How Bhutan’s dependence on Indian workers drains rupee

It’s fascinating to read that the swirl of economic trouble facing Bhutan right now has to do, in part, with dependence on Indian workers to do jobs Bhutanese don’t want to do: Namely, construction.

Not only are there parallels to our situation in the US with Mexican immigrants.  (Bhutanese often turn to outsiders for domestic help too, as they do in this country.) More pointedly is the tragic irony of the long-standing refugee situation surrounding Bhutan, in which people of Nepalese descent were pushed out of the country years ago.

Those people had come into the country years ago to work the land, and to help in the building of Bhutan’s infrastructure as it was started over forty years ago.  Many were granted land and citizenship; however, many others were not.

When Bhutan began free health care and schooling in the late eighties, and with the potential threat of a political uprising that would threaten the monarchy, the Nepalese were forced out.

Some readers have asked how to refer to those refugees.  Some were born in Bhutan.  Others were born in Nepal.  Coming up with a catch-all word to describe the people in camps who are now being resettled (largely in the US) is a challenge.  I faced this challenge last summer in Tucson when I first met some of the resettled people face to face.  And I write about it in the new afterward of Radio Shangri-La.

Anyway, here’s the article:

How Bhutan’s dependence on Indian workers drain rupee
Posted: 10 Apr 2012 09:33 AM PDT
The rupee crisis in the country has brought to light another side of Bhutan’s dependence on India. The country’s booming construction industry is heavily dependent on India for workers. Ministry of Labour and Human Resources recently reported that Bhutan is currently hiring 55,551 Indian workers. The wages paid to each one of them get converted into rupee.

Rupee spent on expatriate workers
According to the 2010 and 2011 annual report of Royal Monetary Authority (RMA), the huge expatriate labour force imported to work in the construction industry has been one of the major causes for rupee outflow. The report says that the worth of import of construction and installation-related services, mostly from India, increased to Nu 1.2 billion between 2010 and 2011.

Such services, related to the development and maintainance of major hydropower projects, constituted 22.9 percent of the total service imports for the fiscal year.

Meanwhile, the construction of new hydropower projects has also resulted in an increase in the import of other business services in engineering and other technical fields.

The overall deficit in other business services like accounting and architecture increased to Nu 800.5 million between 2010 and 2011.

The boom in hydropower, private construction and other such activities has increased the inflow of expatriate workers resulting in a huge increase in payments made to them. It amounted to Nu 2.2 billion in the 2010-2011 financial year, which is an increase of 75 percent from the previous year.

By the end of 2009-2010 financial year, the import of construction and installation-related services from India reached Nu 1 billion.

The services constituted 24.4 percent of total service imports. They were mostly imported for building and maintenance of Chukha and Punatsangchhu hydropower projects. Additionally, the deficit on other business services in line with the overall economic activity expanded to Nu 637.9 million.

Labour payment problems
After RMA, the Central Bank, tightened rupee withdrawals from the banks, some industries in the country have faced difficulties in paying their laborers.

A senior official at Tashi Group of Companies said that one of the problems the company is facing due to the rupee crunch is payment for contract labourers and contract employees from India.

Apart from some 10 percent of contract employees from India, Tashi Group employs around 40 labourers for packaging and loading, who want to be paid in rupee.

The construction industry, meanwhile, has been hit hard by the rupee crunch since it mostly depends on Indian labourers.

The general secretary of Construction Association of Bhutan, Cheku Drukpa, said the association will discuss the issue during the next round of meeting with Construction Development Board (CDB). “We have no other way of working on this but to take it up with the government through CDB,” he said.

The manager of Phuentshum Foreign Workers Recruitment Agent in Phuentsholing, Durga Raj Gurung, said that, since the rupee crisis started, it has been hard for them to supply the required number of labourers on time.

The agent supplies labourers from Falakata and Cooch Bihar in India. Contractors pay the agent in ngultrums, but Indian suppliers have to be paid in rupees.

Shortage of Bhutanese workers
In 2001, a survey done by the then Ministry of Trade and Industry in collaboration with Bhutan Chamber of Commerce and Industry, UNDP and World Bank showed shortage of skilled field workers as well as managers in the country. The survey covered 100 organisations in the private sector.

The survey pointed out that the main reasons for poor human resource development effort in those companies were lack of incentives from the government, foreign workers being recruited on contract, and availability of trained workers from neighbouring countries.

The 2010 human resource development report said that Bhutan’s dependence on foreign labourers was mainly because Bhutanese people did not want to do low skill, laborious jobs that are low paying.

According to a job prospecting exercise conducted by the labour ministry, by 2013, there will be a high demand for elementary occupations and craft and related trade workers. Elementary occupations mainly include skilled and unskilled labourers.

There will also be requirements for higher managerial posts, professionals and technicians with specific skill requirements. It has been estimated that between 2009 and 2013, Bhutan will need 16,359 workers in the construction sector – 15,163 men and 1,196 women.

Courtesy : Puskar Chhetri/Bhutan Observer

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