Everywhere you go in the emerging and fractured world there is evidence of people surviving or, businesses growing due to support from family and friends overseas.

Various sources estimate that 10% of world population benefit or even depend on remittances. More than 150 million migrant workers are sending back over 1.5 billion cash transfers amounting to over $300 billion per year and most of that money goes to immediate household consumption. For Economies like Cape Verde that means 34% of GDP; it is 30% in Afghanistan and, in all, 57 countries are receiving more than $1 billion per year in remittances. What happens when workers are laid off?

Over the past three months in Dubai alone, an estimated $562 billion of construction projects have either been suspended or cancelled. Flights to India have been packed as workers return home to an uncertain future. Huge numbers of the 200 million Chinese that returned home for the recent New Year celebrations would have to no work to return to and, no more cash to send home.  

The return of migrant workers has become a feature of this recession and, the impact on the UNs Millenium Goals is only starting to be counted as whole communities are about to be hit by market forces with no less force than a tsunami. After all, remittances are more than double the Overseas Development Aid budget – which was $126 billion in 2006.

In the Philippines, where migrant workers have been such a feature of the labour market, the recession and their return has led to a significant increase in the informal market. This pattern is repeated elsewhere and makes a mockery of any notion that the informal market makes matters worse. Where else would people go for work?

Then, there are the lucky ones who remain in work all over the world and can continue to send money home. If we look closer, their position has worsened too. Since 9/11 there have been a number of security restrictions imposed on money transfers all over the world. This has led to an increase in costs and has created a near monopolistic position for the banks from the “formal” world. These costs drive many to use informal networks such as Hawali can provide.

The collapse in consumer trust in “formal” banks is not the purpose of this post. Here, we are highlighting the impact of dsiplaced migrant workers returning home. What will happen to that shortfall in remittances and, what impact will this have on the ability to transform economies and drive them out of recession?  After all, 1 in 4 of the world’s population live on less than $400 per year and those cash transfers were a welcome lifeline.

There is something else. What is happening to skills? Are we risking the loss of a generation of skilled workers or, can we harness this experience and put it to work on development projects all along the supply chain back home? That’s for another Post.

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