Remittances

Jun 16, 2017

Photo: Cambodian migrant workers were prepared to leave for their workplace in Thailand ©shutterstock

Does 16 June ring a bell? 

In many countries, it could well be bigger than Mother’s Day or Father’s Day. It is likely that for most people that date is unremarkable, and slips by unnoticed. But the impact of June 16 – International Day for Family Remittances – is massive.

From Asia to Africa from the United States to China, the financial pipeline of people sending money to transferring money to families back home is almost endless.

In a country such as Cambodia, it is a day that provides an opportunity to pause and reflect on the impact of migrant labour, and how this very 21st century phenomenon is transforming the lives of so many people.

There are now more than one million Cambodians working abroad, most in Thailand but also in South Korea, Malaysia and Japan. Within our borders, more than half a million young women work in Cambodia’s textiles sector, and hundreds of thousands of young people toil on construction sites. Many of these workers are young and have left their families and communities for the first time. The work is usually hard and not without risks.

In 2016 these workers sent home about 1.7 billion US Dollars according to the Ministry of Labour and Vocational Training. The National Bank of Cambodia estimates the flow of funds through the banking system as 431 million US Dollars. The discrepancies between these two figures highlight that a large flow of money is likely being transferred by informal - and more risky - methods.

International Day for Family Remittances provides a time for us all to acknowledge the efforts of migrant workers and the contributions they make to their families, communities and country.

Regarded as ‘economic heroes’ in the Philippines, where remittances exceed Foreign Direct Investment, their counterparts here make a similar contribution to development of Cambodia. They also face more risks.

Perhaps the most significant impact of remittances is in securing access to education for family members. Research has demonstrated that drop-out rates fall and years of schooling increase in households that benefit from remittance income. Supporting and strengthening this link, by improving the quality of education and its economic return in the job market, will provide access to better employment and will also have wider benefits to society.

Funds remitted by Cambodia’s migrant labour force also play an increasingly important role in the rural economy. Although much labour has been diverted to work abroad, the funds they provide have contributed to economic diversification in the countryside, and the modernisation of agricultural production.

So what can be done to support migrant labour? How can it be made safer? And how can workers’ hard-earned savings be used to greatest effect to support their families? Ensuring that migrant labourers are documented - and therefore working legally - is perhaps the first step. Currently this is the exception rather than the rule. By formalizing their status, migrant labourers are not only able to move more freely - reducing the dependence on brokers - but are also more likely to be assured of legal protections by their employers.

The One Stop Service Centres established by the Government in 2014 reduce the complexity and cost of securing necessary documents. They have been a positive initiative. A wider set of services, provided directly or effectively regulated, that formalize and increase security in the process of finding employment and then organizing transport, living conditions, and remittance arrangements would be a useful additional step.

Documentation will also ease the inclusion of workers and their remittances in financial and banking systems. Financial inclusion is important, as it enables remittances to be transferred safely and efficiently. Currently only about 1 in 5 Cambodians have a bank account, and in rural areas this figure is far lower. Fewer still have savings accounts. This reduces the likelihood of remittance income being used to increase family security by increasing household assets, providing access to insurance or being used to finance productive investment. Higher financial literacy and increased inclusion in the banking sector are therefore important as they translate into safer remittance transfers, increased asset accumulation and better investment decisions.

Amartya Sen, the Nobel Prize-winning economist, wrote in ‘Development as Freedom’ that promoting economic opportunity and the right to work are fundamental to improving welfare and human development. Migrant labourers epitomize this approach to development that emphasizes the role of work and earned income. It provides the surest means to a more prosperous, independent and autonomous life.

So let’s take some time today to reflect on the situation of Cambodia’s migrant labourers, how it is and how it can be improved. Migrant labour need not be exploitative, and fraught with risk and uncertainty. It has the potential to be empowering, allowing individuals to take control of their own destinies and secure improved opportunities for themselves and their families. Better yet, let’s not simply reflect. Let’s urge and support those in decision-making roles to do everything possible to ensure safe and dignified working conditions.

Happy International Day for Family Remittances everybody.

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Nick Beresford is the Country Director of and Philip Courtnadge is an Advisor for the United Nations Development Programme in Cambodia.

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