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Pandemic chokes migrant workers' cash flows to poor Asian countries

Wealthier nations can do more to ensure that remittances continue to sustain the developing world

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Pandemic chokes migrant workers' cash flows to poor Asian countries

Asian workers work at a construction site in Dubai in this file image. Dubai is one of the locations for some of Bangladesh's 10 million migrant workers who are mostly employed in the Middle East. (Photo: Karim Sahib/AFP)

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The economic data since the onset of the Covid-19 pandemic is now overwhelming — Asian nations are all suffering sharp reversals in economic growth that are in some cases the worst since the Asian financial crisis of the late 1990s.

According to Allied Market Research, the Asia-Pacific digital remittance market garnered US$49.85 billion in 2018 and was expected to generate $269.78 billion by 2026 — without the effect of the coronavirus.

The government of the region’s largest economy, Indonesia, last week finally bowed to the stark reality of the situation — supercharged by its increasingly devastating wave of coronavirus infections and deaths — and forecast that its GDP would contract this year by about 1.7 percent, the first such retreat since the Asian financial crisis more than two decades ago.

But there is another, less visible economic hole being torn in many countries in the region: a plunge in remittances from the millions of migrant workers who travel to other nations — some to other destinations in Asia, others further afield, especially the Middle East — to earn more money to send to their families.

These workers often come from very poor backgrounds. Their families rely absolutely on remittances and are facing increased poverty as migrant workers return home and/or are unable to return to their jobs offshore.

“In the wake of the pandemic, many overseas foreign workers lost their jobs, and reports were widespread of newly laid-off foreign employees stranded in host countries without the means to return home,” the International Monetary Fund wrote on Sept. 11.

Migrants, many of whom are undocumented, often face a heavier burden than a local worker when they lose their jobs. They often lack access to social safety nets or stimulus checks that provide a cushion for their local counterparts. This is especially the case for the undocumented or those on temporary work visas.

Another issue is that many migrant workers have limited or no access to healthcare.  They are forced to live in cramped living quarters, with poor working conditions, which puts them at higher risk of contracting the virus. This was born out in Singapore when its second wave of Covid-19 broke out in vast migrant worker dormitories.

In April, the World Bank forecast that remittances would fall by 20 percent in low and middle-income countries. The Covid-induced oil price shock has driven sharp economic contractions and fiscal deteriorations worldwide, including in the Gulf which is a major source of remittances for the Asia-Pacific region.

An added problem was the increasing chance of deportation as countries tightened immigration rules in the wake of the pandemic.

Indeed, according to the IMF, remittances largely fell from March, then started to stabilize in May before picking up. The pattern was broadly in line with the stringency of virus containment policies in advanced countries where strict measures were put in place in March and slowly relaxed from May. It is from advanced and middle-income countries, after all, where the money flows back to poorer nations who provide workers.

It’s also worth remembering that migrant workers play an important role in the response to Covid-19 by dint of their work in critical sectors.

As of Sept. 4, emigrants from the 20 countries with the highest number of Covid-19 cases accounted for nearly 32 percent of the total international migrant stock and they sent an estimated 37 percent of all remittances globally to their countries of origin in 2019, according to the Migration Data Portal.

In recognition of the problems that the pandemic has caused for migrant workers and the health sectors in the nations they work in, some concessions are belatedly being made by some governments, most recently with the Philippines allowing some health workers to travel to their country of employment.

But it remains early days in measuring the real impact; without a vaccine, the world is only at the beginning of the Covid journey. It is hotspot nations who can do the most to improve the plight of migrant workers and to help ensure that remittances continue to flow back into the developing world.

The wealthier countries have all been hit hard economically but remain relatively better off than poorer countries and better positioned to recover. Perhaps they could ensure all migrants have access to healthcare and basic goods and services.

It would be a worthwhile economic insurance for both sides of the migrant worker equation and help to maintain the remittance flow that is so essential to so many societies across the Asia-Pacific.

The views expressed in this article are those of the author and do not necessarily reflect the official editorial position of UCA News.

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