T d d O l k f Mi iTrends and Outlook for Migration and Remittances Worldwide

Dilip RathaThe World Bank

and Remittances Worldwide

The World Bank

The 4th ADBI-OECD-ILO Roundtable on Labour Migration in Asia:27 28 J 201427-28 January 2014, ADBI, Tokyo, Japan

The views expressed in this presentation are the views of the author and do notThe views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use Terminology used may notaccepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.

Key messages

There is a need for increased labor migration due to income gaps and demographic pressuresg p g p p

Remittances to developing countries estimated to be $414 billion and to Asian developing countries $242 billion in 2013billion and to Asian developing countries $242 billion in 2013.

Migration costs remain a formidable barrier to people mobility.

Trends in migration

Globally, some 3% of world population (or 232 million) are international migrants.international migrants.

73 million people from Asian developing countries live outside their home countries in 2013their home countries in 2013.

More than half of them (44 million) live in developing countries.

Asian developing countries refer to ADB member countries. EAP refers to East Asia and Pacific as defined by World Bank and includes a smaller group of countries.

In the EAP region, intra-regional people mobility is increasingis increasing

35.0(Million)

25 0

30.0

(Million)

8%

20.0

25.0

33%6%

15.0 38%

6%

5.0

10.048%

46%0.0

2000 2013

Source: World Bank (2013), “Migration and Development Brief 21”, October.

EAP N America and W Europe Middle East Others

Stylized facts on migration in AsiaStylized facts on migration in Asia

Most migrants are unskilled.

The share of undocumented workers is large. g

The share of female migrants has been increasing, especially in Indonesia and the Philippinesespecially in Indonesia and the Philippines.

Migration offers opportunities.

Over a billion jobs will have to be created in theOver a billion jobs will have to be created in the coming decades, both at home and abroad

Projected Change in Labor Force, 2005–50 (millions), ages 15-64( ), g

Sub-Saharan Africa 699Middl E t & N Af i 187Middle-East & N. Africa 187East and South Asia 727

Western Europe -88North America -12North America 12Eastern Europe & Central Asia -26

Source: Koettl (2010); Shaping the Future : A Long-Term Perspective of People and Job Mobility for the Middle East and North Africa (World Bank 2008)

Demography – a key pull factor for future g p y y pmigration in Asia

Share of working age g gpopulation

Source: World Bank (forthcoming), International Migration and Development in the East Asia and Pacific Region.

Demography – a key pull factor for future g p y y pmigration in Asia

Share of population older than 64 yearsthan 64 years.

Source: World Bank (forthcoming), International Migration and Development in the East Asia and Pacific Region.

Japan: Rapid aging population

United Nations Department of Economic and Social Affairs/Population Division

Remittances to developing countries estimatedRemittances to developing countries estimated to be $414 billion in 2013

700

800FDI$ billion

500

600

300

400Remittances

Privatedebt &

100

200portfolio

equity

ODA

0

100

Source: Development Prospects Group, World Bank

Remittances to Asian developing countriesRemittances to Asian developing countries estimated to be $242 billion in 2013

$ billion

400

450FDI

$ billion

250

300

350

Remittances

150

200

250

Private

50

100

150 debt & portfolio

equity

50

0

50ODA

Source: Development Prospects Group, World Bank

-50

Remittance flows to developing countries

$ billion 2011 2012 2013e 2014f 2015f 2016f

D l i t i 414Developing countries 373 389 414 449 491 540East Asia and Pacific 106 107 115 126 139 154Europe and Central Asia 38 38 43 47 52 58Latin America and Caribbean 59 60 61 68 75 84Middle-East and North Africa 43 47 49 51 54 57South Asia 97 107 114 123 133 145South Asia 97 107 114 123 133 145Sub-Saharan Africa 30 30 32 35 38 41

Growth rateDeveloping countries 11.9% 4.3% 6.3% 8.6% 9.3% 9.9%

East Asia and Pacific 12.4% 1.0% 7.4% 9.5% 10.2% 10.5%Europe and Central Asia 17 6% 1 6% 10.8% 10 3% 11 2% 11 6%p 17.6% 1.6% 0 8% 10.3% 11.2% 11.6%

Latin America and Caribbean 6.1% 0.9% 2.5% 10.5% 11.1% 11.6%Middle-East and North Africa 6.3% 10.8% 3.6% 4.9% 5.4% 5.6%

South Asia 18 4% 9 7% 6 8% 7 7% 8 5% 9 4%South Asia 18.4% 9.7% 6.8% 7.7% 8.5% 9.4%Sub-Saharan Africa 4.5% -0.4% 6.2% 8.6% 9.2% 9.5%

Source: World Bank (2013), “Migration and Development Brief 21”, October.

Asian countries top remittances in 2013p

$ billion 2013e as % of GDP 2012$ billion, 2013e as % of GDP, 2012

7160

4860

3125 25 24

26 22 21 2015 15 11 9

25 25 24 21 21 21 2017

Source: World Bank (2013), “Migration and Development Brief 21”, October.

