COVID-19 Crisis Through a Migration Lens - Migration and Development Brief 32 April 2020 - Knomad
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
COVID-19 Crisis Through a Migration Lens COVID-19 Crisis Through a Migration Lens Migration and Development Brief 32 April 2020 i
Migration and Development Brief reports an update on migration and remit- tance flows as well as salient policy developments in the area of international migration and development. The Global Knowledge Partnership on Migration and Development (KNO- MAD) is a global hub of knowledge and policy expertise on migration and development. It aims to create and synthesize multidisciplinary knowledge and evidence; generate a menu of policy options for migration policy mak- ers; and provide technical assistance and capacity building for pilot projects, evaluation of policies, and data collection. KNOMAD is supported by a multi-donor trust fund established by the World Bank. The European Commission, and Deutsche Gesellschaft für Interna- tionale Zusammenarbeit (GIZ) GmbH commissioned by and on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), and the Swiss Agency for Development and Cooperation (SDC) are the contributors to the trust fund. The views expressed in this paper do not represent the views of the World Bank or the sponsoring organizations. All queries should be addressed to KNOMAD@worldbank.org. KNOMAD working papers, policy briefs, and a host of other resources on migration are available at www.KNOMAD.org.
COVID-19 CRISIS THROUGH A MIGRATION LENS Migration and Development Brief 32 April 2020 Migration and Remittances Team Social Protection and Jobs World Bank
Migration and Development Brief 32 © 2020 International Bank for Reconstruction and Attribution—Please cite the work as follows: Dilip Ratha, Development/The World Bank. Supriyo De, Eung Ju Kim, Sonia Plaza, Ganesh Seshan, and Nadege Desiree Yameogo. 2020. “Migration and Develop- ment Brief 32: COVID-19 Crisis through a Migration Lens.” Some rights reserved KNOMAD-World Bank, Washington, DC. License: Creative Commons Attribution CC BY 3.0 IGO This work was produced under the Global Knowledge Translations—If you create a translation of this work, please Partnership on Migration and Development (KNOMAD). add the following disclaimer along with the attribution: This A global hub of knowledge and policy expertise on migration translation was not created by The World Bank and should and development, KNOMAD aims to create and synthesize not be considered an official translation. The World Bank multidisciplinary knowledge and evidence; generate a menu shall not be liable for any content or error in this translation. of policy options for migration policy makers; and provide technical assistance and capacity building for pilot projects, Adaptations—If you create an adaptation of this work, evaluation of policies, and data collection. please add the following disclaimer along with the attribu- tion: This is an adaptation of an original work by The World The findings, interpretations, and conclusions expressed in Bank. Views and opinions expressed in the adaptation are this work do not necessarily reflect the views of The World the sole responsibility of the author or authors of the adap- Bank, its Board of Executive Directors, or of its member tation and are not endorsed by The World Bank. countries. Third-party content—The World Bank does not necessarily The World Bank, does not guarantee the accuracy of the own each component of the content contained within the data included in this work. The boundaries, colors, denom- work. The World Bank therefore do not warrant that the use inations, and other information shown on any map in this of any third-party-owned individual component or part con- work do not imply any judgment on the part of The World tained in the work will not infringe on the rights of those third Bank concerning the legal status of any territory or the parties. The risk of claims resulting from such infringement endorsement or acceptance of such boundaries rests solely with you. If you wish to re-use a component of the work, it is your responsibility to determine whether permis- Nothing herein shall constitute or be considered to be a sion is needed for that re-use and to obtain permission from limitation upon or waiver of the privileges and immunities of the copyright owner. Examples of components can include, The World Bank, all of which are specifically reserved. but are not limited to, tables, figures, or images. Rights and Permissions All queries on rights and licenses should be addressed to This work is available under the Creative Commons Attri- World Bank Publications, The World Bank Group, 1818 bution 3.0 IGO license (CC BY 3.0 IGO) http://creative- H Street NW, Washington, DC 20433, USA; e-mail: commons.org/licenses/by/3.0/igo. Under the Creative pubrights@worldbank.org. Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial © Cover design by Spaeth Hill. Further permission required purposes, under the following conditions: for reuse. iv
COVID-19 Crisis Through a Migration Lens Contents Summary............................................................................................... viiii Acknowledgements.................................................................................. xi 1. Viewing the COVID-19 Crisis through a Migration Lens..............................1 1.1 Impacts on Employment of Foreign Workers and Their Earnings.....................3 1.2 Impacts on Internal Migration..................................................................5 1.3 Remittance Flows to Decline in 2020......................................................... 6 1.4 Slower Progress in Reducing Remittance Costs and other Migration-related Development Goals...........................................................9 1.5 Policy Responses Should Be Inclusive of Migrants and Their Remittances........10 2. Regional Trends in Migration and Remittance Flows.........................16 2.1 East Asia and the Pacific.......................................................................16 2.2 Europe and Central Asia........................................................ . ..............19 2.3 Latin America and the Caribbean................................................... . .......21 2.4 Middle East and North Africa.............................................................. . .23 2.5 South Asia..........................................................................................25 2.6 Sub-Saharan Africa....................................................................... ......27 Appendix: Data Notes and Methodologies for Forecasting Remittances and FDI........ ....30 A.1 Estimation of Remittance Flows for 2019............................................. . ...30 A.2 Methodology for Forecasting Remittances for 2020...................................30 A.3 Data on Remittances, Gross Domestic Product, Remittance Prices, Refugees, and Other Variables....................................................................30 A.4 Caveats.............................................................................................31 A.5 Methodology for Forecasting Foreign Direct Investment..............................31 References.......................................................................................... . ...33 Endnotes ...............................................................................................35 List of Figures Figure 1.1 Three Phases of the Spanish Flu, 1918–19.........................................3 Figure 1.2 Migrant Workers Are More Vulnerable to Risks of Unemployment During an Economic Crisis......................................................5 v
