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Migration and Development Brief 32 Summary

Core Content

This Migration and Development Brief 32 by the World Bank's Migration and Remittances Team provides an analysis of the impact of the COVID-19 crisis on migration and remittance flows, emphasizing the broader economic and social implications for both migrant workers and their home countries.

Main Views

• The economic crisis induced by the pandemic is expected to be longer, deeper, and more pervasive than previous crises, including the Spanish flu (1918–20) and the Global Financial Crisis (2008–09).
• Migrant workers are particularly vulnerable to unemployment, wage loss, and health insurance disruption during economic downturns.
• Remittance flows to low- and middle-income countries (LMICs) are projected to decline by 20% in 2020, from $554 billion in 2019 to $445 billion.
• Internal migration has also been severely affected, with mass return processes in countries like India and Latin America due to lockdowns and movement restrictions.
• The global average remittance cost fell slightly to 6.8% in 2020, but remains far above the SDG target of 3%.
• Government policy responses have largely excluded migrants, despite the externalities of their health status on the broader population.
• Digital remittances are growing, but poor and irregular migrants still face barriers to accessing online services.
• Stranded migrants are at risk due to travel bans and disrupted transport services, and some host countries have implemented visa extensions and temporary amnesty.
• The crisis has highlighted the global shortage of health professionals, creating a need for long-term investment in medical training.

Key Information

Impact of the Crisis on Migration and Remittances

• Employment and earnings of foreign workers have been heavily affected, especially in sectors like agriculture, hospitality, and manufacturing.
• Internal migration has been impacted more than international migration due to job losses and restricted movement.
• Remittances are countercyclical, meaning they increase during crises in the origin country, but decline during crises in the host country.
• Remittance flows are expected to be the most affected in Europe and Central Asia, South Asia, and Sub-Saharan Africa due to economic contraction and currency fluctuations.

Policy Responses

• Governments should include migrants in health strategies, social programs, and economic recovery plans.
• Support for stranded migrants, remittance infrastructure, and families left behind is crucial.
• Inclusive policies can help reduce xenophobia and discrimination against migrants.
• The global financial crisis had a procyclical effect on remittances, while the bird flu had a countercyclical effect, showing diverse impacts based on the nature of the crisis.

Regional Trends

• Remittance flows to LMICs are expected to decline significantly in 2020, with Europe and Central Asia and South Asia seeing the largest drops.
• Digital remittance services are on the rise, but access remains limited for poor and irregular migrants.
• Remittance costs vary widely across regions, with Russia and GCC countries being more cost-effective due to lower fees.

Development Goals

• SDG 17.3.2, SDG 10.c.1, and SDG 10.7.1 are migration-related development goals that are expected to see slower progress in 2020.
• Remittance costs have not yet reached the SDG target of 3%, and are likely to increase due to service disruptions.
• Reducing recruitment costs for migrant workers is also a challenging goal due to the economic impact of the crisis.

Conclusion

The pandemic has created significant challenges for both international and internal migrants, affecting employment, health, and economic stability. The decline in remittance flows has reduced external financing for LMICs, and increased poverty and vulnerability for families dependent on these flows. Policy responses must be inclusive and comprehensive, addressing health, employment, and social protection for migrants and their families. Long-term investments in healthcare and migration infrastructure are essential for recovery and resilience.