The importance of migration and remittances to economic stability and competitiveness
INTRODUCTION
The cross border movements of people and increasing diversity of societies are inevitable. International migration creates significant financial and social benefits for migrants, for their families, and for the countries of origin and destination. Workers move overseas, away from family and friends, to seek better employment that will produce an improved quality of life for themselves and those loved ones they have left behind. The salaries earned by migrants and the resulting surplus funds sent home – remittances – constitute the second largest flow of capital to developing countries, behind only governmental development aid.
THE BENEFITS OF INTERNATIONAL REMITTANCES
The global remittance market is vast and impacts both low income and high income countries in significant ways. Salary levels in high income countries are approximately five times those in developing countries for similar occupations, creating a massive incentive to emigrate. Migrants are earning industrial country salaries yet sending and spending that money in their native countries. The additional income created by remittances goes much further in developing countries where domestically generated goods are traded in local currencies. This enables the standard of living of the recipient. and thereby the overall economy of the receiving country, to improve due to an influx of wealth and buying power.
Migrant remittances have become an increasingly important feature of modern economic life. It is important that we recognise the important role migrants play in strengthening the global economy, as well as helping to diversify the social fabric of our societies. In this respect, Afasal, a young business entrepreneur living in the United Kingdom, has a poignant story to tell. He is a second generation migrant, having moved from Bangladesh with his parents when he was 7. Now a successful business man with a chain of fabric stores catering to the needs of his south Asian clientele, he reflects on his early years:
“It was very difficult for us. I was one of seven children and often there wasn’t enough food to eat. We were very hungry. The winters were extremely cold and we were not used to such bitter, harsh weather. We couldn’t afford coal so had to burn cardboard boxes we found. It was very tough. We missed our culture, our food, our family very much. Now, we’ve been here over 20 years and have built up a chain of very successful textile stores throughout the southern part of the country. We have used some of the monies earned here to build a university in our village back in Bangladesh, so our local youth don’t have to leave home to study.”
THE GROWING IMPORTANCE OF MIGRATION
A recent study by the European Commission has shown that by 2030 those of an employable age within Europe’s population will decrease by 20 million, and the percentage of people over 65 will increase from about 23% to 40%. This decrease in the workforce will see an increase in the number of dependents and consequently a stagnation, or decline, in the economic growth and competitiveness of the region. Already, there are 40 million foreign born, including about 30 million working migrants, in the EU 25+. A United Nations’ report published in 2000 stated that migration will have to double to maintain the size of the working population. Indeed, the European Commission argues that without steady migration by 2050, the EU will need two workers to pay for one pensioner. The Commission has also stated that it is assumed that developed countries will absorb 4% of the population growth of developing countries. With an estimated net migration of one million people to Europe, this means 100 million people by 2050.
The United Nation further estimates that migrants account for some 3% of the total world population, or about 191 million people. Currently, one out of every 35th person is an international migrant, a proportion that more than doubled between 1970 and 2000. Interestingly, 75% of all international migrants are in just 12% of all countries worldwide.
SUMMARY
International migration generates significant benefits for originating countries with by far the largest of these being remittances. As migration rates increase, so do remittance levels. The latest figures estimate the global market value of remittances is $268 billion and that it is growing at a rate of 8% a year. With the inclusion of formal and informal (non-reported) channels of transfer, it is estimated that these figures have doubled in the past five years alone. Indeed, it is estimated that some 500 million people depend, at least partly, on the steady, reliable and speedy flow of remittances.
With this in mind, the importance of migration and remittances to economic stability and competitiveness cannot be understated. The postal industry has to play its part to support these individuals with secure, reliable and, above all, safe access to easy financial services that simplify the remittance process. In this way individuals, their families and their countries of origin will benefit further in the future.