Migration and Development Brief 32 vi
COVID-19 Crisis Through a Migration Lens Figure 1.3 Event Study: Remittances to the Philippines Increased During the Bird Flu, but Decreased During the Global Financial Crisis....................6 Figure 1.4 Remittance Flows to Low- and Middle-Income Countries Expected to Decline in 2020..........................................................................7 Figure 1.5 Remittance Costs Remain High.......................................... . . . ..........9 Figure 2.1 Top Remittance Recipients in the East Asia and Pacific Region, 2019.....16 Figure 2.2 Remittance Fees to the Philippines Are Among the Lowest in the East Asia and Pacific Region...............................................................17 Figure 2.3 Remittance Inflows to Europe and Central Asia Remained Strong in 2019...................................................................... . . . ..18 Figure 2.4 Russia Continued to Be the Least Expensive Country from Which to Send Money.........................................................................20 Figure 2.5 Remittances Represent a Large Share of Foreign Income in Latin America..................................................................21 Figure 2.6 Cost of Sending Money to Latin American and the Caribbean, 2018 and 2019..............................................................22 Figure 2.7 Remittance Inflows to the Middle East and North Africa in 2019...........23 Figure 2.8 Sending $200 within the Middle East and North Africa Is Less Expensive Than Sending $200 from Outside the Region........................ 24 Figure 2.9 Top Remittance Recipients in South Asia in 2019.............................. 25 Figure 2.10 Remittance Costs in South Asia Vary Widely between the Highest- and Lowest-Cost Corridors...................................................... 26 Figure 2.11 Top Remittance Recipients in Sub-Saharan Africa in 2019................ 27 Figure 2.12 Remittance Costs in Sub-Saharan Africa Vary Considerably.............. 28 List of Tables Table 1.1 Comparison of COVID-19 with Other Pandemics and the Global Financial Crisis.............................................................................2 Table 1.2 Estimates and Projections of Remittance Flows to Low- and Middle-Income Regions.........................................................................8 Table 1.3 Possible World Bank Interventions Addressing COVID-19’s Effects on Migration and Remittances.......................................................... 13 Table A.1 Panel Data Regression Estimates for Remittances............................. 30 Table A.2 Panel Data Regression Estimates of Foreign Direct Investment to Low- and Middle-Income Countries.......................................... 32 List of Boxes Box 1 Access to Health Care For Migrant Workers........................................... 11 vii
Migration and Development Brief 32 Summary The economic crisis induced by COVID-19 have contributed to spreading the epidemic. could be long, deep, and pervasive when Governments need to address the challenges viewed through a migration lens. Lockdowns, facing internal migrants by including them in travel bans, and social distancing have brought health services and cash transfer and other global economic activities to a near standstill. social programs, and protecting them from Host countries face additional challenges in discrimination. many sectors, such as health and agriculture, that depend on the availability of migrant Migration flows are likely to fall, but the stock workers. Migrants face the risk of contagion of international migrants may not decrease im- and also the possible loss of employment, mediately, since migrants cannot return to their wages, and health insurance coverage. This countries due to travel bans and disruption to Migration and Development Brief provides transportation services. Migrant workers tend a prognosis of how these events might affect to be vulnerable to the loss of employment and global trends in international economic migra- wages during an economic crisis in their host tion and remittances in 2020 and 2021. country, more so than native-born workers. Lockdowns in labor camps and dormitories Considering that migrants tend to be concen- can also increase the risk of contagion among trated in urban economic centers (cities), and migrant workers. Many migrants have been are vulnerable to infection by the coronavirus, stranded due to the suspension of transport there is a need to include migrants in efforts to services. Some host countries have granted fight the coronavirus. Migrant remittances pro- visa extensions and temporary amnesty to mi- vide an economic lifeline to poor households in grant workers, and some have suspended the many countries; a reduction in remittance flows involuntary return of migrants. could increase poverty and reduce households’ access to much-needed health services. The In 2020, remittance flows to low- and mid- crisis could exacerbate xenophobic, discrimi- dle-income countries are expected to drop natory treatment of migrants, which calls for by around 20 percent to $445 billion, from greater vigilance against such practices. $554 billion in 2019. In the midst of this sharp decline, the relative importance of remittance This Brief is largely focused on international flows as a source of external financing for low- migrants, but governments should not ignore and middle-income countries is expected to the plight of internal migrants. The magnitude rise. This is because foreign direct investment is of internal migration is about two-and-a-half expected to decline by even more, due to travel times that of international migration. Lock- bans, disruption of international trade, and downs, loss of employment, and social distanc- wealth effects of declines in the stock prices of ing prompted a chaotic and painful process multinational companies. This Brief estimates of mass return for internal migrants in India that it could fall by more than 35 percent. and many countries in Latin America. Thus, Private portfolio flows through stock and bond the COVID-19 containment measures might markets could fall by over 80 percent. viii
