19 Aug 2022
The COVID-19 epidemic has devastatingly impacted worldwide labour mobility, affecting migrant remittances and employment. Migrant workers require additional economic and social protections and advocacy, now more than ever. It is critical to have a policy environment that encourages migrant savings and investments.
The epidemic has had a devastating effect on international labour migration. The employment security and well-being of over 91 million foreign migrants from Asia and the Pacific are critically important.
The pandemic has impacted the financial industry influencing migrant remittances, money transfers to Pakistan or other countries, reintegration, and employment. Let’s examine some workable solutions that can help migrants solve their remittance concerns during the pandemic of COVID-19.
This pandemic constitutes an even more significant threat to countries relying heavily on remittance income than in previous economic crises. Because of the global nature of this crisis, recipient nations will not only see remittance flows dry up, but they will also see outflows of private money and possibly a drop-in help from suffering donors.
When private capital exits a country due to a macroeconomic shock, whether climate-related or deterioration in the country's terms of trade, remittance flows typically enter to mitigate the impact of capital flight. On the other hand, emerging countries should expect to see both capital flight and a decline in remittance flows during the current crisis.
A solid safety net of social programs, unemployment insurance, and direct payments will significantly affect the severity of the current depression and the rate of economic recovery in more prosperous countries. Remittances are the largest buffer for unforeseen life expenses and investments towards a better future for underprivileged countries and areas.
While enormous (global remittances peaked at $706 billion in 2019), this safety net is currently being eroded by employment losses in the service sectors most reliant on migrant labour and shutdowns that fail to recognise remittance brokers as essential services.
Even minor adjustments in remittance policy can significantly impact developing-country financial systems over time. Given the magnitude and importance of remittances for people living on wages of a few dollars a day, adequate measures must be taken to support such people. Initiatives to reduce the costs of making online money transfer to Pakistan or any other home country and make them easier to send and receive can directly improve the lives of migrants and their families.
Because of their relevance to financial stability in many countries, such policies can aid the economy's long-term recovery. Once the immediate health issue stabilises, faster adoption of digital financial services that make remittances cheaper and more convenient should be prioritised.
Not only can digital financial services give the best way to transfer money to Pakistan, but they can also lessen the bite of fees into payments via technology-enabled scalability. The global average cost of remitting $200 as of the end of 2019 was 6.82 per cent, or $13.64. In the last decade or so, vital remittance-sending countries have pledged to lower this cost. Goal 10.c.1 of the Sustainable Development Goals (SDGs) aims to reduce this cost to $6 on average by 2030.
A remittance transaction, being a cross-border transaction, typically entails foreign-exchange conversion unless the receiver can receive in the same currency as the sending country.
Remittance Service Providers (RSPs) generally maintain positions in various currencies at any given time and establish the foreign exchange rate for remittances based on the current rate.
Volatility in foreign exchange markets makes it harder for RSPs to set foreign exchange rates confidently at periods of increasing uncertainty, such as presently, resulting in higher foreign-exchange-related expenses. This, together with more significant operating costs resulting from operational disruptions, may put upward pressure on remittance pricing in the immediate term.
With all of this information, it’s recommended that if you live in the United Kingdom, and send money to Pakistan from the UK, use ACE Money Transfer for the best services. ACE provides better exchange rates, the lowest fees for international transactions, and the most secure online money transfers to ensure ultimate peace of mind for its customers.