KERALA REMITTANCE ECONOMY: BURSTING BUBBLE ?
The Kerala economy is dominated by the service industry. Kerala leads over several other Indian states and territories in terms of per capita GDP and economic productivity. In terms of HDI, Kerala's record is by far the best in India (The 2011 census shows the state's HDI to be 0.920, which is higher than that of most developed countries). Kerala's low GDP and productivity figures juxtaposed with higher development figures than in most Indian states is often dubbed the "Kerala Phenomenon" or the "Kerala Model" of development by economists, political scientists, and sociologists. This phenomenon arises mainly from Kerala's land reforms, social upliftment of entire communities and reforms introduced by the communist party which had held its sway over the state for a long period of time. Some describe Kerala's economy as a "democratic socialist welfare state". Others use the term "Money Order Economy". While Kerala's economic progress is above the national average, relatively few major corporations and manufacturing units are based out of Kerala. Unemployment recently dropped from 19.1% in 2003 to 9.4% in 2007 & a mere 4.2% in 2011. Underemployment, low employability of youths, and a 13.5% female participation rate are chronic issues. One major cause for concern is that the Kerala government is running one of the highest deficits in India. In this state of 32 million, one out of six employed Keralites, or around 30 lakh people from the state, work abroad mainly in Persian Gulf, the result of a migration that started with the Kerala Gulf boom, when Malayalees began migrating to the GCC (Gulf Cooperation Council) countries for livelihood in the 1970s. As of 2008, The Gulf countries altogether had a Keralite population of more than 2.5 million, who sent home a sum of US$ 9.25 billion (approximately INR 46.24 Crores) annually. Even now, Kerala's state economy is dependent on NRI remittances that crossed the INR 50,000 Crores mark in 2011 and touched an all time high of INR 58,000 Crores in 2012. Foreign remittances augment the state’s economic output by nearly 25 percent. To put it in the words of academician and scholar S Irudaya Rajan, "Remittances from global capitalism are carrying the whole Kerala economy". Keralites working in the Gulf, as a class are today facing a crisis of status — and of survival. Some 30~40 years ago, it was a matter of pride for malayalee families to say that they had some Persian connections (the word Gulf was yet to enter the ubiquitous vocabulary at that time). Men working in the Gulf then were in high demand in the marriage market at home. Half the Malayalam movies released between then and now had stories directly related with migration to the Gulf. However, pictures, videos and reports that flooded the media during the Gulf War I showcasing the conditions the majority of the Malayalee migrants to the Gulf were working and living in changed the perception: Insecure jobs, low salaries, contractual terms equivalent to those of slavery, sardine-canlike labor camps, filthy toilets, long queues in the morning for water being brought by corrupt tanker drivers preying on them ... That picture of disgrace has only got worse since then. Luckily for those from Kerala, known for the several past decades as a money order- economy, and their families and relatives, the Gulf dreams did not end with the two Gulf Wars. In fact, there were people who had even bought star hotels in Kerala with money earned from the business of supplying chicken to US military camps in Saudi Arabia and Kuwait even while supporting Saddam Hussein. But that was not enough to save the Malayalee from the image problem despite the fact that a small minority has always been in the high-pay, secured-job category in the Gulf. The new circumstances in the Gulf have, however, generated a feeling that it is high time Malayalees ended the habit of viewing Arabia as the ‘Promised Land’. The legal machine designed to expel the (illegal) working class migrants has already been switched on in Saudi Arabia; Kuwait, Oman, Bahrain and even the UAE are priming their legal machineries with the goal of reducing the size of expatriate populations. It is called Nitaqat in Saudi Arabia, a program that seeks to ensure a minimum representation by natives in the country’s employment scenario, clearly a product of the fear of the rulers about backlash from the people in the context of the Arab Spring uprisings in the region. Many countries — like Yemen, Palestine, Vietnam, Philippines, Pakistan and Sri Lanka — are bound to feel the heat of this new trend, a direct result of the Arab Spring. However, there is no doubt that Kerala will be the worst hit, whose remittances from abroad (mainly Gulf) stand today at almost 31 percent of the State’s GDP, and 1.4 times more than the internal revenue income of the Government. Even a 10 per cent down-slide in these figures can have a catastrophic effect. But what are the governments in Thiruvananthapuram and New Delhi doing to address the issue? They can perforce do nothing to reverse the situation. But surely there are some things they can — and should — do to ensure the survival of the lakhs of people who could be coming back like refugees to their own land. Nitaqat works at many levels against the low-income expatriate community in Saudi Arabia. Associated initiatives by the Saudi Government, implemented through Labor Department officials and the Jawazat police (passport cops), are stringent in content and practice. Companies have to ensure eight to 30 percent (depending on the employee strength) representation by Saudi nationals in their workforces. There are specific guidelines on the pay package and other amenities