Remittance growth is picking up in all regionsEast Asia and Pacific Europe and Central AsiaGrowth, %Growth, %

18.0

p

Latin America and Caribbean Middle-East and North Africa

South Asia Sub-Saharan Africa

G o t , %G o t , %

13.0

8.0

3.03.0

2010 2011 2012 2013 2014 2015 2016

Source: Development Prospect Group, the World Bank

-2.02010 2011 2012 2013 2014 2015 2016

Remittance growth is picking up in all regions

East Asia and PacificGrowth %

18.0

East Asia and PacificGrowth, %

13.0

8 08.0

3.0

2010 2011 2012 2013 2014 2015 2016

Source: Development Prospect Group, the World Bank-2.02010 2011 2012 2013 2014 2015 2016

Double dip in remittance flows to Mexico but recoveringbut recovering

35%*year-to-year growth of 3-month moving average

25%

35%

15%

5%

-15%

-5%

-25%

15%

Jan 04 Sep 05 Apr 07 Dec 08 Aug 10 Apr 12 Nov 13

Source: Banxico

Jan-04 Sep-05 Apr-07 Dec-08 Aug-10 Apr-12 Nov-13

In the US employment is recovering faster forIn the US, employment is recovering faster for migrant workers than for natives*illi

24

123

125

millions

23119

121

123

Natives (left scale)

2211

117

119

113

115Migrants (right scale)

*3-month moving averages

21111Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Source: Current Population Survey

A decoupling of housing starts in the US and remittance flows to Mexicoremittance flows to Mexico

Year-on-year growth (%)

20%

40%30%Housing starts (right scale)

0%

20%

10%

-20%-10%

60%

-40%

30%

Remittances to Mexico

-60%-30%

Jun-

06N

ov-0

6A

pr-0

7S

ep-0

7Fe

b-08

Jul-0

8D

ec-0

8M

ay-0

9O

ct-0

9M

ar-1

0A

ug-1

0Ja

n-11

Jun-

11N

ov-1

1A

pr-1

2S

ep-1

2Fe

b-13

Jul-1

3

3-month moving averages

Currency depreciation to encourage remittancesCurrency depreciation to encourage remittances to India

60

65

18 0

20.0

Remittances ($ bn,

55

60

16.0

18.0 left axis)

45

50

12 0

14.0 Rupee/$

40

45

10.0

12.0

358.0Q1

2007Q4

2007Q3

2008Q2

2009Q1

2010Q4

2010Q3

2011Q2

2012Q1

20132007 2007 2008 2009 2010 2010 2011 2012 2013

Source: Internal Financial Statistics, IMF

After a decline during the crisis, remittance flows from Russia to Central Asian countries are recovering with increase in oil prices

9140

7

8

9

120

140

6

7

80

100

4

5

60

80

2

340

Avg oil (Brent/Dubai/WTI) $/B

0

1

0

20Russia outflows ($ billion, right axis)

Source: IMF Balance of Payments and Development Prospects Group, World Bank.

Jan-2004 May-2005 Oct-2006 Feb-2008 Jul-2009 Nov-2010 Apr-2012

Registered Syrian Refugees are increasingRegistered Syrian Refugees (thousands)

2,500Registered Syrian Refugees (thousands)

1 500

2,000

1,000

1,500

500

0Dec-11 Apr-12 Aug-12 Jan-13 May-13 Sep-13 Jan-14

Source: UNHCR based on available data from Egypt, Iraq, Jordan, Lebanon and Turkey

Remittance price is falling, but not as much in l l id h itt ilow volume corridors where remittance is more important

9%

10% Cost of sending $200

8%

9%Global simple

average

7%Global weighted

%

6%

gaverage

5%

Source: World Bank (2013), “An Analysis of Trends in the Average Total Cost of Migrant Remittance Services,” Remittance Prices Worldwide, December.

Remittance costs are still too highRemittance costs are still too high

Cost of sending $200 (%)

12.62013-Q4

8 3 8 68.3 8.67.8

7.0 6.6 6.3

Source: Remittance Prices Worldwide, World Bank.

SSA EAP Global MENA LAC SA ECA

In EAP, remittance costs are high, especially in Australia and Japanespecially in Australia and Japan

$16.2

13 7

Cost of sending $200 (%) in 4Q2013

9 4

13.7

7.2 7.6

9.4

3.7

Singapore to Phili i

Australia to Phili i

Singapore to Chi

Japan to Chi

New Zeland to Fiji

Australia to FijiPhilippines Philippines China China Fiji Fiji

Source: Remittance Prices Worldwide, World Bank.

Are remittance costs rising?Are remittance costs rising?

Lifting feesg

Closing of MTO accounts by correspondent banks

Recruitment costs can be a drain on migrants’ income

Sending Average recruitment In months ofDestination/Occupation

Sending country

Average recruitment cost ($)

In months of wages

Domestic worker in Hong Kong Indonesia 2,708 5.4

Philippines 1 719 3 4Philippines 1,719 3.4

Construction worker inConstruction worker in Middle East Nepal 1,200 6.0

Bangladesh 2,891 14.5

Manufacturing worker in Korea Bangladesh 950 < 1in Korea Bangladesh 950 < 1Sources: ITUC, IMWU and HKCTU, June 2012; APL-HK and PLU, April 2013; Martin 2013, Human Rights Watch 2013, World Bank 2011 (Nepal report), Korea’s EPS. These data should be viewed as preliminary.

