Covid-19 hammers migrant income

From making beds in Hong Kong to building multistar resorts in Dubai, migrant workers help underpin two economies. They provide cheap labour for the rich world and vital income for poorer countries.

Remittances in 2019 overtook foreign direct investment as the biggest source of external financing to these nations, equal to a 10th of economic output in the Philippines and 16% in Jamaica.

Then the Covid pandemic broke out. The World Bank believes it will scythe a fifth, or more than $100bn, off global remittances. Workers will send home $445bn in 2020. East Asia and the Pacific, the biggest recipient of remittances, face the biggest cut from overseas workers downing tools.

Broad-brush figures conceal personal hardship — remittances are a lifeline for many extended families — and local anomalies. Remittances to Mexico were up 10% year on year in the six months to June at a record $19bn. Yet for the Philippines, with 9-million or so workers overseas, remittances fell by a fifth in the year to May.

Cancelled or reduced monthly remittances have many impacts, apart from less income for the financial institutions that send toilers’ money around the world, often for nosebleed commissions. At the macro level, lower hardcurrency income dents national balance sheets.

There are human costs and benefits too. Some workers will inadvertently bring the coronavirus home. Others will relish the unexpected reunion with loved ones.

At the micro level, less money coming in means less consumption. A National Migration Survey in 2018 said about 12% of all Filipino households have, or have had, a member working overseas. In good times, remittances illustrate the trickle-down effect with textbook precision. The coronavirus shows how quickly that can go into reverse. /London, August 9

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