Gulf revisited economic consequences of emigration from Kerala : emigration and unemployment

This Working Paper is about Videsha Malayalikal, or Non-Resident Keralites (NRKs). It provides the size, trend, geographical distribution, socio-economic composition of migrants, and remittances sent back by the migrants. The situation with respect to migration in 2004 is compared with that in 1999. The main focus of the study is, however, the analysis of the social and economic consequences of emigration on Kerala society. What have been the macroeconomic consequences of emigration? What are its impacts on human resources development, employment, unemployment and household consumption patterns? To what extent has the large-scale emigration from the state been beneficial to the Kerala society? Has emigration been a factor in Kerala's high unemployment rate? During the five-year period 1999-04, the number of emigrants increased from 13.6 lakh to 18.4 lakh, and the number of Non-Resident Keralites (emigrants plus return emigrants) increased from 21.0 lakh to 27.3 lakh. The Gulf region has not been the only, although still a very dominant, destination of Kerala emigrants of 2004; Kerala emigrants have spread their wings over a larger number of countries during 1999- 04, including countries in Europe, America and South East Asia. Within the Gulf region itself, significant realignments have taken place. Saudi Arabia has lost some of its charm and United Arab Emirates has emerged, as the preferred destination. Remittances to Kerala from abroad increased from Rs 13.65 thousand crore in 1999 to Rs 18.46 thousand crore in 2004. As a result of remittances, the per capita state income in Kerala has increased by Rs 5,678. The increase has been, however, as much as Rs 10,654 in Thrissur district, Rs 7,681 in Pathanamthitta district and Rs 7677 in Malappuram district. Foreign remittances to the state have been 7 times of what the state received from the Government of India as budget support, 15 times the receipts from cashew export, and 19 times the receipt from marine export. They have formed 1.8 times the annual budget of the state. However, the proportion of remittances to State Domestic Product has shown a slight decrease from 25 percent in 1999 to 22 percent in 2004. * * * * * * The KMS had emphasized the beneficial effects of emigration, on per capita income, education, employment, housing, household amenities and consumer durables. In the early stages of Kerala emigration, the beneficial effects over-shadowed the adverse effects. Now that Kerala emigration has come of age, secondary effects, which are not so beneficial, are beginning to appear. In this study, we have emphasized the emerging negative impacts of emigration more than the positive impacts. The first and the foremost among the negative impacts has been on the unemployment rate. The paper gives an unorthodox view of the relationship between emigration and unemployment. A point of view, which this study puts forth is that emigration is a causative factor in the high unemployment rate prevailing in the state. An equally important "adverse" consequence is the emergence of "replacement migration". Emigrants from Kerala have converted Kerala itself into a "Gulf" for many a migrant worker from other states in India. By accepting low wages and poor living conditions, these outside workers are taking away a lot of work, which otherwise could have gone to Kerala workers. Replacement migration is a consequence of emigration, and is having significant effect on unemployment and wage rates in Kerala. It is nullifying some of the potentially positive spin-off effects of emigration. The greatly increased disposable income in the Kerala households had its effect on the consumption pattern in the state. Higher levels of consumption, however, have not helped industrialization in Kerala, as most of the goods Kerala consumes come from outside the state. The potential spin-off effects of remittances on employment are benefiting workers outside Kerala more than workers in Kerala. Consumerism is draining the state of the development potential of its remittance receipts. It is leading many a Kerala family to financial ruin and even to suicide. Consumerism, brought about by emigration, has gone amok in the state with minimum positive impact on its employment situation. The increasing economic and political clout of the "new rich", who became rich because of emigration and the Gulf connection, is creating a climate of resentment against them among some communities in Kerala. The Chief Minister of Kerala was being accused of antiminority mentality for his alleged observation that minority communities were cornering undue benefits using their newly acquired wealth power and high level connections, both being the consequences of emigration. This study has shown that minority communities have undoubtedly benefited much more than the majority community have, from emigration. Justified or not, such expression of resentment against the "new rich" of the minority communities by the "old rich" is another of the adverse effects of emigration. * * * * * * Five years ago we thought that Kerala's Gulf connection was a passing phase in its history. Today we think otherwise. Not only has Gulf emigration become well entrenched, some of the second-generation emigrants are settling in the host country on a permanent basis too*, and others are spreading their wings to a much wider spectrum of countries. Migration is here to stay for a long time to come. The process of demographic contraction at work in Kerala would be the only major obstacle for Kerala emigration to take off to higher orbits. It is important that Kerala takes policy measures to see that emigration is kept at a sustainable level, and too much of its brain power is not drained off to other countries, and too much of its remittances are not drained off to other states. A policy for moderating brain drain and better and more productive utilization of remittances for Kerala's development is essential. One way to do this is through educational reforms, taking into consideration the emerging remittances-induced job opportunities in the state. Not that emigration and remittances are not creating new job opportunities; there exists, however, considerable mismatch between skill requirements for these jobs and skill availability among the new crop of SSLC holders and plus two graduates. Ways and means should be found to bridge this gap. At this stage of Kerala's Gulf connection, there is every justification for exposing our youngsters more to the Gulf countries. There is every justification for introducing Gulf studies in our schools and colleges. Today we can make out a strong case for our students to learn much more about Gulf geography, Gulf history, Gulf politics and Gulf language. Taking into consideration the emerging wide-spread impact of replacement migration on Kerala's employment sector, especially on unemployment and wage rates, we urge that a high level research on the magnitude and characteristics of replacement migration in the state be undertaken on an urgent basis. This has to be a major project in view of its importance and technical requirements. In the KMS, we suggested that, migration has become so important a development factor that, Kerala should develop a formal migrationmonitoring system. We now argue that Kerala should have an institute of its own to monitor migration and its impact on Kerala society, a Migration Monitoring Institute. How important that migration is carefully monitored and researched in Kerala? To realize the importance, compare the magnitude of remittances in 2003 with the total Kerala Government expenditure in 2003. Key Words: International Migration, Remittances, Kerala JEL Classification: J21, J23