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R 211150Z MAY 08
FM AMEMBASSY COLOMBO
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RUEHNE/AMEMBASSY NEW DELHI 2042
RUEHKA/AMEMBASSY DHAKA 0901
RUEHIL/AMEMBASSY ISLAMABAD 7892
RUEHKT/AMEMBASSY KATHMANDU 6069
RUEHGP/AMEMBASSY SINGAPORE 5732
RUEHKL/AMEMBASSY KUALA LUMPUR 0350
RUEHUL/AMEMBASSY SEOUL 0821
RUEHRH/AMEMBASSY RIYADH 0312
RUEHAD/AMEMBASSY ABU DHABI 0461
RUEHKU/AMEMBASSY KUWAIT 0482
RUEHLB/AMEMBASSY BEIRUT 0042
RUEHDO/AMEMBASSY DOHA 0243
RUEHKP/AMCONSUL KARACHI 2349
RUEHCG/AMCONSUL CHENNAI 8500
RUEHGV/USMISSION GENEVA 2780
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC

UNCLAS SECTION 01 OF 03 COLOMBO 000491 
 
SENSITIVE 
 
SIPDIS 
 
DOL/ILAB FOR TINA MCCARTER 
STATE FOR SCA/INS SCA/RA, DRL/ILCSR, AND G/TIP 
 
E.O 12958: N/A 
TAGS: ELAB EFIN KWMN KCRM PGOV PHUM SOCI SMIG CE
SUBJECT: SRI LANKA REMITTANCES UP AGAIN IN 2007 
 
 
¶1.  (SBU) Summary:  Sri Lankan migrant worker remittances rose 15% 
to $2.5 billion in 2007.  Remittances are the second largest source 
of foreign exchange earnings to the country, after garment exports. 
Each year, over 200,000 Sri Lankans -- about one percent of the 
population -- leave to work abroad.  Women accounted for 53% of the 
2007 migrant labor flow, with housemaids the largest occupational 
category.  The government seeks to send more skilled male workers 
instead of female domestic workers, as stories of abuse of 
housemaids offend national pride.  But it will have a hard time 
meeting the president's goal of discontinuing sending housemaids 
abroad, both because of the country's dependence on remittances to 
shore up its balance of payments, and because of the basic supply 
and demand composition of the Sri Lankan and Middle Eastern labor 
markets.   End Summary. 
 
--------------------------- 
Strong Remittances Continue 
--------------------------- 
 
¶2.  (SBU) According to the Central Bank, Sri Lanka's official 
remittances increased by 15%, from $2.3 to $2.5 billion, in 2007, 
continuing a strong growth trend since 2004.  The actual value of 
remittances is likely 30-50% greater than the amount through formal 
channels that is recorded in the balance of payments records, 
according to informed observers.  Formal channel remittances are the 
second largest source of foreign income to Sri Lanka, after 
garments, which generated $3.3 billion in 2007; and ahead of tea, 
which drew in $1.0 billion.  Remittances thus play a significant 
role in offsetting Sri Lanka's chronic trade deficit. 
 
¶3.  (U) According to Central Bank data, an estimated 1.6 million Sri 
Lankan nationals -- equal to about 8% of the population -- are 
working abroad.  The number of both skilled and unskilled workers 
leaving for overseas employment has increased.  Total new placements 
were 217,000 in 2007 compared with 202,000 in 2006.  Women still 
outnumber men, but their share is decreasing.  In 2007, women 
constituted 53% of workers heading abroad for employment, down from 
67% in 2000.  Housemaids constitute about 47% of annual placements. 
However, housemaid recruitment has slowed in recent years. 
According to the Central Bank, a key reason was the availability of 
employment opportunities in Sri Lanka and inadequate wages in Saudi 
Arabia and Oman.  Placements in 2007, by share of labor category, 
were as follows: 
 
Housemaids      - 47% 
Unskilled labor - 24% 
Skilled labor   - 23% 
Others       - 6% 
 
----------------------------------- 
Middle East Remains Top Destination 
----------------------------------- 
 
¶4.  (U) The Middle East continues to provide about 90% of employment 
opportunities for Sri Lankan migrant workers, with Saudi Arabia, 
Kuwait, the UAE, and Qatar attracting the majority of workers.  Sri 
Lankan officials frequently talk of increased and better paying job 
opportunities in countries such as South Korea, Malaysia, Singapore 
and Japan, but those countries still absorb relatively few Sri 
Lankan workers. 
 
¶5.  (U) On April 1, the government instituted -- via the Bureau of 
Foreign Employment (SLBFE), which is responsible for promoting 
foreign employment -- minimum wages for unskilled laborers bound for 
the Middle East.  The minimum wages are based on the per capita 
income of the labor-receiving country.  Monthly wages range between 
$150 (Egypt and Maldives) to $250 (Qatar).  Cyprus is an exception, 
with the minimum set at $375 per month. 
 
