Quick Take

Thoughts from Bangladesh and India: Corporate Practices Inflate Recruitment Fees for Low-Wage Migrant Workers

David Segall

September 22, 2016

The Center for Business and Human Rights recently completed a research mission to Bangladesh and India focused on the recruitment of migrant construction workers bound for nations in the Arabian Gulf region.

These migrants leave their home countries hoping to earn more money overseas than they otherwise could and to make better lives for themselves and their families. Recent media and civil society reports, however, demonstrate that once these migrants arrive in the Gulf, they face numerous difficulties. But mistreatment of these workers often begins even before they leave their home countries, in the form of high fees they often must pay to registered Recruiting Agents (RAs) or to local sub-agents these RAs rely on.

The recruitment industries in both Bangladesh and India are complex. The Center looks forward to more comprehensively sharing our research on the subject, but two early findings are particularly illustrative of larger issues at play and point to the need for companies operating in the Gulf to take a hard look at ways in which their own policies might contribute to cycles of debt entered into by many migrant workers:

1. The high cost of migration in places like Bangladesh can be traced to dealings and agents in both source and destination countries. Critics of recruitment systems in South Asian migrant-sending countries often point to a multitude of middle-men in these countries profiting off of the migration enterprise. While a proliferation of such actors no doubt plays a significant part in inflating the fee amounts that prospective migrants pay in order to secure visas for places like the Gulf, there are also networks of agents in the Gulf itself who contribute equally – or more so – to this inflation.

In Bangladesh, we met RAs who consistently noted that dalals (brokers/agents) in places like Qatar and Oman, who are commissioned by corporate representatives to secure workers, might themselves charge up to BDT 400,000 (almost U.S. $5,000) to the first point-of-contact in Bangladesh for the right to auction a visa to other RAs. While each subsequent agent and sub-agent contributes to further markups of the eventual visa “price,” this initial “sale,” which occurs even before the visa arrives in a place like Bangladesh, may account for a huge chunk of the eventual cost borne by the migrant who receives it.

2. Corporate practices may be forcing unskilled migrant workers to effectively subsidize the migration of skilled workers. As in all countries, semi-skilled and skilled workers and professionals in Bangladesh and India tend to be more educated and prosperous than unskilled workers. Moreover, their skills, especially in the engineering world, are highly sought-after, both in their home countries and abroad.

As a result, these individuals are less likely t o accept opportunities abroad that require the payment of fees to RAs or local sub-agents. Recruiters understand this and usually lower – or refrain altogether from charging – fees to skilled prospective migrants.

At the same time, while companies in regions like the Gulf are more likely to pay fees to RAs for the recruitment of skilled workers than for unskilled workers, these companies exercise tremendous leverage over RAs, who operate in a crowded space characterized by cutthroat competition. RAs are therefore often willing to take pay cuts (or accept no payment at all) for the sake of securing business, especially when it comes to low-skilled workers.

In order to cover costs and stay in business, then, RAs and local sub-agents need to draw funding from somewhere. RAs cover their costs and turn a profit by charging fees to low-skilled migrants. These workers, who often cannot afford such fees without borrowing large sums of money or taking out high-interest loans, are therefore effectively paying for their own recruitment and the recruitment of their higher-skilled compatriots.

If construction companies and other employers of low-wage workers are not paying fees of fair-market value to their Recruiting Agents in South Asia, or if they are not tightly controlling their human resources and visa processes on the home front, they run the risk of complicity in a phenomenon that their executives should be keen to eradicate.