Can India’s international labour recruitment agencies bounce back from coronavirus-induced losses?

The prolonged lockdown and uncertainty around oil prices and growth prospects in the Gulf have hit India’s overseas labour recruiting agents, showed an investigation by India Migration Now, a Mumbai-based migration research organisation. These agencies facilitated over 90% of the overseas labour recruitment that took place through the government’s e-Migrate portal between 2010 and 2019. The industry has been idle for the past three months and agencies are struggling to pay salaries and rents.

India had 1,454 active registered agents recruiting workers for the international labour market as of July, as per the e-Migrate portal under the Ministry of External Affairs. During the Covid-19-induced lockdown, India Migration Now interviewed 11 agencies operating across major source states and representatives from key federations that oversee the interests of hundreds of individual agents. Most reported that their businesses have been disrupted by recent events.

“We see that 50% of recruiting agents in the industry are on the verge of shutting down and unable to make their payments,” said Deepak H Chhabria, chairperson of the Federation of Indian Emigrants Management Councils & Associations or FIMCA, a recruiting agents’ federation.

The Gulf Cooperation Council or GCC countries, where 65% of the non-resident Indian population lived, as per 2018 data, are a critical migration corridor. And in spite of Covid-19-related restrictions, upcoming major international events in Qatar and Dubai will open up new avenues of overseas employment, experts said.

Within just the construction sector, the Dubai Expo estimated that it would need 40,000 workers across 100 different sites. Qatar was estimated to need as many as 500,000 more workers for the infrastructural demands of the World Cup, according to a 2015 report by the International Trade Union Confederation. Construction activities had been impacted due to the lockdown and will have to revive as the event draws closer.

Other sectors such as hospitality, tourism and aviation too may need workers, given the footfall both the events are expected to generate. The re-skilling of India’s returned emigrants can also help revive overseas recruitment out of India, recruiting agents said.

Recruiting agents are often accused of unethical, corrupt and exploitative practices but this can also be an opportunity to rebuild migration systems to ensure that recruitment is made safe, regular and attentive to the rights of workers, said experts. Migrants sometimes choose irregular channels when regular ones are limited or involve long bureaucratic processes. Poorer, more vulnerable migrants may often find themselves paying higher amounts to migrate irregularly, according to research done in 2018 by the World Bank on migration costs.

“In India, registered complaints against those who take the regular channels [e-Migrate] are less than 1% of total deployments,” said Amit Saxena, the director of Ambe International, India’s oldest private recruiting firm. “Often, we are clubbed together with illegal operators who facilitate irregular channels where migrants get into trouble.”

Fall in working hours, job loss and forced temporary leave across the world have impacted the global workforce, with 93% living in countries with measures for workplace closure, the International Labour Organisation reported on June 30. India tops the list of nations that remit earnings – nearly $83 billion remitted in 2019 – according to the World Bank. But international remittances are now set to witness the “sharpest decline in recent history”, according to a World Bank update of April.

Agents are crucial

Between 2015 and 2018, recruitment from India to Emigration Check Required countries, which lack strict foreign recruitment laws and grievance redressals, had fallen by 56% – from 784,152 to 340,157, data from the e-Migrate portal show. ECR passport holders typically include those who have not completed matriculation and require clearance from the Protector of Emigrants before migrating for work.

Data on those who migrate to non-ECR countries and on passports that do not require a check are not available publicly. Although recruitment had increased by 8% in 2019, the pandemic has shut down activities almost entirely in the past few months with a ban on commercial international travel starting March 25.

“This entire situation has set our industry back by at least two-and-a-half years,” said a Hyderabad-based recruiting agent who did not wish to be named. “Even before lockdown, we saw the slowing down of job offers and interview calls, and now we have 50-60 aspirants whose visas are pending.”

The importance of promoting safe, regular migration – especially of workers – was emphasised in the Global Compact for Safe, Orderly and Regular Migration, formally adopted by the United Nations General Assembly in December 2018. This non-binding attempt at global migration governance highlights the importance of a multi-sectoral, multi-stakeholder approach and focuses on fair and ethical recruitment practices to be achieved through partnerships between employers, recruiters and sub-contractors in the labour supply chain. The need to include the recruiting industry as stakeholders in the policy conversation is also highlighted in the ILO’s Work in Freedom project, and the International Organisation for Migration’s International Recruitment Integrity System.

