The impact of COVID-19 lockdown on migrant workers and global remittances
Kavita Datta, Professor in Development Geography, Queen Mary University of London.
Vincent Guermond, Post-doctoral Researcher, Royal Holloway University of London.
Migrant remittances are a largely invisible issue in the coverage of the COVID-19 pandemic even while im/mobility has perhaps never been so widely experienced nor contested. With job and wage losses attributable to the pandemic adversely impacting upon migrant dependent labour market sectors, a slowdown in international remittances looks increasingly likely. As such, remittances will undoubtedly be a crucial vector in the transmission of the unfolding economic crisis in richer, mostly global North, nations to poorer countries and will fundamentally shape how, and the pace at which, we recover from COVID-19.
Remittances shelter a large number of poor and vulnerable households, underpinning the survival strategies of over one billion people. In 2019, an estimated 200 million global migrant workforce remitted US$715 billion, of which US$550 billion supported up to 800 million households living in rural and urban neighbourhoods in low and middle income countries. Constituted predominantly of small sums of money remitted to large numbers of households, the majority of these receipts are spent on everyday subsistence needs including food, education and health. Current projections that in five years remittances will outstrip Overseas Development Assistance and Foreign Direct Investment combined reflect the extent to which global financial flows have been reshaped by migration.
Measures to contain COVID-19 – social distancing and ‘lock downs’ – have led to a global economic slump. Three issues are particularly salient in relation to migrant workers who generate remittances. First, and as illustrated in a recent IPPR briefing, migrant workers tend to be concentrated in those sectors of the economy which are particularly at risk at times of downturn. Their preponderance in less regulated sectors where precarious employment arrangements are endemic place them at greater risk of abusive and unsafe practices, and job losses. Migrants are also more likely to self-employed partly due to barriers to labour market entry. Second, migrant workers recourse to public funds is – with some exceptions – specifically restricted as a condition of their visas such that their access to (already limited) government interventions is uncertain. Eligibility to the South African government’s initiative to help small and medium size businesses, for example, is specifically predicated on citizenship status. Third, as a result, migrant workers adopt a series of strategies or tactics including continuing to work in compromised circumstances (lower wages, erosion of working conditions and, in the current crisis, exposure to infection), restricting expenditure as well as contemplating a return back home. In the UK, while some migrants are hyper visible NHS doctors and nurses whose labour has been somewhat belatedly acknowledged by the Health Secretary of State, and reliance demonstrated by the Home Office’s decision for a free year-long extension to visas coming up for renewal, many more migrants are hidden and largely unsung ‘semi-skilled’ or even ‘unskilled’ heroes (forced to continue to) work in sectors such as food manufacturing and delivery, social care and cleaning. High rates of infection among Somali migrants in Norway are partly attributable to their concentration in these ‘close-contact’ professions where home working is not an option.
What are the implications of migrant un/under employment for remittance flows? Here we can draw on the most recent global crisis – the 2008 financial crash and recession – for early indications. Countering a political and financial consensus that remittances are resilient and counter-cyclical, between 2008 and 2009, remittances flows declined by 5.5% globally. Contractions in specific remittance corridors were even more marked with transfers to Latin America and the Caribbean, mostly originating from the United States, decreasing by 12%. These trends were indicative of changing remittance practices with migrants remitting smaller amounts infrequently, or in extreme cases, stopping altogether as they were laid off and faced uncertain future employment prospects. Early conservative predictions of the impact of COVID-19 (perhaps over-optimistically) assume that the upcoming recession will be less severe. On this basis, it is estimated that there will be a 7% decline in remittances from the United States which will fall from US$ 76 billion to US$ 70 billion, with receiving households from Mexico and Central America being most affected. According to another study by BBVA Research, remittances to Mexico could fall by 17%.
With the global economy slowing down even before COVID-19, and uncertain geographically varied pandemic timelines, long term recovery prospects are unclear. Identified as a ‘worldwide emergency that has left no safe haven’, the particular vulnerability of poor countries is apparent with the World Bank pledging US$160 billion over the next 15 months to aid both immediate health priorities, and longer term economic recovery. Notwithstanding the detrimental impacts of the World Bank’s structural adjustment programs on the health care systems of many developing countries, it remains unclear whether this amount is adequate and will reach vulnerable households. In contrast, remittances, known as ‘aid which reaches its destination’, constitute a significant safety net for vulnerable households. Research by the authors show that remittances do not only reach immediate household members but are also distributed amongst extended family and friends, as well as supporting local economies through payments to shopkeepers and construction workers. In regions such as the Horn of Africa where 40% of households are heavily dependent upon remittances, any disruption in flows sent by the Somali diaspora will further exacerbate food insecurity.
How richer nations respond to the current crisis will have significant economic ramifications for remittance dependent countries. While the tracking of these declines is a vital on-going priority, a key intervention must be for richer nations to adopt inclusive economic policies which protect the livelihoods of migrants, and have the added benefit of reducing the socio-economic impacts of the pandemic, as their jobs are linked to the survival of millions of others. Relatedly, this crisis represents an opportunity to end the hostile environment which has wreaked havoc for many migrants including curtailing access to health care. While the Portuguese decision to temporarily grant citizenship rights to all undocumented migrants and asylum seekers is unlikely to be widely adopted, challenging popular narratives whereby migrant/labour is a disposable commodity are urgently needed.