growing local economy and to turn the country into a global tourism destination.
A significant number of expatriates are also working in the financial sector or are involved in logistics such as transport or trade.
