Remittances in Crisis
A Call to Action to Protect Migrants in South-East Asia During and After the COVID-19 Pandemic
Moving across borders in search of decent work and increased income has long been an important strategy to support livelihoods and reduce poverty for many families across South-East Asia. The COVID-19 pandemic and the resulting restrictions have abruptly halted human mobility, as well as economic activities in key sectors, exacerbating financial vulnerabilities for migrant workers and their families all over the world. Remittances (earnings sent back home by migrants) to low- and middle-income countries are estimated to fall by as much as USD110 billion globally, representing the loss of a crucial lifeline for many vulnerable households, migrant communities and emerging economies.
Today, 16 June, is the International Day of Family Remittances. With COVID-19 overwhelmingly affecting migrants and their families, this is an important time to take stock of the contributions migrants make to national and international development, and the significant challenges they are now experiencing and, most importantly, what can be done to support them.
Labour Migration in South-East Asia: Big Risks, Mixed Rewards
When labour migration is safe, orderly and well-managed, it not only benefits migrant workers themselves but also provides income for their families back home and contributes to poverty reduction and socio-economic development. Migrant workers contribute significantly to GDP in countries of origin through remittances, including an estimated 5.9 per cent of GDP in Cambodia, 4.3 per cent in Myanmar, 9.9 per cent in the Philippines, and 6.5 per cent in Viet Nam.
Debt is often a primary driver of migration especially in rural South-East Asia, as many households routinely take out loans to cover costs including education, healthcare, and establishing and scaling up businesses, as well as supporting family farms and covering daily household expenses. Migration is often a coping strategy in response to debt stress due to factors such as failed crops, an increasing phenomenon across the sub-region due to climate change and environmental devastation. Remittance-receiving rural households in South-East Asia have reported debt repayments as the primary use of remittances.
However, migration is itself a financial investment, and the low wages associated with many of the jobs migrants perform also make it a significant gamble. In recent years, the costs of labour migration in the region, often borne by workers, has caused migrants to borrow heavily in order to cover recruitment and other migration-related cost, such as transportation, documentation and medical checks.
Facing these migration-related costs, aspiring migrant workers often resort to borrowing through informal lending with poor conditions and high interest. Migrants in debt are more likely to remain in jobs with inadequate working conditions, which can create a situation of debt bondage and expose them to a range of abuses, including labour exploitation and human trafficking.
Heightened Vulnerabilities: Migrant Workers in Thailand during the COVID-19 Pandemic
Thailand is a key country of destination for migrant workers in South-East Asia, with approximately 3.9 million migrant workers mainly from Cambodia, Lao People’s Democratic Republic, Myanmar and Viet Nam. It is estimated that the average recruitment cost for migrant workers in Thailand is USD 251, paid off over 8 months.
The COVID-19 pandemic has led to sudden disruptions in economic production and trade globally including in Thailand. As a result, the Migrant Working Group (MWG) estimates that at least half a million migrant workers in Thailand have been left unemployed and stranded, with many more migrants likely to be under financial stress due to reduced income. While the situation is still evolving rapidly, emerging data shows that insufficient income was the primary challenge identified for non-Thais in the country during the pandemic.
This loss of income has already significantly impacted migrants and their families. According to the World Bank’s Lao Economic Monitor, the return of more than 100,000 Laotian migrant workers will result in a reduction of up to USD 125 million in remittances in 2020, equivalent to 0.7 per cent of the national GDP. This has wide-ranging implications for migrants’ families and their communities, with remittances constituting almost two-thirds of household income in Lao People’s Democratic Republic. This is likely to significantly limit the money available for community recovery and development, including food, education, housing, livelihood enhancements, and disaster risk reduction.
The loss of remittances as a means to meet daily subsistence needs is only the tip of the iceberg. Migrants who have lost their jobs or whose incomes have been reduced due to the pandemic are a lot less likely to be able to repay debts. It is estimated that in South-East Asia, 19 per cent of all migrants who took out loans used collateral to secure finances for overseas employment. For these migrants and their families, the inability to make repayments can lead to losing their houses, agricultural land, businesses and equipment or other valuables, removing their ability to generate future income. In the context of COVID-19 pandemic, facing likely long-term unemployment and reduced income, migrant workers and their families are experiencing significant financial challenges. These conditions may also push migrants to take on further debt via predatory loans, starting a vicious cycle that traps them in chronic poverty.
Fewer Risks, Higher Rewards: A Call to Action
Recognizing the need to urgently address the financial insecurities faced by migrant workers and their families during this crisis, IOM has joined a global call to action on socioeconomic impacts of COVID-19 on remittances, which is led by the United Kingdom and Switzerland, and supported by a wide range of government and non-government partners.
“While we anticipate a significant economic downturn globally, our concern is that there will be an even stronger knock-on effect for remittance dependent economies, communities and families, in terms of worsening access to education, health and nutrition, and broader poverty outcomes,” IOM Director General António Vitorino has said.
The world-wide Call to Action aims to raise awareness and calls on relevant stakeholders, including policy makers, regulators and remittance service providers, to take specific actions to decelerate the decline in remittances and facilitate their flow between migrants and their families in low and middle-income countries.
Meanwhile, we must acknowledge that the issues that have affected migrants in Thailand and many countries across the world existed prior to the onset of the COVID-19 pandemic. In order to ensure truly inclusive socio-economic recovery and resilience, it is important to promote access to formal employment, labour rights and social protection for migrants. We must also double down on efforts to eliminate worker-paid recruitment fees, debt bondage and constraint-driven migration, which places migrants at extreme risk of economic shock.
The COVID-19 pandemic has highlighted the urgency of these issues and it is critical that we now ensure that governments, businesses and civil society organizations take action to alleviate debt for migrants in the immediate term, and amplify efforts to address structural barriers which lead to these conditions in the first place.
Funded by the Swiss Agency for Development and Cooperation, IOM Thailand has been supporting migrant workers through the PROMISE project since 2017, in partnership with government counterparts, private sector stakeholder and civil society organizations. Through skills development, enhancing worker employability, and by promoting ethical recruitment, PROMISE aims to help migrant workers to achieve better migration outcomes, thereby contributing to poverty reduction and greater economic resilience for migrant workers and their families. Information on IOM Thailand’s support to migrants during the COVID-19 pandemic are available online.
For more information on PROMISE please visit the IOM Thailand or contact:
Sally Barber, Head of Labour Mobility and Human Development, IOM Thailand
Vivian Liang, M&E Reporting Officer, PROMISE, IOM Thailand
