Lost Remittances: The Spillover Effects of Discrimination

Ji Yoon Han is a 2020 Social Connectedness Fellow working with SCSC to explore the impact of COVID-19 on vulnerable populations and compile lessons learned and best practices to mitigate the negative impacts of the pandemic going forward. Ji Yoon is passionate about building robust global governance institutions and hopes to pursue a career in an international organization advocating for a sustainable, inclusive system for all.

COVID-19 has mobilized states across the world to approve an unprecedented amount of government spending. G20 leaders have committed to spend over 5 trillion USD to counteract the impact of COVID-19 on their economies. But what about governments that don’t have the wealth to support robust social security nets? Many low- and middle-income countries (LMICs) rely on remittances to support the provision of basic needs to their residents. A remittance is money sent to an individual’s family or community in their source country. For some countries, remittances make up to 20 percent of their GDP.

While remittances are an important source of financial stability throughout the year, they become especially important during disasters, where they often serve as a form of informal insurance. Remittances typically peak during disasters and are credited for improving their recipients’ access to healthcare and basic needs faster than those who don’t receive remittances. Unlike other forms of foreign aid, remittances can be mobilized almost instantaneously, are tailored to specific needs, and are more reliable. Many of these benefits can be attributed to the intimate relationship between senders and recipients, who are often part of the same family unit.

However, due to fallout from the coronavirus, remittances are projected to fall by 19.7 percent in 2020 and aren’t expected to recover to pre-COVID-19 levels for several years. The loss of migrant jobs, travel restrictions, and volatility in the international economy have all contributed to diminished remittance levels. Many banks and money transfer operators have reduced their service or temporarily shut down key branches to preserve physical distancing guidelines. The shutdown of local NGOs, religious organizations, and government offices have also blocked off a key partner for the coordination of collective remittances. Historically, when such pathways were shut down, migrants were able to “cash and carry,” where they would travel back to their source country with money and goods. This is no longer an option. COVID-19 related travel bans and a rise in airplane prices for the few remaining tickets have eliminated the possibility of cash and carry as a backup plan.  

But the fall in remittances isn’t just because of economic volatility, it’s also the consequence of human rights abuses. For those who still have the means to send remittances, there are serious barriers beyond the shutdown of key institutions. The rampant discrimination temporary foreign workers (TFWs) face in their countries of employment, especially here in Canada, prevent TFWs from sending remittances. On June 8, the Migrant Workers Alliance for Change released “Unheeded Warnings,” a report outlining the litany of abuses faced by TFWs across Canada during the COVID-19 pandemic. In the report, workers state that many employers have forced them into signing documents stating that they may not leave their bunkhouses, even for essentials such as food, personal supplies or to send remittances back home, threatening them with deportation under the guise of following COVID-19 regulations. The report details widespread wage theft, racism, verbal abuse, and threats to call the police if they speak out. Workers have also been working long hours in unsafe conditions with no overtime pay. 

The direct impact of a culture of abuse, wage theft, and racism are devastating for the workers themselves. There have been mass COVID-19 outbreaks across farms in Canada where TFWs work as well as stigmatization by communities refusing to provide essential services to TFWs. But the impact of these abuses doesn’t stop with the TFWs. It also has devastating spillover effects for their families and communities who are now unable to rely on remittances to pay for basic needs, including food, education, and healthcare. 

Migrant workers must be included in Canada’s COVID-19 response. They play an essential role in Canada, from ensuring our food systems keep running to taking care of our loved ones, often at great personal risk. If we continue to ignore the rampant human rights abuses against our essential workers, we are failing them and their families. TFWs must be empowered to speak out against abusive employers and protect their health and livelihoods with no fear of retribution. The best way to do that is to call upon our government to give open work permits in the immediate term and permanent residency in the long term to temporary foreign workers. This reduces the threat of deportation and income loss that some employers use to exploit their workers.

While the first wave of the COVID-19 hit developed countries, we are now seeing a rise in cases in South Asia, Africa and Central and South America, where many TFWs travel from. By advocating for the rights of migrant workers, we have an opportunity to help our essential workers and their families through one of the most challenging periods we have ever experienced as a global society, and demonstrate that we can put our values into action.