COVID-19 Crisis Through a Migration Lens The global average cost of remittances de- So far, government policy responses to the clined to 6.8 percent in the first quarter of COVID-19 crisis have largely excluded mi- 2020, from 6.9 percent a year previous. This re- grants and their families back home. But there mains far above the Sustainable Development is a strong case for including migrants in the Goal target of 3 percent. Remittance service near-term health strategies of all countries, providers have been affected by lockdowns, given the externalities associated with the shorter business hours, and social distancing. health status of an entire population in the face This has increased the relative importance of of a highly contagious pandemic. Also, govern- electronic transfers, since some cash-based ments would do well to consider short-, medi- services and remittance operators have been um-, and long-term interventions to support: (i) closed or impacted negatively by the crisis. Al- stranded migrants; (ii) the remittance infra- though the use of digital payment instruments structure; (iii) loss of subsistence income for for sending remittances is increasing, poorer families back home; and (iv) access to health, and irregular migrants often lack access to on- housing, education, and jobs for migrant work- line services. They require the origination and ers in host/transit countries and their families distribution of funds through banks, payment back home. The pandemic has also highlighted cards, or mobile money. Online transactions the global shortage of health professionals (like cash-based services) require remittance and an urgent need for global cooperation and service providers to exercise vigilance against long-term investments in medical training. fraud and financial crime, to comply with anti-money laundering and countering the financing of terrorism (AML/CFT) regulations. However, such due diligence has become diffi- cult amid staff shortages. ix
Migration and Development Brief 32 x
COVID-19 Crisis Through a Migration Lens Acknowledgements This Brief was prepared by Dilip Ratha, Su- Oya Pinar Ardic Alper, Eldira Dashi, Harish priyo De, Eung Ju Kim, Ganesh Seshan, and Natarajan, Roberta Gatti, Mattias K. A. Lund- Nadege Desiree Yameogo of the Migration berg, Martin Rama, Hans Timmer, and Albert and Remittances Team, Jobs Group, Social G. Zeufack for helpful comments and inputs. Protection and Jobs Global Practice; and Sonia Thanks to Immaculate Nafula Machasio and Plaza of the Finance, Competitiveness, and Maja Vezmar for research assistance, Fayre Innovation Global Practice. Thanks to Michal Makeig for editing, and Rebecca Ong for com- Rutkowski, Ian Walker, Asli Demirguc-Kunt, munications support. xi
Migration and Development Brief 32 1
COVID-19 Crisis Through a Migration Lens 1. Viewing COVID-19 Crisis Through a Migration Lens: Remittance Flows are Expected to Decline by 20 Percent in 2020 The economic crisis induced by COVID-19 is The exception is the so-called Spanish flu of deeper and more pervasive than any other pan- 1918–20, which was global. It infected around demic-induced crisis since the 1900s. Table 1.1 500 million people (one-third of the world pop- briefly compares a few well-documented crises. ulation at the time) and resulted in 17–50 mil- Most pandemics have affected a few countries lion deaths between March 1918 and March and a small share of the world population. 1920, in three recurrent phases Table 1.1 Comparison of Covid-19 with Other Pandemics and the Global Financial Crisis Cases Average Case as % of change in Cases as Cases % of world Deaths Fatality Most Affected Countries population GDP growth (thousands) (thousands) Rate of most in the most Population (%) affected affected countries countries China, India, Indonesia, SPANISH FLU 17,400– 2.7%– Russia, United States of 500,000 ~25% ~28% 0.8% (1918–20)* 50,000 10% America (global pandemic impacting many countries) Canada; China; Hong SARS 8 Negligible 0.7 9.56% Kong SAR, China; 0.01% 3.1% (2002-2004) Singapore H1N1 Australia, China, Mexico, (Swine Flu) 762,630* 11% 284 0.04% 0.06% -2.5% Thailand, United States (2009–10)** Islamic Republic of Iran, MERS Jordan, Republic of Korea, 2.5 Negligible 0.8 34.38% 0.001% -3.7% (2012) Saudi Arabia, United Arab Emirates Ebola Guinea, Liberia, 28.7 Negligible 11 39.52% 0.16% -8.6% (2014–16) Sierra Leone France, Germany, Italy, Spain, United States COVID-19 2,019 .03% 119 5.92% (global pandemic 0.22% -8.7% (2019–20) impacting 210 countries)*** High-income Memo: global Countries of all countries: financial crisis income levels -3.7%; (2008–2009) LMICs: +-3.3% Sources: KNOMAD website; WDI, CBC, and WHO estimates; Johns Hopkins website; Lancet; IMF 2020; UN Population data; Maddison Historical Statistics. Note: The average share of deaths and changes in GDP growth attributed to Spanish flu is listed for only India, Indonesia, and the United States, countries for which GDP data are available. GDP = gross domestic product; LMICs = low- and middle-income countries; MERS = Middle East respiratory syndrome; SARS = severe acute respiratory syndrome. *WHO and CDC estimates of cases. The number of Spanish flu cases is from https://ourworldindata.org/spanish-flu-largest-influen- za-pandemic-in-history; case percentages of population are broad approximations, and period economic data are from the Maddison Historical Statistics. **The H1N1 swine flu outbreak occurred in the midst of the 2008–09 global financial crisis, thereby making it difficult to determine the real economic effects of the pandemic. ***Top five countries by case number as of April 13, 2020. 2 COVID-19 is now a global pandemic impacting 213 countries, areas or territories per the World Health Organization.
Migration and Development Brief 32 (figure 1.1). If that pattern were to be repeat- 1.1 Impacts On Employment Of ed, the COVID-19 crisis could last longer than Foreign Workers And Their Earnings currently projected by many governments, with several recurrences over the next 24 months. These measures have brought global economic activities to a near standstill. Such simultane- Fast-spreading contagion, high case fatality ous suspension of activities in all parts of the rates, inadequate medical facilities, and a lack world is unprecedented in history. Worldwide, of vaccine cure (so far) have prompted societ- many businesses, especially small and medi- ies to lock down, reduced business hours and um enterprises and informal businesses, have practice social distancing. A response to the closed. According to the International Mon- coronavirus outbreak in China in December etary Fund (IMF), the world economy is ex- 2019 was the imposition of a ban on interna- pected to contract by 3 percent in 2020 in the tional travel and quarantines for international baseline scenario, a change of nearly 6 percent arrivals. Subsequently, most countries have compared with 2019. Advanced economies are imposed a ban on the arrival of not only for- projected to decline by 6.1 percent and emerg- eigners but also of returning nationals. ing market and developing economies by 1.0–2.2 percent in 2020. Also, there is substan- tial risk of continued economic recession well into 2021. The worst case scenario anticipates Figure 1.1 Three Phases of the Spanish Flu, 1918–19 (Deaths per 1000 persons, United Kingdom) 25 20 15 10 5 0 8 8 8 8 8 8 9 9 9 8 9 91 91 91 91 91 91 91 91 91 91 91 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 un ct ep ug ov ul ar an eb ec pr -O -J -M -J -N -S -D -A -J -A -F 29 29 29 29 29 28 29 29 31 30 29 Source: Data are based on Taubenberger and Morens (2006: 15). 3
