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MIGRATION: Financial Crisis Eroding Remittance Lifeline

Thalif Deen

UNITED NATIONS, Apr 17 2009 (IPS) - The Geneva-based International Organisation for Migration (IOM) has warned that the current financial crisis is threatening to claim another casualty: international migration.

“Trying to combat the economic crisis by simply cutting immigration may make the situation worse,” the IOM said in a recent policy brief.

A number of destination countries – mostly in the West and the Middle East – have stopped or imposed restrictions on new admissions of migrants for employment.

As a result, countries of origin, such as Pakistan, Bangladesh, Philippines, Morocco and Sri Lanka, which supply migrant workers, are already experiencing influxes of returning migrants, “which may result in economic and global instability in (these) poorer countries.”

Jean-Philippe Chauzy, head of IOM’s Media and Communications, told IPS that labour migration, is an integral part of today’s globalised world.

“Even during this economic downturn, one simply cannot wish migration away,” he said.

Chauzy said the global financial crisis is having a negative impact on perceptions of migrants and migration worldwide.

Special attention must therefore be paid to ensure that migrants, who are particularly prone to stigmatisation at best of times, are adequately protected from xenophobia and discrimination in the employment sector and in all social spheres, he added.

Kul Chandra Gautam, a former deputy executive director of the U.N. children’s agency UNICEF, told IPS that in the case of Nepal, his home country, the global financial crisis is expected to cause up to a 30 percent decline in remittances that provide the lifeline for many rural communities.

These remittances, he pointed out, had prevented the total collapse of Nepal’s economy during the last decade of a horrendous civil war.

“Nepal’s example is multiplied all across the poorest countries of Asia and Africa,” he added.

A recent World Bank study reveals that migrant earnings to developing countries will decline from 305 billion dollars in 2008 to about 290 billion dollars in 2009.

The fall in remittances has already been recorded in several countries, including Morocco, the Philippines and Sri Lanka.

In Latin America and the Caribbean, resource flows from the United States alone have dropped by 71 percent.

Besides the economic crisis, there are other reasons for the decline in earnings, including sharp fluctuations in exchange rates.

The study says that migrants may also be more reluctant to send money through formal channels due to a lack of confidence in the stability of the international banking system, which has taken a heavy beating due to the financial meltdown in the United States.

The ongoing crisis – along with the spread of xenophobia – is prompting some of the rich countries to cut down on immigration and place restrictions on the hiring of foreign workers.

IOM’s Chauzy said solidarity between countries of origin and destination is today more than ever needed to mitigate the impact of the crisis on the fragile economies of countries of the south.

This could be done by increasing levels of official development assistance (ODA) from the rich to the world’s poorer nations.

The Middle East, particularly the Gulf, has been hit with a double whammy: first, the precipitous decline in oil prices, and second, the global economic crisis which has reached out from Wall Street in New York to the skyscraper offices that have sprouted in Dubai, Abu Dhabi, Doha, Dhahran and Kuwait City.

In the Gulf, the boom times in Dubai, one of the fastest-growing sheikdoms of the United Arab Emirates, are virtually over.

The New York Times reported recently that over 3,000 cars, including a few Mercedes Benzes, BMWs and Porsches, have been abandoned at the Dubai international airport by expatriates fleeing the country after losing their jobs.

“Dubai is emptying out,” one Western diplomat was quoted as saying.

According to one report, over 1,500 visas are being cancelled per day in Dubai, which has about 3.6 million expatriates and only 864,000 nationals.

The recession has also resulted in a 50 percent decline in the price of luxury apartments and a 25 percent reduction in luxury spending by expatriates, mostly bankers, engineers, accountants and other executives.

The number of British expatriates in Dubai alone has been estimated at over 100,000, where the real estate market has collapsed and building construction has come to a standstill. But the bigger picture worldwide is even worse.

In Malaysia, there is evidence of policies to speed up the deportation of irregular migrants who have lived and worked in the country illegally. And, according to the World Bank, the Malaysian government has reportedly cancelled work visas for some 55,000 Bangladeshi workers.

Faced with their own domestic economic crises, several Western states are also imposing new conditions on migrant labour.

Britain has introduced a points-based system favouring “high-skilled” migrants and even raising academic qualifications.

Australia has reduced its intake: from 133,500 to 115,000. And Spain has introduced new incentives for migrants to return to their home countries.

A provision in the stimulus package in the United States makes it more difficult for U.S. companies to hire skilled foreign workers.

“Slamming the door shut to labour migration will only push more undocumented migrants in the hands of people smugglers and traffickers and will make undocumented migrants even more vulnerable in countries of destination,” says Chauzy.