In the Indian context, the stakeholders, outside of migrant workers themselves, include recruiting agents, the government, foreign companies, embassies and NGOs. Despite their critical role, it was only in 2017 that recruiting agents were brought into the policymaking dialogue through a meeting moderated by the International Labour Organisation and the Federation of Indian Chambers of Commerce and Industry. A meeting organised by the ILO had also brought the industry together with the Ministry of External Affairs in April 2020 for a discussion on Indian workers abroad, according to industry representatives.

Although the government’s e-Migrate portal allows foreign employers to register themselves and recruit directly, between 2010 and 2019, 91% of recruitment activity happened through the agents, as we said earlier. These agents, who often operate through a chain of sub-agents, are responsible for fulfilling the recruitment needs of the foreign employers while complying with the legal MEA-instituted process for emigration. They also coordinate logistics such as interviews, emigration clearance, pre-departure orientation, and air ticket for the workers.

Recruiting agents are crucial for a number of reasons: They scope out international labour demand, negotiate with foreign companies, match skills to recruit the correct candidates, facilitate migration journeys, and continue to remain an important point of contact for workers at destination. Recognising their services, the MEA, in its 2017 amendment of the Emigration Act of 1983, set an upper limit of Rs 30,000 to be charged to the worker for the recruitment service to cover costs of scouting and selection, advertisement, attestation, and cost of domestic travel for interviews.

Nationalised workforce

Migration plans have stalled and far fewer people than usual migrated in March and April across prominent Asian origin countries, according to an ILO policy brief of June. “The first phase of the Covid-19 turmoil led to several lakh candidates coming back to India in a reverse migration,” said Saxena of Ambe International. “The second phase of this lockdown will take many months to wind down and will involve a trickle of candidates heading back to the Middle East. Rehiring based on actual economic growth and new projects could be several months or years away.”

Future recruitment may also be affected as many destination countries are taking steps towards nationalising the workforce, according to Indian Personnel Export Promotion Council, an association of 400 recruiting agents. Kuwait’s new expatriate quota bill proposes to limit Indians to 15% of the population, a move which may impact 800,000 Indians already living and working there. “Business has been shut for most of 2020 and this may continue for the rest of the year. Agencies are facing issues of cash-flow,” said Safwan Yusuf Shaikh, head of the IT cell at the Indian Personnel Export Promotion Council.

Some recovery is expected with events such as the Qatar World Cup in 2022, said an agent based out of Saran, Bihar. Another agent, based out of Darbhanga, however, was more pessimistic about the future of Gulf migration. Bihar, a prominent migrant source state, sends people to other Indian states as well as outside the country to the GCC.

Although a 3% contraction in the world economy is predicted, the impact on oil-exporting Gulf economies is likely to be worse, the International Monetary Fund had estimated in April. Hit by the Covid-19-induced-lockdown, falling oil prices, and flight of their migrant labourers, the IMF’s estimation for expected contraction in the oil exporting countries, which includes all the GCC nations, has increased from 3.9% in April to 7.6% as of June.

What can be done

Recruiting agencies are registered with the MEA and submit a bank guarantee for Rs 50 lakh after the 2017 amendment to the Emigration Act Rules 1983. A majority are registered in metro cities such as Mumbai, Delhi, and Hyderabad although many important source states for emigrants such as Uttar Pradesh, Bihar, Telangana, and Kerala also have agents operating at the district level. A recent notification expanded the network by allowing small-scale agencies to register with a Rs-8-lakh bank guarantee for recruitment of 100 workers during the registration period. The recruitment process of the e-Migrate portal is said to have inhibited migration from India to the Gulf in recent years, due to being time-consuming and red-tape-ridden.

To ease the severe liquidity crunch they are dealing with, the government should release the bank guarantees that recruiting agents submit upon registration, the Federation of Indian Emigrants Management Councils & Associations recommended. “Instead of the bank guarantees, recruiting agents should be asked to provide a credit insurance policy of equivalent amount, covering all the provisions of the Act; this will help the industry survive right now,” said Alijan Rajan, a FIMCA director, who also runs Vira International, a Mumbai-based recruiting agency. Similar liquidity issues are plaguing internal migration labour intermediaries in India’s construction industry, IndiaSpend reported on June 3.

Grievances of workers emerge in cases where personal emergencies or mistreatment force them to return and they end up filing grievances against the RA, said Saxena of Ambe International. An insurance policy would ensure that the worker is taken care of if these things happen, without an acrimonious grievance conflict between them and the RA, according to Saxena.

