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Economic Impact of the COVID-19 Pandemic on Sri Lankan Migrants in Qatar

Anoji Ekanayake | Published on October 1, 2020

As of 5 July 2020, Qatar has the second-highest number of Covid19 cases in the Gulf Corporation Council (GCC) region with almost 100,000 cases, and the highest per capita rate of Covid19 in the world. Even though extensive contact tracing and testing by the Government of Qatar have helped to keep the country’s fatality rate at a low 0.1%, the Qatar economy is severely affected by the pandemic, akin to other countries grappling with high numbers of Covid19 cases. The International Monetary Fund (IMF) projects that Qatar economy will contract by 4.3% in 2020, becoming one of the economies most affected by the pandemic in the Middle-East.

The spread of Covid19 in Qatar and the pandemic-led economic slump in the country have substantial financial implications for Sri Lanka. Qatar has been one of the top three destinations among Sri Lankan labour migrants in recent years with an average of approximately 64,000 Sri Lankans leaving for Qatar between 2010 and 2017. According to the Sri Lankan Embassy in Qatar, as of 2018, nearly 140,000 Sri Lankans resided in Qatar and this tiny Gulf nation is one of the top five countries from which remittances to Sri Lanka originate with USD 508.4 million being sent from Qatar to Sri Lanka in 2017. Therefore, the impact of Covid19 on Qatar has a direct bearing, not only on Sri Lankans in Qatar, but their families in Sri Lanka and the Sri Lankan economy at large, and this article attempts to address these economic implications.

The article is based on a rapid online survey conducted between 3 and 15 June 2020.1 The sample of the study included 101 Sri Lankan workers currently based in Qatar. This included 78 highly-skilled, nine skilled and 14 semi-skilled workers.2 Eighty-two per cent of the respondents were males, and 18% were females, and the average age of the respondents was 36. The majority of the respondents were married with families residing with them in Qatar (57.4%) or Sri Lanka (30.7%). The rest were either single, divorced or separated.

Financial issues faced by Sri Lankan workers in Qatar at the moment

Sixty-seven per cent of the respondents (N=97) stated that they currently face one or more financial issues as a result of Covid19 (Figure 1). Among them, the most common problem reported is pay cuts with nearly 50% of the respondents stating that their salaries have been slashed in the past few months. This is followed by loss of savings (24.7%), difficulty to repay loans (20.6%), delays in salary payments (19.6%), difficulty to send remittances to Sri Lanka (16.5%), difficulty to bear the rent (12.4%), loss of job (9.3%), loss of bonuses (9.3%), difficulty to pay for food and other expenses (9.3%), and loss of gratuity payments (2.1%).

There are considerable differences in the level and type of financial difficulties experienced across the skill levels. Whereas 39% of highly-skilled workers stated that they are yet to face any financial hardships due to the pandemic, only 11% of skilled workers and 14% of semi-skilled workers reported they have not yet encountered any financial pressures due to the pandemic (Figure 2).

Semi-skilled workers have experienced the most difficulties in sending remittances to Sri Lanka, paying off their debts and managing their food and other expenses due to the pandemic-led current economic situation. Compared to highly-skilled workers, a higher percentage of skilled and semi-skilled Sri Lankans in Qatar have experienced pay cuts, layoffs, losses in bonus payments and losses in savings due to the pandemic. On the other hand, a higher percentage of highly-skilled Sri Lankans in Qatar have experienced losses in gratuity payments and have faced difficulties in making rental payments than skilled and semi-skilled workers.

The higher percentage of semi-skilled workers experiencing difficulties in sending remittances could be because all in-person money exchange and transfer offices in Qatar were closed between 26 March to 11 May 2020 as part of measures undertaken by the Government of Qatar to contain the spread of Covid19. This is bound to have created difficulties for semi-skilled workers who unlike skilled and highly-skilled workers lack access and technological know-how to use online methods for remitting.

Compared to Sri Lankan highly-skilled and skilled workers in Qatar, semi-skilled workers tend to struggle more with debt repayments. In general, a higher percentage of semi-skilled workers than highly-skilled and skilled workers tend to obtain loans to finance their migration projects and migrate for the sole purpose of paying off debt. Moreover, some semi-skilled workers spend their initial months in Qatar paying off their debt which tends to be a substantial proportion of their salaries. Therefore, even small pay cuts and bonus losses could push them into a debt spiral, making it difficult for them to bear the living expenses in Qatar.

On the other hand, a higher percentage of highly-skilled Sri Lankans in Qatar have experienced losses in gratuity payments and have faced difficulties in making rental payments than skilled and semi-skilled workers. The higher rate of losses in gratuity payments experienced by highly-skilled workers could be because companies experiencing cash flow problems have delayed or temporarily cancelled gratuity payments for the highly-skilled as the amount that should be paid as gratuity for the highly-skilled tend to be far higher than the amount due for the skilled and the semi-skilled. The rental issues experienced by the highly-skilled could be due to the nature of rental agreements of accommodations where the highly-skilled workers tend to reside. Usually, highly-skilled workers in Qatar live in apartment complexes with binding contracts and hence might find it difficult to move out with short notice despite facing pay cuts and delays in payments. As low-skilled and skilled workers are usually either provided with accommodation by their companies or stay in places which are more flexible about moving out, they might not have experienced issues with rental payments as much as highly-skilled workers.

