29 June 2020 08:30 am
Income from migrant workers recorded a rebound from the depths it hit in April—may be an indication that the worst is over for the country’s largest source of foreign currency earnings— with work gradually returning to normalcy amid easing of lockdowns and lifting of restrictions on businesses and human movement.
Sri Lanka received US$ 431.8 million in remittances in May, rebounding from US$ 375 million in April as the pandemic forced factories and other commercial establishments to close and more than a third of the global population to hunker down to stem the spread of the virus that originated from China.
However, during the same month in 2019, Sri Lanka received US$ 562.1 million in remittance income, reflecting how far behind the present numbers stand compared to a year ago.
Sri Lanka annually receives close to US$ 7 billion in worker remittances, which makes up for much of the hole in the merchandise trade account and sooths the overall balance
of payment.
But analysts have projected the pandemic’s hit on the sector could be between 10 to 20 percent in 2020.
The Word Bank estimated the pandemic to erase as much as 19 percent of the regular remittance income to end the year with US$ 5.4 billion. The country in 2019 received US$ 6.7 billion from Sri Lankan workers abroad.
The cumulative decline in worker remittance during the first five months was 11.9 percent to US$ 2.4 billion compared to US$ 2.7 billion in the corresponding period
last year.
Irrespective of the extent to which the remittance income would dip in the current year, it could deal a severe blow to the country’s current account balance, particularly amid significant shortfall in tourism income—the second largest current account flow after remittance income.
Remittances and tourism earnings together account for US$ 10 billion in current account flows, which pretty much offset the nearly US$ 10 billion deficit annually created in the merchandise trade account.
As there is a segment of workers, who wants to return to Sri Lanka with the easing of border controls, some of them may not go back due to safety at home from the virus. The new departures seeking employment abroad could also come down in the short-term due to fears of contracting the decease.
Both factors could result in high level of unemployment leading to widespread social distress unless the government prioritises creating high-paying jobs in Sri Lanka pivoting its industrial policy.
As some of them may require training and re-training to suit the new sectors here, the government and the private sector will also be required to work together in making the country’s vocational and technical training sectors efficient and produce technicians and skilled workers equipped to run the new industries.