COVID-19 Crisis Through a Migration Lens even lower growth (IMF 2020).1 According to The crisis has greatly increased the demand for the latest regional economic updates published health care services, and a global competition by the World Bank, real economic growth could has already begun with many developed coun- fall to -0.5 percent in the East Asia and Pacific tries announcing incentives to recruit doctors region, 4.4 percent in Europe and Central Asia, and nurses from abroad. There is a global -4.6 percent in Latin America and the Caribbe- need to train more health professionals and an (LAC), 1.8 percent in the Middle East and provide recognition of skills in host countries in North Africa (MENA), -2.8 percent in South the long term. Asia, and -5.1 percent in Sub-Saharan Africa (Arezki et al. 2020; Calderon et al. 2020; World Migrant workers tend to be particularly vulner- Bank 2020a–d). able, more than native-born workers, to losses of employment and wages during an economic When viewed through a migration lens, the crisis in their host country. During the global economic crisis induced by COVID-19 could be financial crisis, the average unemployment even longer, deeper, and more pervasive than rate for foreign-born workers in the EU-28 these estimates imply. In host countries, the countries rose from 11.1 percent in 2007 to COVID-19 crisis has created additional chal- 16.4 percent in 2009, significantly higher than lenges in sectors that depend on the availabili- the increase among native-born workers. Even ty of migrant workers. The crisis has dispropor- a decade later, in 2018, the unemployment tionately impacted food and hospitality, retail rate remained high for foreign-born workers, and wholesale, tourism and transport, and while it had fallen below the pre-crisis rate for manufacturing. As the farming season begins native-born workers. The unemployment rate in many countries, there are emerging signs of for foreign-born workers is especially high in labor shortages in the agriculture sector of in- Italy and Spain, which have been hit hard by dustrial countries that rely on migrant workers. the coronavirus. Given the seasonality of agriculture, worker shortages have given rise to concerns about Migration flows are likely to fall, but the stock food security later in the year. of international migrants may not decrease immediately. In 2019, there were around 272 The crisis has presented a challenge for the million international migrants (including 26 cross-sectoral mobility of workers, which could million refugees). Under normal circumstances, be particularly hard for lower-skilled migrant migrants losing jobs would consider return- workers, especially informal and undocument- ing home. However, that has become nearly ed workers. During the global financial crisis impossible because of travel bans and the sus- in 2009, many migrant workers moved from pension of transportation services. As a result, construction to agriculture and retail. Such the rate of voluntary return migration is likely intersectoral movement may be difficult at this to fall, except in the case of a few cross-border time because the sectors that need more work- migration corridors in the South (such as Ven- ers—such as health and information technolo- ezuela–Colombia, Nepal–India, Zimbabwe– gy—require specific skills and prior training. South Africa, Myanmar–Thailand).2 In other words, more people will stay on in their host country than is typical. 4
Migration and Development Brief 32 Figure 1.2 Migrant Workers Are More Vulnerable to Risks of Unemployment During an Economic Crisis Unemployment rate (%), EU-28, during global financial crisis 2008-2009 Native Born Foreign Born 16.4 12.3 11.1 11.1 7.3 6.9 2007 2009 2018 Source: Eurostat data. Note: EU = European Union. In the long term, income gaps between coun- those from international migrants, serve as a tries constitute the most important driver of lifeline and insurance for families left behind. migration pressure. The average per capita income in high-income countries was 54 times The COVID-19 outbreak has placed many in- that in low-income countries, according to the ternal migrant workers in dire conditions, many World Bank (2019). The present crisis will not losing their (mostly informal) jobs and unable lower the income gap sufficiently to reduce to return home due to disruption to public migration pressures. On the contrary, income transport services and movement restrictions. inequality between the low-skilled and high- This is the reality for most migrant workers, skilled is likely to increase due to the crisis. especially those working in the informal sector and living in overcrowded slums. 1.2 Impacts on Internal Migration Lockdowns, travel bans, and social distancing The number of internal migrants is about measures in response to the crisis have dispro- two-and-a-half times that of international portionately affected internal migrant work- migrants. China and India each have over ers, who found themselves stranded, unable 100 million internal migrants. For the poorer to return either to their places of work or their sections of the population, especially from un- communities of origin. Without adequate der-developed rural areas, migration to urban access to housing, basic water and sanitation, economic centers provides an escape from health facilities, or social safety nets to help poverty and unemployment. Remittances from them survive such restrictions, these migrants these migrants, typically smaller amounts than have become even more vulnerable to conta- 5
COVID-19 Crisis Through a Migration Lens gion risks. If discrimination and xenophobic basic provisions to provide shelter to stranded attitudes affected migrants before, the current migrants in cities and districts of destination, crisis has exacerbated such social tensions. transit, and origin. Some countries are provid- The crisis has created a chaotic and painful ing cash support to affected and vulnerable process of mass return for internal migrants in groups with a specific allocation for internal India and many countries in Latin America. As migrants and returned migrant workers (World a result, the COVID-19 containment measures Food Program 2020). might even have contributed to spreading the epidemic. The loss of jobs and livelihood has 1.3 Remittance Flows to Decline in 2020 also ruptured an important lifeline to rural households in many countries. The persistence of the stock of international migrants over an economic cycle or a crisis is Governments need to address the challenges an important factor in the persistence or resil- facing internal migrants by including them in ience of remittances. Not only