COLOMBO 00000491  002 OF 003 
 
 
 
¶6.  (SBU) Suraj Dandeniya, President of the Association of Licensed 
Foreign Employment Agencies (ALFEA), told EconFSN the minimum wages 
are difficult to implement.  Although the employment contracts 
specify the minimum wage, in practice many employers do not pay the 
agreed wage.  Currently, prevailing wages for housemaids in most 
countries average only $125 per month.  Dandeniya faulted the 
government for setting minimum wages without consulting the 
governments and employment agencies in labor-receiving countries. 
Mrs. KMKP Herath, also of the SLBFE, acknowledging these concerns, 
said the government is now taking measures to ensure the 
enforceability of the minimum wage rates by signing bilateral 
agreements with labor receiving countries.  In January 2008, the 
governments of Sri Lanka and Saudi Arabia agreed to a minimum 
monthly wage of $173 for Sri Lankan housemaids working in the 
kingdom. 
 
------------------------------------- 
Government Looking to Skilled Workers 
------------------------------------- 
 
¶7.  (U) President Rajapaska earlier this year called for Sri Lanka 
to cease sending unskilled domestic workers overseas by the end of 
¶2008.  According to many, the policy change is a reaction to 
frequent reports of mistreatment of Sri Lankan housemaids abroad. 
There are also concerns regarding the neglect of children and 
families due to wives and mothers leaving home.  The government now 
actively encourages the migration of males and skilled workers, and 
discourages the migration of primarily female domestic workers. 
Mrs. Nanayakkara, Secretary to the Ministry of Foreign Employment 
Promotion and Welfare, told EconFSN that the Ministry has a two year 
plan to implement the decision.  The ban, when in operation, will 
only affect new employment contracts; current contracts will not be 
cancelled. 
 
¶8.  (SBU) Kumudini Samuel, an NGO representative working with local 
migrant workers, considers the policy to curb housemaid recruitment 
short-sighted.  She notes that these jobs opportunities are utilized 
by women from low income families who have limited skills and 
education.  Their options for employment within Sri Lanka are also 
limited.  ALFEA chief Dandeniya agreed, noting that Sri Lanka does 
not have a large skilled work force to replace the unskilled migrant 
workers.  ALFEA is trying to do its part to correct weaknesses in 
the system.  In mid-April, for the first time, a thirty-member 
delegation traveled to Kuwait to meet with the Sri Lanka Manpower 
Agents Association of Kuwait to discuss employment opportunities and 
working conditions. 
 
¶9.  (U) The Foreign Employment Promotion and Welfare Ministry plans 
to increase the migration of skilled workers by offering training 
programs which will enable female workers to be employed as nannies, 
housekeepers, caregivers and nurses, instead of simply as 
housemaids.  In addition, the government has launched training 
programs in the hospitality sector and an apprenticeship program in 
the construction sector leading to an internationally accepted 
certification.  Since these workers -- male and female --  will be 
skilled and trained, the government hopes that there will be a drop 
in exploitation, as well as an increase in overall remittances. 
 
------------------------------------------ 
Hundreds of Nurses to the U.S.?  Not Quite 
------------------------------------------ 
 
¶10.  (SBU) Local media are uncritically reporting government 
promises to secure higher paying jobs for skilled workers.  For 
example, the Minister of Health has repeatedly stated that the 
government plans to send 500 nurses annually to the United States. 
When embassy officials met with Ministry of Health officials, they 
 
COLOMBO 00000491  003 OF 003 
 
 
conceded that the minister's statements bore no relation to actual 
plans.  They told Econ and ConOffs that in fact they had only six 
nurses currently being trained to work abroad, possibly in the 
United States.  Post has since coordinated with the ministry and 
with two private health care recruitment and training firms to 
ensure they are aware of U.S. visa requirements for nurses. 
Exaggerated press reports aside, the government is implementing new 
programs and facilitating language and technical training that will 
ultimately make nurses more qualified for work abroad. 
 
--------------------------------------------- ---- 
Comment: Hard to Change Dependence on Remittances 
--------------------------------------------- ---- 
 
¶11.  (SBU) The government's plan to train and send out more skilled 
workers makes sense in the near term.  Due to the limited capacity 
of its university system, Sri Lanka has a large pool of educated 
youth who could be trained for skilled employment abroad.  (Each 
year, of about 120,000 students who qualify for university 
education, only about 18,000 are admitted.)  Until it has more 
training programs in place, however, the government will have to 
balance its desire to reduce the number of women it sends abroad as 
housemaids against the country's dependence on remittances to shore 
up its balance of payments.  (The USD $2.5 billion received in 2007, 
combined with government borrowing, more than offset Sri Lanka's 
$3.5 billion trade deficit.) 
 
¶12.  (SBU) Under these circumstances, the President's call to cease 
sending housemaids abroad, which was not supported by national 
legislation, is unlikely to overcome the basic supply and demand 
facts of the Sri Lankan and Middle East labor markets.  Over the 
longer term, Sri Lanka could change this equation by pursuing more 
private sector growth, which would create more domestic job 
opportunities for both skilled and unskilled workers.  The country 
would benefit more from having its people contribute directly to 
growth and development than it does now from their remittances, 
which constitute only a fraction of the salaries they earn and the 
growth they generate abroad. 
BLAKE