The Wage Earners’ Scheme was introduced in 1974 in Bangladesh to encourage nationals working abroad to remit their earnings through official channels. The scheme gained importance when the government reduced foreign exchange allocation for importers due to declining foreign exchange reserves. It allowed wage earners to convert remittances at exchange rates close to the open market rate, making it more attractive to remit money officially rather than through informal channels. This scheme encouraged the growth of what became known as the secondary foreign exchange market, where foreign exchange was sold at higher rates than the official rate.
Remittances sent by Bangladeshi workers abroad have played a vital role in reducing the country’s dependence on foreign aid by becoming the largest source of foreign exchange earnings under the “manpower export” category in the balance of trade. Starting with $11.8 million in 1974-75, remittances surged to $378.74 million in 1980-81 and $764 million in 1990-91, reaching $1.7 billion by 1998-99. Bangladesh is recognized as one of the world’s major labor-exporting countries, with over 7.4 million Bangladeshis having worked abroad since independence.
The growth of labor migration intensified with expanding job opportunities in the Middle East during the mid-1970s. The number of overseas workers grew from 17,000 in 1977-78 to over 270,000 by 1998-99. Remittances as a share of GDP increased from 2.67% in 1980-81 to 4.68% in 1998-99. Countries like Saudi Arabia and Kuwait are top sources of remittances, with Saudi Arabia’s contribution increasing from 36.35% in 1983-84 to over 40% in 1998-99.
By 2010-11, remittances reached approximately $11.65 billion, accounting for 11.12% of GDP. Although the remittance-to-GDP ratio slightly declined in 2010-11 compared to the previous fiscal year, Bangladesh continues to depend heavily on remittances, particularly from Middle Eastern countries including Saudi Arabia, UAE, Qatar, Oman, Bahrain, Kuwait, Libya, Iraq, Singapore, and Malaysia. Political instability and economic downturns in these regions have impacted labor migration and remittance flows.