do new migrants programs that provide health services and send money home but also those migrants who cash transfer and other social programs, and arrived a long time ago. Indeed, migrants new by protecting them from discrimination. Some and old increase the amounts they send home governments are already providing some as- during times of crisis and hardship in their sistance to these vulnerable groups who are at country of origin, a phenomenon noted in the risk of spreading the virus. For instance, in In- literature as the countercyclicality of remittanc- dia, the government has now set up camps with es. Remittances (as a share of GDP) tend to be Figure 1.3 Event Study: Remittances to the Philippines Increased During the Bird Flu, but Decreased During the Global Financial Crisis Percent change (y-o-y, 3-month moving average) Bird Flu (Nov. 2003) 30 Financial Crisis (Sep. 2008) 25 20 15 10 5 0 -4 -2 0 2 4 Time (month) Data Source: World Bank–KNOMAD remittance inflows dataset. Note: t = 0 November 2003 and September 2008. It represents the month at which the outbreak reported. 6
Migration and Development Brief 32 largest in poor countries (8.9 percent in 2019), South Asia turned out to be larger than expect- small island developing states (7.7 percent), ed in the second half of 2019. and those in fragile and conflict-affected situations (9.2 percent).3 During a crisis in the In 2020, remittance flows to LMICs are expect- host country, however, remittances can decline. ed to decline by around 20 percent, marking For instance, during the global financial crisis, the sharpest decline in recent history (table remittance flows to low- and middle-income 1.2 and figure 1.4). This is not so much due to countries (LMICs) declined by 5 percent in a decline in the stock of international mi- 2009. Similarly, the event study in figure 1.3 grants, but largely due to a fall in wages and shows the countercyclical increase in remit- the employment of migrant workers in host tance flows to the Philippines during the bird flu nations due to COVID-19 (see appendix for pandemic in November 2003, and a procycli- the methodology behind this projection). The cal decline in response to the global financial decline in remittance flows is expected to be crisis starting in September 2008. sharpest in Europe and Central Asia, South Asia, and Sub-Saharan Africa. These region- In 2019, remittance flows to LMICs became al patterns are affected by COVID-19 and larger than foreign direct investment (FDI), also a fall in the price of oil, which affects the an important milestone for monitoring re- economies of Russia and the Gulf Cooperation source flows to these countries. Recent data Council (GCC) countries in particular. Russia reveal that in 2019, remittance flows to LMICs is the most important source of remittances reached $554 billion, slightly higher than our to Central Asia; outbound remittances from earlier projection ($551 billion) published in Russia, as expressed in U.S. dollars, would also October 2019.4 Remittance flows to LAC and be impacted by the weakening of the ruble Figure 1.4 Remittance Flows to Low- and Middle-Income Countries Expected to Decline in 2020 ($ billion) 900 FDI 700 500 Remittances 300 100 ODA Portfolio debt and equity flows -100 90 96 f 92 94 18 14 16 00 98 06 08 10 12 02 04 20 19 19 19 19 20 20 20 20 19 20 20 20 20 20 20 20 Sources: World Bank staff estimates, World Development Indicators, and IMF Balance of Payments statistics. Note: See appendix A in World Bank (2017) for data and forecast methods. FDI = foreign direct investment; ODA = official development assistance. 7
COVID-19 Crisis Through a Migration Lens against the dollar. Such valuation effects would tion of international trade, and wealth effects also be felt in outbound remittance flows from of declines in the stock prices of multinational Europe through the weakening of the euro companies; private portfolio flows through against the U.S. dollar.5 Outbound remittances stock and bond markets may decline by about from the GCC countries would be impacted 80 percent.6 by the recession induced by the coronavirus as well as a fall in oil prices. Remittance flows to Medium-term downside risks dominate the re- South Asia, East Asia, and the MENA countries mittance outlook for 2021. The recovery from would be impacted as well (see section 2 for the crisis is likely to be prolonged and arduous. regional trends). Global and regional growth in 2021 is likely to remain subdued. Given these global trends, Despite the decline, however, remittance flows remittances to LMICs are expected to grow at are expected to become even more important about 5.6 percent in 2021 to $460 billion, well as a source of external financing for LMICs below the 2017 level of $487 billion and far (figure 1.4). In 2020, FDI is expected to decline from the recent records of 2019 (table 1.2). by over 35 percent due to travel bans, disrup- Table 1.2 Estimates and Projections of Remittance Flows to Low- and Middle- Income Regions Region 2009 2016 2017 2018 2019e 2020f 2021f ($ billion) Low and Middle Income 307 446 487 531 554 445 470 East Asia and Pacific 80 128 134 143 147 128 138 Europe and Central Asia 36 46 55 61 65 47 49 Latin America and the Caribbean 55 73 81 89 96 77 82 Middle-East and North Africa 33 51 57 58 59 47 48 South Asia 75 111 118 132 140 109 115 Sub-Saharan Africa 29 39 42 48 48 37 38 World 437 597 643 694 714 572 602 (Growth rate, percent) Low and Middle Income -5.0 -1.5 9.1 9.0 4.4 -19.7 5.6 East Asia and Pacific -4.8 -0.5 5.1 6.8 2.6 -13.0 7.5 Europe and Central Asia -14.7 -0.3 20 10.9 6.6 -27.5 5.0 Latin America and the Caribbean -11.3 7.4 11 9.9 7.4 -19.3 5.9 Middle-East and North Africa -6.2 -1.2 12.1 1.4 2.6 -19.6 1.6 South Asia 4.5 -5.9 6.2 12.1 6.1 -22.1 5.8 Sub-Saharan Africa -0.2 -8.3 9.3 13.7 -0.5 -23.1 4.0 World -5.1 -0.9 7.7 8.0 2.8 -19.9 5.2 Source: World Bank–KNOMAD. Note: See appendix A in World Bank (2017) for data and forecast methods. Projections for 2020 and 2021 are based on methods described in the appendix to this Brief. e = estimate; f = forecast. 8