A new Draft Emigration Bill is in the works, and although an improvement on its earlier counterpart in many ways, it is focused on management of emigration flows and has several key exclusions, according to a 2019 commentary in the Economic and Political Weekly. This new Bill does move to recognise and register the sub-agents in the labour supply chain who have, till now, escaped scrutiny. However, it holds the recruiting agent accountable in cases of misdemeanour by the sub-agent and this could impact the rebuilding of ethical international migration corridors. It seeks to bring under its ambit the placement or counselling of students into education programmes overseas. This is a booming sector and there are many complaints from students who are stranded in difficult situations due to non-regulated intermediaries, said Saxena.

Since April, the MEA has launched a mammoth repatriation exercise, Vande Bharat. Covering 12 countries and over 60 flights in the first phase between May 7-15, the fourth phase began on July 4. A petition in the Supreme Court sought to use the MEA’s Indian Community Welfare Fund to pay for the passage of those who cannot afford it, but was dismissed in June. Many companies were also attempting to charter private planes to fly their employees home and from May 5, India was accepting them, although those migrants who are unemployed, or whose companies cannot afford to charter planes, cannot return through this method.

Broken contracts

Survival of the recruitment industry and survival of those returnees who are in dire financial straits are most important over the next few months, said industry representatives. In the medium term, the broken contracts and the difficult circumstances of return would prompt a string of grievances against the agencies, recruiting agents said during interviews in April 2020. Changing laws in the Gulf countries, such as the UAE’s Ministerial Decree 279 of 2020, have allowed companies to renege on existing contracts and fire or force workers on unpaid leave. However, given the unprecedented nature of the situation, agents should not be held liable, said industry members.

“Many overseas companies are winding up and not able to pay dues to the employees, which is a force majeure situation,” said FIMCA in a statement. “Any grievances filed by returning emigrants as a consequence of the pandemic cannot be considered a complaint against the agent.” Since those returning in distress need support, a loan of up to Rs 5 lakh for rehabilitation and reintegration should be considered by state governments, it said. Inclusion of a force majeure clause in the Draft Emigration Bill to account for extraordinary situations requiring repatriation is important, said Shaikh of IPEPCIL.

Returnees are likely to face reintegration issues in the coming months – income loss and future employment are sources for worry, our interviews with return emigrants in Telangana and Andhra Pradesh in May 2020 showed. Few states in India have comprehensive reintegration policies for return emigrants. Kerala’s Non-Resident Keralite Affairs Department runs a number of schemes for upskilling, entrepreneurship, and social security for their returnees, and similar government-run organisations exist in Telangana and Andhra Pradesh for the non-resident populations.

However, important source states such as Uttar Pradesh, Bihar, and Rajasthan lack the necessary infrastructure and are also dealing with large numbers of returning migrants from within India. In 2019, UP, Bihar and Rajasthan accounted for 66% of the top 50 emigrating districts, and about 70% of total emigrant workers from the top 50 districts, according to data from the e-Migrate portal.

New sectors to explore

Upcoming high profile events such as the Dubai Expo and the Qatar World Cup may generate demand for labour in related sectors such as construction and hospitality, as we mentioned earlier. A resurgence in oil and gas is also expected in the latter half of 2020, according to this assessment published by Ambe International.

The position of the GCC countries as a partner for commercial and business interests for India is also likely to change, according to an April 2020 report of the Observer Research Foundation. Remittances will be hit as will GCC investments in India and existing business relationships, according to the report. However, in a corridor as historic and sizable as the India-GCC one, returnees may not give up on their dreams to re-migrate.

New corridors in Europe, Australia, and Japan also need to be explored, said experts. Sectors such as healthcare, essential facilities management, and high-skill IT/ITES will see some demand in the coming times, said industry representatives. “Instead of jobs like welding, we should focus on new age occupations such as packing labour, cleaners, hygiene operators, and housekeeping,” said Shailendra Nigam, a FIMCA director, and the managing director of Sinclus Group of Companies, a major recruiting agent.

“Unless we adapt, we will lose out – especially in states such as Andhra Pradesh, Telangana, UP, Bihar where workers are mostly of the semi-skilled category”. Skilling centres for aspiring migrants were set up in 2017 by the MEA and the National Skill Development Corporation to take advantage of growing sectors in the ECR countries.

This article first appeared on IndiaSpend, a data-driven and public-interest journalism non-profit.