required for nationals, which small companies will never be able to abide by. Migrants working under sponsors other than their original contractors will have no space to work and live in the kingdom. There is no dispute that all this is fair from the viewpoint of any nation and it is immensely clear as to who all will be hit by such norms. Searches for “illegal residents” started after March 27, the deadline set for complying with the Nitaqat norms, spreading panic through the migrant worker communities. The move, which included arrest, removal to deportation camps and expulsion, was to affect an estimated two million of the 6.5 million expatriates in Saudi Arabia. On April 6, Saudi Saudi Arabia’s King Abdullah bin Abdulaziz Al Saud announced a 3-month reprieve for all “illegal” expatriates to either legally regularize their residence permits or get out. It was by no means a gesture of generosity from the king. The Saudis had no other option as the large corporates executing government jobs on contract reiterated in no uncertain terms that works would not be completed in time if low-income migrant workers were rounded up and sent back. Also, there was immense pressure on the Saudis from the Government in Yemen, according to a manager with an infrastructure firm having government contracts worth millions of dollars in Riyadh. Politicians in India, however, have since taken credit for this reprieve, claiming that the relaxation was a result of India’s diplomatic efforts. The governments in Thiruvananthapuram and New Delhi, and the armchair researchers who depend largely on stock methodology surveys, are arguing that fears about the Gulf dream coming to an end in the context of the Nitaqat cleanup in Saudi Arabia seem to be grossly misplaced. They might be justified in their theory that Nitaqat hits only illegal immigrants in Saudi Arabia and that they are only a small portion of the immigrant community there. And insofar as Kerala is concerned, those who may have to return empty-handed in the changed circumstances might number up to a mere 1.75 lakh, while Saudi Arabia has over 5.75 lakh Malayalees. But they may be missing the larger picture, as no country in the Arabian Gulf would now be able to stay away from the job nationalization process, thanks to the strong message rippling forth these societies in the aftermath of the Arab Spring. Ordinary Gulf-dependent Keralites, who could recall how the war in Kuwait ravaged their lives in the early 1990s, would understand the gravity of the situation better than those sitting safe in the central and state governments here. Amidst reports that companies and even sections within the Government there were opposing the proposed employment nationalization plan, Kuwait’s Minister for Social Affairs and Labor Thikra al-Rashidi, on April 14, asserted that there would be no change in the plan to cut the size of migrant employees by 1,00,000 per year for the next 10 years in order to accommodate more and more natives in government and private sector jobs. A similar development is afoot in the UAE as well, where 40 per cent of Kerala’s total emigrants — officially, 2.28 million and over three million unofficially — work. An influential member of the Federal National Council of the UAE had on March 31 reiterated the country’s resolve to implement nationalization in the government job scene apart from the private sector. Bahrain, which has already borne the brunt of the Arab Spring, and Oman, which is yet to win over the minds of immigrants as a hospitable paymaster, are thinking along the same lines. One must view these developments in the background of what had happened just a few years ago when the ‘economic bubble’ of Dubai burst, pushing then Government there into near-bankruptcy. Ministers here had said the Dubai meltdown would not affect Keralites, but affect them it did, and close to 40,000 Keralites came back. According to some surveys done in 2011, the Gulf has been providing jobs to over two million Keralites. The UAE had 8,83,313 Keralites, while their number in Saudi Arabia was 5,74,739. Qatar was then the third Gulf country with the largest population of Malayalee migrants numbering 1,48,427. The number of Malayalees in Kuwait then was 1,27,782 while Bahrain had 1,01,556 Keralites. All this leads us to question whether governments here have any idea at all of how it would impact Kerala if 20 percent of these people have to return in the next five years ... Experts in migration studies aver that the age of Globalization is bound to be an age of cyclical migration. Workers — professional, skilled and unskilled — become eternal floaters, leaving one country when the opportunities end there for another in search of new assignments. And this did prove true when the Dubai economy buckled in 2009 leading to heavy job losses. A good portion of the affected were Keralites, but a large percentage of them opted not to return home and instead migrate to Abu Dhabi within the UAE, Saudi Arabia and Qatar, the new destinations for job-seekers from the Orient. But now, cleanup plans like Nitaqat would leave no room for cyclical migration. Semi-skilled and unskilled workers from places like Kerala cannot have the luxury of migrating to the US, Canada or countries in Europe. Their lives have to perforce revolve around the Gulf. But when all the governments in Arabia focus on nationalization of their job markets, where is the chance for country-to-country migration? The only option will is to go back home. So, are we ready to handle this influx and rehabilitate/re-integrate these returnees into our socio-economic paradigm? Assertions and announcements of rehabilitation and re-integration programs from governments abound, but only time can tell.