Migration and Development Brief 32 1.4 Slower Progress in Reducing Remit- and government policies in receiving countries. tance Costs and other Migration-relat- According to the Remittance Prices Worldwide ed Development Goals database, the average cost of sending $200 to LMICs was 6.8 percent in the first quarter (Q1) The World Bank closely monitors three Sustain- of 2020, slightly below the cost one year earlier able Development Goal (SDG) indicators for (figure 1.5).8 The global average cost of remit- which it is a custodian: increasing the volume tances declined from 6.9 percent in 2019 Q1 to of remittances as a percentage of gross do- 6.8 percent in 2020 Q1. This is still more than mestic product (GDP) (SDG indicator 17.3.2), double the SDG target (10.c) of 3 percent by reducing remittance costs (SDG indicator 2030.9 Sub-Saharan Africa continued to have 10.c.1), and reducing recruitment costs paid the highest average cost, at about 9 percent. by migrant workers (SDG indicator 10.7.1).7 Remittance costs across many African corri- Progress on all three indicators is projected to dors and small islands in the Pacific remained slow in 2020, although initial data shows that above 10 percent. Intraregional migrants in remittance costs through digital channels are Sub-Saharan Africa comprised over two-thirds decreasing. of all international migration from the region. Yet intraregional remittance costs are very high Remittance costs remained above the SDG in the region (figure 2.12 in section 2). target and may increase due to disruptions to remittance services, though there are counter- Brick-and-mortar remittance service provid- vailing forces such as the growing use of digital ers (RSPs) have been affected by lockdowns, services, increased competition for business, reduced business hours, and social distancing. Figure 1.5 Remittance Costs Remain High (Percent) Q1 2019 10 9.25 Q1 2020 8.90 8 7.21 7.13 6.94 6.79 6.67 6.76 7.00 6.48 6.20 6 5.97 5.04 4.95 4 2 0 Global SAR LAC ECA EAP MENA SSA Average Sources: World Bank Remittance Prices Worldwide database. Note: Red dotted line represents the Sustainable Development Goal 10 target of 3 percent. EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MENA = Middle East and North Africa; SAR = South Asia; SSA = Sub-Saharan Africa. 9
COVID-19 Crisis Through a Migration Lens There is less disruption and perhaps a relative tries have announced incentives or relaxed visa increase in remittances sent via digital pay- restrictions to recruit health professionals from ment instruments. However, poor and irregular foreign countries. migrants have lower or no access to digital payment instruments—such as bank accounts, In general, most countries use residency crite- payment cards, or mobile wallets—to fund or ria to determine whether foreigners are entitled disburse remittance transactions. Many poor to public health care services (box 1). So far, households in LMICs also lack access to trans- government policy responses have mostly action accounts to receive remittances. Online excluded migrants. There is a strong argument transactions also require RSPs to be able to for including migrants in the near-term health remotely collect and verify identity documents strategies of all countries, recognizing the and exercise additional vigilance against positive externalities associated with health, or higher risks of fraud and financial crime, to conversely, the negative externalities associat- comply with anti-money laundering and coun- ed with pandemics. tering of financing of terrorism (AML/CFT) regulations.10 However, such due diligence has Table 1.3 summarizes short-, medium-, and become difficult amid staff shortages.11 The long-term interventions that could be consid- disruption of formal remittance services and ered by the World Bank Group. Specifically, a lack of access to banking or online services operational interventions could be considered may shift remittances to informal channels. to support: (i) stranded migrants; (ii) access to health care, housing, education, and jobs for Some RSPs have temporarily waived the fees migrant workers in host/transit countries and for sending money home, but such waivers are their families back home; and (iii) remittance not sustainable. To encourage RSPs to facil- infrastructure. itate remittance inflows, some governments (notably that of Pakistan) have announced tax Keeping remittances flowing incentives equivalent to the remittance fees waived. The World Bank has initiated a weekly sur- vey of remittance costs in several important 1.5 Policy Responses Should Be Inclu- corridors to assess the effects of the COVID-19 sive of Migrants and Their Remittances crisis on the remittances sector. Initial find- ings show that authorities in many sending Lockdowns and travel bans directly affect the and receiving countries observed a decline employment and wages of foreign workers. in remittance flows and expect this trend to Lockdowns in labor camps and dormitories can continue. RSPs are not classified as essential increase the risk of contagion among migrant services. As such, their services have been workers. Many migrants have been stranded interrupted or their working hours reduced. due to the suspension of transport services. The use of digital channels for sending money Lockdowns have also closed the offices of is increasing due to the closure of brick-and- RSPs, some of whom are also grappling with mortar services.12 Meanwhile, a large percent- employees who have fallen sick, thus affecting age of migrant workers and their families back the flow of remittances. home are unbanked or under-banked, and are facing challenges in meeting the due diligence To address shortages of workers in agriculture requirements of digital channels. In the short and health sectors, some countries have grant- run, the services that remain available are in ed visas to attract agricultural workers, even general priced lower than those that preced- chartering flights to bring them in. Many coun- ed the COVID-19 measures, according to 10
Migration and Development Brief 32 Box 1. A Comparison of National Health services for migrants tend to be asso- ciated with higher costs to varying degrees. Policies Regarding Migrant Workers’ In Qatar, migrants seeking to obtain a health Access to Health Care card that grants access to a subsidized public health system pay only a slightly higher fee According to the forthcoming Migration and than do GCC nationals.15 In Malaysia, foreign- the Law Database, economic migrants13 enjoy ers using the public health system are charged full access to public health care in 80 out of a significantly higher fees than are citizens. total of 132 sampled countries, provided that general requirements for participation in the In response to the COVID-19 crisis, several respective scheme are fulfilled.14 Another 40 host countries have temporarily introduced countries allow migrants access to health care new policies or relaxed requirements to facil- conditionally, while 12 countries (most of which itate migrant workers’ access to health care are located in South Asia and the Middle East protection. Examples include the following: a North Africa regions) completely exclude migrants from their health care systems. • The Portuguese government announced that all immigrants with pending res- Many countries use residency to determine idence applications will be treated as whether foreigners are entitled to public health permanent residents until July 1, 2020, care services. The national laws and regu- due to COVID-19. This measure will allow lations of Portugal and Dominican Republic migrants access to public social security link health entitlements to the residency status system, including health care. rather than nationality of a person. In Croatia, Bulgaria, Czech Republic, the United States • The Malaysian Ministry of Health an- of America, and Singapore, a person needs to nounced that foreigners will be exempted obtain permanent residency status first in order from