Financial issues anticipated by Sri Lankan workers in Qatar in the coming months

Sri Lankan workers in Qatar anticipate their financial situation could be worsened in the coming months due to the pandemic-led economic slump (Figure 3). As opposed to the 67% of respondents who currently face financial issues, 93% of respondents believe that they will encounter some form of financial difficulty in the near future due to the pandemic. Akin to the current situation, the most common financial issue anticipated in the coming months is pay cuts with 54% of respondents expecting reductions in their salaries in the coming months. The most substantial difference between the current and anticipated financial difficulties is for loss of gratuity payments with 22% of respondents believing that they could lose their gratuity in the coming months as opposed to the current 2% who have already lost their gratuity payments. This is followed by job losses, with 42% of respondents believing that they could lose their jobs in the coming months as opposed to nine per cent who have already lost their jobs. Also, being laid off is the most common financial issue anticipated in the near future after pay cuts. The other financial issues which are expected to turn for the worse by substantial percentages are loss of bonuses and delays in salary payments. Financial problems such as difficulty to repay loans, remit money to Sri Lanka and bear food and other expenses are also expected to turn for the worse, but only marginally.

As discussed above, pay cuts are the most common financial issue that Sri Lankan migrants in Qatar currently grapple with and anticipate to deal with in the coming months. Among the respondents who currently experience or anticipate a pay cut in the near future (N=63), 50% stated that the pay cut is between 11%-30% while nearly a one-fifth is not sure of the exact percentage of the pay cut even though they either currently face or expect there to be a reduction in their salaries in the coming months (Figure 4). Nine per cent experience or anticipate a pay cut of less than 10%, while another nine per cent face or expect a pay cut between 41%-50%. The pay cut for nearly eight per cent of respondents is or will be 31%-40%. Only five per cent of the respondents face or anticipate a pay cut above 50%.

Only a mere three per cent of those who are currently experiencing a pay cut or anticipate one in the coming months believe that their employers will pay back the deducted salaries. The majority (52%) do not think that they will receive the withheld salaries while 45% is not sure whether they will be compensated for when their companies bounce back post-pandemic.

Remittances to Sri Lanka

The majority (53%) of respondents (N=101) stated that they decreased the amount of money remitted to Sri Lanka in the past few months while 31% said that they did not make any changes to the amount of money sent to Sri Lanka (Figure 5). Only 16% of the respondents stated that they increased remittances to Sri Lanka. All those who increased their remittances to Sri Lanka are highly-skilled workers while skilled and semi-skilled workers either decreased or made no changes to the amount sent to Sri Lanka.

The main reason of those who have decreased the amount of money sent to Sri Lanka (N=54) is pay cuts (55.6%). This is followed by overall economic uncertainties created by the pandemic (38.9%), potential pay cuts (33.3%) and layoffs (24.1%) in the coming months. Temporary closure of money transfers offices (14.8%) and layoffs (9.3%) were among other reasons for decreasing the remittances to Sri Lanka.

On the other hand, the main reason of those who have increased remittances to (N=16) is to support friends and family members in Sri Lanka who are facing economic difficulties due to the pandemic (87.5%) followed by increasing the amount of savings due to potential layoff in the coming months (25%). Request by the Government of Sri Lanka from Sri Lankans overseas to make foreign currency deposits as a gesture of goodwill to address the issue of the country’s dwindling foreign reserves (12.5%), higher interest rates given by Sri Lankan banks on the onset of the lockdown (6.3%) and decrease in expenditure in Qatar due to remote working and restricted social lives (6.3%) were among other reasons for increasing remittances to Sri Lanka.

Future plans of Sri Lankan migrants in Qatar

Nearly 28% of respondents (N=101) are planning to permanently return to Sri Lanka in the near future, while 51% are yet to make a decision. Only 22% are sure that they will not return to Sri Lanka permanently in the coming months.

Of those who have made up their minds to return to Sri Lanka (N=28), only 29% stated that their return is unrelated to Covid19 (Figure 6). 58% had been planning to return for some time but decided to accelerate their plans due to the pandemic. 7% are returning as they fear that they will be infected with Covid19 if they continue to stay in Qatar, while 3.5% are returning as they have lost their jobs. Of those who have experienced layoffs or non-extension of contracts (N=9), only a third are planning to return to Sri Lanka while approximately 44% is planning to stay in Qatar and find another job.

Conclusion

A significant proportion of Sri Lankan migrant workers in Qatar face numerous financial challenges due to the spread of Covid19 in Qatar and the resultant economic slump. Among the various financial issues that these migrants have to deal with, pay cuts are the most common across all skill levels with nearly 50% of respondents reporting deductions from their salaries. Even though as of now, less than 10% of respondents have experienced job losses, this figure is bound to increase in the coming months as 42% of the respondents believe that they will be laid off in the near future. Across the skill levels, the semi-skilled workers are the most severely affected, with a significant percentage of semi-skilled workers already facing difficulties in making debt repayments and paying for their food and other basic needs.

Pay cuts, layoffs, the overall economic uncertainties created by the pandemic and the temporary closure of in-person money transfer services have led to a decrease in remittances sent to Sri Lanka in the past few months. Even though in-person money transfer services in Qatar are now open for the public, the decline in remittances is likely to persist if migrant workers face layoffs and pay cuts. Also, as more than a quarter of respondents are accelerating their plans of leaving Qatar, mostly due to pandemic-related reasons, the slump in remittances from Qatar to Sri Lanka could exacerbate in the coming months. This will negatively affect the dependents of these migrant workers in Sri Lanka and the Sri Lanka economy as a whole as Sri Lanka is a remittance driven economy.

Notes

1This article is based on a working paper by the authors. The comprehensive analysis will be available at a later date.

2 The skill levels of migrants are classified based on the International Standard Classification of Occupations (ISCO) of the International Labour Organisation (ILO).

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