How Are Remittances Being Affected by COVID-19?

How Are Remittances Being Affected by COVID-19?

Remittances are cash transfers sent by migrants, usually to family members in their country of origin. International remittances can also make up part of the regular income of some people, for example, those who perform cross-border work, such as seasonal workers who tend crops in neighbouring countries. According to UNDESA, migrants send an average of 15% of their earnings back home. Remittances often represent up to 60% of family income.

Projections

In 2019, remittances worldwide accounted for a flow of $706 billion, most of it ($554 billion) to low- and middle-income countries, setting a new record, the World Bank said. However, they also project that the flow of remittances in 2020 will be affected by the economic impact of the pandemic, falling 19.7% globally, and 19.3% for Latin America and the Caribbean. The IOM estimates those most affected will be those working in the catering, construction, manufacturing and hospitality industries, which are traditionally performed by migrants in North America and Europe.

Reality

Despite these projections, some countries continued to see a rise in remittances, at least during the first two months of the year. As time passes, a decline in remittances is being observed.

Guatemala, for example, reported an increase in remittances during the months of January and February, compared to the previous year. While a drop was noted in March, April and May 2020 compared to 2019, more remittances were reported in May 2020 than in May 2018. Moreover, the balance up to May 2020 shows a decline of 3% compared to the previous year.

In Mexico remittances practically doubled during March 2020, the month in which the pandemic was declared, in comparison with the previous month. This represented the greatest monthly increase in remittances since 1995, as well as the highest ever income received by recipient families from remittances, with $378 USD. Some economists attribute this increase to a fear held by migrants that their incomes would be reduced in destination countries, causing them to send savings to their families.

In other countries, however, the predictions have come true and a decrease in the receipt of remittances has occurred. Such is the case of Honduras, which between January and March decreased by 1.1% from the previous year, apparently as a result of a loss of income in the destination countries due to the outbreak of COVID-19, especially the United States. This decrease in remittances intensifies as the months pass: between March and April 2020, the country reported 43% less reserves compared to 2019.

A similar case is found in El Salvador, where a 9.8% drop in remittance between January and April 2020 was reported, compared to the previous year. The vast majority of remittances in this country (95.4%) come from the United States, one of the places hardest hit by the pandemic. It is expected that with the gradual opening of states, remittances will be strengthened.

Reducing the cost of sending remittances is necessary to help alleviate this situation, in line with the Sustainable Development Goals, specifically Goal 10 target 10.c, which aims to reduce the transaction costs of migrant remittances to less than 3%. One factor that can offset remittance fees (which on average, entail a sending fee of 6.79%, which is well above the 3% fee suggested in the SDGs) is a decrease in the value of the currencies of recipient countries, which increases the value of what migrants send home.

Factors

As mentioned above, the main factor in the reduction of remittances to Central America is probably due to the reduction in income from migrants in the United States due to COVID-19. However, there are other factors associated with the pandemic that must also be taken into account, such as:

  • Vulnerability in health: migrants are required to be in good health to be able to keep working. However, 20% of regular migrants in the US do not have health insurance. The figure increases if they are irregular migrants, and that’s just one example.
  • Economic recession: employment and remittances will be hit hard, as the effects of the pandemic-induced recession are felt. An estimated 595,000 migrant workers could be affected. According to ILO, the pandemic will restrict the ability of migrants to travel to work in their host countries and reduce their income, as well as their capacity to return to their families.
  • Exclusion of people from crisis response systems, leaves them more vulnerable to global crises.

Interviewing Rubén Sánchez, Director of 'Zanmi'

Interviewing Rubén Sánchez, Director of 'Zanmi'
Categoria: Communication & Migration
Autor: Laura Manzi

‘Zamni' (2018) is one of the films that participated in the 2020 edition of the Global Migration Film Festival. The short film, which was selected to be screened at regional level by the Regional Office for Central America, North America and the Caribbean, narrates the experiences and daily lives of four Haitian migrants in Chile and their integration process in the South American country.

In this interview, the young director Rubén Sánchez, tells what objectives and motivations guided him towards the creation of the short film.

Why did you choose young Haitian migrants as the protagonists of your work? Is there something in their profile that makes them different from other migrant communities in Chile?

What struck us is that the Haitian population here in Chile is the one that finds it most difficult to integrate into society. One of the main reasons is that they speak another language, the Creole language, and that is an even bigger barrier considering that Chilean Spanish has many idioms and tends to be spoken very quickly. Another obstacle to integration is the racism and rejection of some sectors of society towards the Haitian population: whether because of ethnicity, nationality, language or other prejudices. This leads to more segregation and not integration.

In the short film, there are many scenes that portray different landscapes: the sea, the forest, the city. What is the role of nature in the integration process of migrants?

Climatic conditions and landscapes can be a challenge for integration. For example, Haiti is very flat, there are no mountains and the climate is tropical. Here in Chile, nature and microclimates are quite diverse (the north has higher temperatures, the south is more humid and rainy, while the central zone is a mixture of these).
Nature, however, has also a symbolic purpose in the documentary. The mountain range, which characterizes the Chilean landscape, is the great frontier that any person faces to reach Chile. This justifies the scene that opens and closes the film and represents one of the protagonists in the Embalse del Yeso, which is a place here in Santiago, in the middle of the mountain range. We wanted to film those scenes there as a more oneiric way of representing this enormous wall that is like a border to cross in order to reach Chile, and that at the same time symbolizes the great wall that is in the cultural shock that the Haitian population faces.

‘Life is a circle. A perfect circle of which we are not a part': the protagonists in the film have jobs, go to school, learn Spanish. Then, what are the elements that continue to prevent their integration into the host community, this 'circle' from which they are excluded?

The cultural shock is big. If the host society lives this 'fear of the unknown', the Haitian migrant population in turn reacts and this generates a fear of the community where they live. The lack of integration is made difficult by prejudice and because initiatives that value cultural richness are not promoted. I think this is what we lack as a society: to be more educated. If there is no good education, there will be no people who cannot integrate; we still need to be educated and 'humanized'. I feel that in some way we are also 'dehumanized'. This is what the documentary wants to capture: to reflect on the humanity that we need, the humanity that we need to integrate others, to show that we are all really the same, we are all human beings and we all have dreams.

How much is the director visible in his work? How come are you interested in the subject of migration?

The issue of Haitian migration was, for me, a personal concern, because I live in one of the cities in Chile with the largest Haitian population. I used to witness daily this rejection of the Haitian population in the eyes of the people, in comments that were exchanged by whispering in the bus when I went to the university. I was worried about that.
Also, before I enrolled in audiovisual communication, I studied social work, and had many courses on the migration issue and related social policies. I did a lot of research on Haitian migration, which allowed me to capture the central idea of the short film. During the shooting process, I had the opportunity to meet these young people (Haitian migrants), to live their culture, to taste their food. I was filled with a culture that I didn't know, I was filled with knowledge, with a new experience. I wish this documentary could reach more people, change who we are and cultivate our humanity.