registration, examination, treatment, to enjoy health care protection on par with cit- and hospitalization fees related to the izens. Under Turkish laws and regulations, for- treatment of COVID-19. eigners may benefit from general health insur- ance schemes provided that they have resided • The UK government announced that no in Turkey more than a year. Other national laws charges will be made in the diagnosis or delegate the role of protecting migrants’ health treatment of COVID-19 for all people, to employers. In the United Arab Emirates and regardless of their residency/immigration Kuwait, employers are required to cover the status. costs of health insurance for migrant workers or face penalties for noncompliance. • The Qatari government is providing free health care to migrant workers affected by Access to health care for economic migrants the COVID-19 virus in the Doha Industrial can be restricted to emergency life-saving care Area. or infectious disease prevention. Economic mi- grants in Kazakhstan have the right to receive Source: Migration and the Law Database, World Bank (2020). free medical care only for acute diseases that are dangerous to others. The list of such dis- eases is determined and updated by a regula- tory health authority. 11
COVID-19 Crisis Through a Migration Lens data collected in 2020 Q1.16 Some RSPs have removed their fees and have been using social media to raise awareness of digital payment instruments (where applicable). It would be important for RSPs and authorities to work together to mitigate the effects of the crisis and encourage the adoption of digital payments, greater use of regulated channels, and wider availability of cost-efficient services. In the meantime, the World Bank will continue to monitor and report on the availability of remittance services worldwide, and work with stakeholders to improve the transparency and efficiency of the remittances market toward a reduction of the still high cost of remitting money internationally, guided by the CPSS- World Bank General Principles for Internation- al Remittances (CPSS-WB 2007). The World Bank has issued a call to action to support the remittances sector (see table 1.3). 12
Migration and Development Brief 32 Table 1.3 Possible World Bank Interventions Addressing COVID-19’s Effects on Migration and Remittances Supporting access to social Supporting remittance Supporting stranded migrants services for migrants and their infrastructure families SHORT TERM • Evacuation of stranded migrants. • Set up grants to improve access • Remittance service providers to basic health services, education, (RSPs) have been facing store • Granting temporary protected and housing for host and migrant closures and disruption of status to foreign nationals with communities. remittance services. expired visas. • Extend cash transfer programs to • Support could be provided to RSPs • Health awareness campaigns and support internal and international to be declared as essential services. provision of treatment to migrants. migrants, especially those who have • Incentives (such as subsidies) could • Identifying options to serve lost their jobs in host cities/countries. be offered to RSPs to reduce the cost stranded migrants (including • Support social services and provide of remittance services. For example, internal and international migrants, cash transfers to families left behind. RSPs could claim a tax credit for informal workers, and those without waiving remittance fees paid by proper documentation). • Facilitate the provision of remote remitters. mentoring and medical advice by • Supporting informal businesses diaspora doctors, and the temporary • Certain AML/CFT requirements that are likely to employ migrants, return of such professionals. could be temporarily simplified to conditional on keeping migrants on incentivize online and mobile money the payroll. • Include migrants in programs that transfers, following a risk-based provide a temporary moratorium approach. on debt service in countries of origin (including loans taken out for paying • Public authorities would do well to recruitment costs) and rent payments identify, remove, or mitigate factors in host countries. that prevent customers or providers from leveraging digital payment instruments for remittances. Supporting access to social Supporting remittance Supporting stranded migrants services for migrants and their infrastructure families MEDIUM TERM • Revisit insurance regulations that • Support countries in improving may constrain migrants from buying data on migration and remittances. medical insurance for families back • Support efforts to reduce home. remittance costs. • Make medical insurance benefits • Facilitate emerging remittance offered by host countries portable to models using digital means. origin countries. • Achieve universal financial access • Expand origin countries’ social- in receiving and sending countries. welfare schemes to migrants abroad (i.e., to address unemployment spells). • Enhance domestic retail payment systems and grant RSPs access. • Facilitate the recognition of skills of migrants and refugees in host • Promote interoperability. countries to help with the shortage of skills. • Enhance AML/CFT compliance and use of digital ID solutions. • Support cross-border payment solutions for remittances. 13
COVID-19 Crisis Through a Migration Lens Supporting access to social Supporting remittance Supporting stranded migrants services for migrants and their infrastructure families LONG TERM • Support safe and regular • Set up twinning arrangements to • Support efforts to reduce migration programs. train more doctors and nurses in remittance costs. low- and middle-income countries in • Support national strategies (on collaboration with medical schools in a demand basis) to increase the high-income countries. share of regular migrants in the total migrant population in host countries. • Support efforts to reduce recruitment costs. • Establish universal health programs that include migrants irrespective of their legal status. 14
Migration and Development Brief 32 15
