EVEN though uncertainty grips the global market with the ongoing Covid-19 crisis impacting various industries, the Philippine remittance sector would still post growth this year, given that financial aid is highly needed on the receivers’ end in these difficult times, according to a top official of an international payments processing provider.
“Usually in the past, remittances have been resilient to economic cycles. We saw that in the financial crisis of 2008, when remittances practically were affected in their growth. But we did not see large downturns in remittances,” UniTeller CEO Alberto Guerra told reporters at a recent webinar for the launch of the second installment of their new report dubbed “Both Sides of the Coin—Side Two, The Sender’s Story.”
“Now Covid-19 has been a very particular situation because we’re not only talking about dramatic unemployment in some cases, but also we have seen impact on accessibility to remittance facilities,” he added.
The executive contradicted earlier reports about how remittances could respond to the pandemic. He cited, in particular, the World Bank’s expectation that remittances are going to fall by 20 percent this year.
“We’re not seeing that at least in the markets that we have. [Based on the origin of remittances from] the United States to Asia, we’re seeing some growth; US to Mexico, we continue to see some positive growth despite the pandemic,” Guerra said.
“I do believe that as economies continue to come back to a ‘new normal,’ hopefully, remittances will pick up again because they [migrant workers] need to support their families continuously. It may have increased because of this pandemic,” he said.
Seeing such behavior apparent among their Filipino clients, the CEO of UniTeller agreed with last month’s forecast of the Bangko Sentral ng Pilipinas (BSP) that remittances inbound to the Philippines will continue to expand amid the ensuing pandemic.
“I think that’s a possibility. But we have to monitor and see how things continue to evolve in the upcoming months,” Guerra said.
Based on the recently released study of UniTeller, Asian migrant workers, particularly Filipinos, Indians, Indonesians and Vietnamese, in the US, Hong Kong and Singapore remit their hard-earned money back home 1.6 times on the average per month.
“This is a very significant data because people are sending money more than once a month and to continuously support the needs of their families,” he emphasized.
Over half of low-income migrant workers are remitting their money to spouses, children and/or their parents. In Hong Kong, spousal remittances are the highest at 24 percent, followed by 21 percent in Singapore, and 19 percent in the US.
On the average, spousal remittances account for 15 percent of senders’ annual salary. Migrant workers from Hong Kong remit almost a fifth, or 19 percent, of their annual wage back home to their loved ones. In Singapore and the US, it’s around 15 percent and 12 percent, respectively.
“One of the more concerning issues which we’ve uncovered in our research is the expectation of remittance payments and how it places emotional stress on the family,” said Noel Cristal, head of Asia Business Development, UniTeller. “We found out in our report that one in three senders expressed that remittance payments cause emotional stress.”
The highest anxiety reported is from Hong Kong, where 36 percent of senders have experienced emotional stress when sending money to their family; then followed by senders from Singapore, 34 percent, and from the US, 29 percent.
“There are many reasons for this. One is that migrant workers endure a long time away from their loved ones and often serve as unsound finances yet have little visibility or control of what they are sending. So they usually don’t know where these funds are being used although they have instructions,” he explained.
Another surprising finding of UniTeller, Cristal revealed, is that many senders (75 percent) have been used to living abroad and expressed that they would still consider being away from their home countries even if they didn’t need the money.
Financial matters aside, 77 percent would like to stay in the US and Singapore, and 71 percent in Hong Kong. For him, this is reasonable given the context that they usually have better career and salary opportunities in these originating markets.
Meanwhile, almost a third (32 percent) of migrant workers would also, eventually, prefer to stay permanently away from their home countries. This figure was high for Hong Kong (38 percent) and Singapore (34 percent), yet incidentally the lowest for the US (25 percent).
As part of these sacrifices that many of these migrant workers undertake, nearly one-third or 29 percent say that even though they have enough money to get by, they still need to make lifestyle sacrifices in order to keep making their remittance payments and ease the financial struggles of their loved ones back home.
Receivers’ attitudes toward the digitalization were positive, with 92 percent of overseas Filipino workers’ families expressing that they would consider using a mobile app to electronically receive money transfers from their loved ones abroad. This is much higher for Indians (99 percent), Indonesians (98 percent) and Vietnamese (97 percent).
“Covid-19 may have an impact on the industry, but remittances have shown to be resilient and will remain as a key driver for many receiving economies. The degree of the impact will depend on multiple factors and it is corridor-specific. Remittances can alleviate poverty, and will become more efficient when migrant workers and their families are educated on financial inclusion and digital remittance solutions,” stressed Guerra.
Image credits: Aleksey Eremeev | Dreamstime.com, Nonie Reyes