Challenges – to capitalize migration and remittance links for developmentremittance links for development.

RemittancesKnowledge and

Remittancesg

technology transfer

Philanthropy Trade

Investment & entrepreneurship

Tourismp p

Skills Values & advocacySkills y

The wealth of the diaspora can be mobilized through diaspora bonds

Diaspora size(millions)

Estimated savings($ billions, 2009)

Developing countries 161.5 397.5East Asia & Pacific 21.7 83.9Europe & Central Asia 43.0 72.9Latin America & Caribbean 30.2 116.0Middle East & North Africa 18 0 41 2Middle East & North Africa 18.0 41.2Sub-Saharan Africa 21.8 30.4South Asia 26.7 53.2

The World Bank has set up a Task Force on Diaspora Bonds

Source: Ratha and Mohapatra (2011).

The World Bank has set up a Task Force on Diaspora Bonds

Global Knowledge Partnership onGlobal Knowledge Partnership on Migration and Development (KNOMAD)

An open, inclusive, multidisciplinary knowledge partnershippartnership.

Aims to generate a menu of policy choices, based on analytical evidence and quality control through peer-review.

A global public good that is also a learning process.

Data

High-skilled labor

migration

Lower-skilled labor

migration Internal

migration

Migration and

security

Thematic

migration

IntegrationEnvironmental

h d Working Groups

Integration issues in host communities

change and migration

Policy and institution

Migrant rights and

social

Demography and

migration

Mobilizing other

diaspora resources

al coherence

social aspects

migration

Remittances

Thematic Working GroupsThematic Working Groups1. Data on migration and remittance flows 10.Mobilizing diaspora resources as

agents of social and economic change2. Skilled labor migration

3. Low-skilled labor migration

g g

11.Environmental change and migration

12 Internal migration and urbanization4. Integration issues in host communities

5. Policy and institutional coherence

12.Internal migration and urbanization

Cross-cutting themes:

6. Migration, security and development

7 Migrant rights and social aspects of

1. Gender

2. Monitoring and impact evaluation7. Migrant rights and social aspects of

migration

8. Demographic changes and migration

3. Capacity building

4. Public perceptions and communications

9. Remittances, including access to finance and capital markets

Highlights of TWG Work Programsg g g

1 Data: Handbook on Improving Data on Migration1. Data: Handbook on Improving Data on Migration and Development: A Practical Guide.

(B Hovy UN DESA; F Laczko IOM)(B. Hovy, UN DESA; F. Laczko, IOM)

2. Skilled labor migration: Emerging global patterns f kill d i tiof skilled migration.

(S. Angenendt, BMZ; C. Ozden, World Bank)

3. Low skilled labor migration: Database on recruitment costs; Assessment of implementation ; pof bilateral agreements

(M Abella; M Tomei ILO)(M. Abella; M. Tomei, ILO)

Highlights of TWG Work Programsg g g

4. Integration issues: Comparative case study of g p yeffects of integration in host country and re-integration in homeland.

(H. Duncan, Metropolis; G. Appave, IOM)

5 Policy coherence: Identification of coherence5. Policy coherence: Identification of coherence criteria & development typology/assessment tool.

(B. Godenzi, SDC; D. Khoudour, OECD; S. Rosengaertner, UNDP)

6. Security: Inventory of data on border security

(K. Koser, Geneva Centre for Security Policy;(K. Koser, Geneva Centre for Security Policy; M. Fowke, UNODC)

Highlights of TWG Work Programsg g g7. Migrant rights: Development of indicators

(W. Gois, MFA; R. Saab, UNICEF; P. Oberoi, OHCHR)

8. Demographic change: Impact of international migration on fertility and mortality in countries of origin and destination.

(R. Muenz; A. Pawliczko, UNFPA)( ; , )

8. Remittances: TA on remittance data according to new IMF BPM6; Regulations affecting remittancenew IMF BPM6; Regulations affecting remittance service providers.

(D Ratha; WB)(D. Ratha; WB)

Highlights of TWG Work Programs10.Diaspora Resources: Diaspora Profiles;

Assessment of diaspora programs.p p g

(K. Newland, MPI; S. Plaza, WB)

11 E i t l h I t f l11.Environmental change: Impacts of slower environmental change and planned relocation.

(S. Martin, Georgetown)

12.Internal migration: Drivers and effects of internal gmigration; Mechanisms to cope with migrants' vulnerability.

(C. Abrar; University of Dhaka; R. Vargas-Lundius; IFAD)Lundius; IFAD)

Partnerships p International and regional agencies

Universities and research institutions

Think tanks

International initiatives

NetworksNetworks

Civil society

Website: www.knomad.org