COVID-19 Crisis Through a Migration Lens 2. Regional Trends in Migration and Remittance Flows The outlook for remittances for 2020 remains tries such as those in the Pacific Islands could as uncertain as the impact of COVID-19 on see households at risk as remittance incomes global growth and may depend to a large decline over this period (World Bank 2020a). A extent on the measures taken to restrain the recovery of 7.5 percent growth for the region is spread of the disease. In the past, remittances anticipated in 2021. have been countercyclical during times of di- saster in the recipient economy. This time, how- Remittances to the Philippines rose by 4 per- ever, the pandemic has affected all countries, cent in 2019, to reach $35.2 billion, up from and the economic fallout is likely to vary due to the 3 percent growth seen in 2018 (figure 2.1). country-specific characteristics. Year-on-year growth in remittances for Janu- ary 2020 was 6.6 percent but this likely reflects 2.1 East Asia and the Pacific a period prior to widespread COVID-19 mea- sures being adopted in host countries. Remit- Remittance trends. Remittance flows to the tances to Indonesia returned to a single-digit East Asia and Pacific region grew by 2.6 annual growth of 4 percent in 2019 after expe- percent in 2019, about 4.3 percentage points riencing double-digit growth in 2018, the latter lower than the growth rate in 2018. In 2020, due to an expansion in remittance flows from remittance flows are expected to decline by the Middle East (particularly Saudi Arabia). 13 percent due to the impact of COVID-19. By contrast, remittances from the Middle East The slowdown is expected to be driven by shrunk in 2019 while growth remained in the declining inflows from the United States, the double digits from Asia, particularly in Hong largest source of remittances to the East Asia Kong SAR, China; and Taiwan, China. and Pacific region, and from Hong Kong SAR, Remittance costs. The average cost of send- China. Several remittance-dependent coun- ing $200 in remittances to the East Asia and Figure 2.1 Top Remittance Recipients in the East Asia and Pacific Region, 2019 ($ billion, 2019) (Percentage of GDP, 2019) 37.6 68.4 35.2 16.2 14.3 10.9 9.9 9.7 17.0 6.5 6.1 5.9 11.7 5.0 7.1 2.8 1.7 1.6 0.6 0.3 . am a a s lu oa Ca Sts m sia M dia lia ji s sia s Ph hina ar ilip ti ji nd M nd di ne ng Fi ne Fi va a na go nm am ay ne bo es etn rib bo sla pi la . pi To Tu ed et C al on ai do S m ilip ya Ki m lI Vi Vi M ,F Th Ca al In Ph ia sh ar on M Sources: World Bank staff estimates, World Development Indicators, and icr IMF Balance of Payments statistics. Note: GDP = gross domestic product. 16 M
Migration and Development Brief 32 Figure 2.2 Remittance Fees to the Philippines Are Among the Lowest in the East Asia and Pacific Region (Percent) 30 Fourth Quarter 2018 Fourth Quarter 2019 25.1 25 5 highest-cost corridors 21.0 20 17.0 15 14.0 14.2 13.4 12.9 13.0 11.8 5 lowest-cost corridors 11.0 10 5.1 5 4.1 3.2 3.2 2.6 3.4 2.8 2.9 2.2 2.2 0 pi s to m sia a s a a s u ar ne ne di in in at na nm ne s Ch Ch bo nu pi pi ilip te ne et do ya ilip ilip Ph ira m Va Vi to to M Ca In Em Ph Ph to to nd a to to ric to to o nd lia la ab Af tt sia e ai nd ra la or or Ar ai Th h ay st ai ap ap la w ut d Au Th al ai Ku So ite ng ng M Th Un Si Si Sources: Remittance Prices Worldwide database, World Bank. Average cost of sending $200. Pacific region dropped to 7.13 percent in 2020 was expected to fall amid travel bans imposed Q1, compared with 7.21 percent in 2019 Q1. by the GCC.17 As of April 30, 2020, 1677 The five lowest-cost corridors in the region av- overseas Filipino workers had tested positive eraged 2.6 percent while the five highest-cost for COVID-19, of which 451 had recovered corridors averaged 15.4 percent as of 2019 and 201 had died. Only workers barred from Q4. Money transfer costs from Thailand to travelling to China were entitled to a subsidy neighboring countries in Southeast Asia were of 10,000 pesos (about $198), which had not among the highest, averaging 12.1 percent in been extended to those affected by travel the last quarter of 2019. bans, particularly in Qatar and Kuwait. Migration trends. The Philippine government’s Over 60,000 migrant workers from Myanmar, efforts to halt the spread of the coronavirus Cambodia, and the Lao People’s Democratic by banning travel to several countries—in- Republic fled Thailand, defying requests by cluding Taiwan, China; Macau; Hong Kong officials to remain in the country to help con- SAR, China; and South Korea—was short tain the virus and raising fears of cross-border lived amid resistance from overseas Filipino infections. Elsewhere, Singapore, which ap- workers concerned about potential job losses peared to have early success in containing the if they were unable to travel back to their host coronavirus among its residents, was seeing countries after home visits. The government a new surge in cases from a previously over- announced that new deployment to these looked source. Over three-quarters of these countries and mainland China would be scaled new cases were related to low-skilled migrant down while deployment to the GCC countries workers housed in dormitories. There were 17
COVID-19 Crisis Through a Migration Lens more than 200,000 migrant workers from the arrest and deportation of undocumented Asia residing in a total of 43 dormitories in migrants in order to facilitate their testing and the country. treatment for the coronavirus. A lockdown in Malaysia was causing hardship Throughout the East Asia and Pacific region, for foreign workers, particular daily casual migrant workers were left out of financial workers. The Indonesian Ministry of Foreign support from host governments to counter the Affairs (MOFA) indicated that it had sent more economic fallout from containing the coronavi- than 3,000 aid packages to its citizens in Ma- rus pandemic, and were at times being told to laysia and was preparing an additional 3,000 simply return home–though many were unable more.18 Malaysia is the main destination for to travel due to travel bans or flight cancella- Indonesian workers, hosting half of Indonesia’s tions. A recent survey of migrant workers in estimated 3.7 million workers abroad in 2019.19 New South Wales, Australia, found that half had lost their jobs and one-fifth had seen Undocumented migrant workers in host their work hours reduced while none would Southeast Asian countries risked detention be eligible for government assistance. A plan and deportation by visiting health centers to to pay employers A$1,500 (around US$950) be checked or treated for the coronavirus. The every two weeks per employee did not extend Ministry of Labor in Taiwan, China, planned to to those employing temporary migrant workers inspect the documentation of migrant caregiv- (except New Zealanders). While the Singa- ers. A civic group called for granting amnesty porean government waived the monthly levy to the estimated 50,000 undocumented work- of S$750 (about US$530) for foreign workers ers in the economy, citing these workers’ fear of required of employers and committed to pro- coming forward to report COVID-19 symp- viding the latter a rebate, contract workers did toms. In Malaysia, civic groups similarly called not expect to receive any financial support. on the government to impose a moratorium on Figure 2.3 Remittance Inflows to Europe and Central Asia Remained Strong in 2019 ($ billion, 2019e) (Percentage of GDP, 2019e) 15.8 29.2 28.2 25.4 10.6 7.2 16.2 15.6 14.2 4.2 4.2 11.4 10.5 10.2 2.4 2.3 2.3 2.3 2.1 9.5 an e Ro ia ia f an a an ia o ne a va ia ia a Ta lic vo lic Ta ria Uz ic o vin in vin gr ni ss an rg rg en ist st ist b do ai ub so a ra ba ne Ru pu o go eo lg m go ki kr ul jik m jik Uk Ko ol ep e Al be Bu te ep U Ar Re G G ze ze M zR on ,R er er yz M rg H H ia rg rb Ky d d Ky an an Se ia ia sn sn Bo Bo Sources: World Bank staff estimates, World Development Indicators, and IMF Balance of Payments statistics. Note: GDP = gross domestic product; 2019e = estimated for 2019. 18
You can also read