This Sunday 18th December marks International Migrants Day, created by the UN to encourage conversations around migration, and recognise those who set up home in different countries. The UN notes that migrants contribute with their knowledge, network, and skills to build stronger, more resilient communities.
Migration often results in families being separated across borders, and as such, many migrants financially support their families from afar through digital remittances. World Bank reports that this year, remittance to low and middle-income countries grew by 5% to £506 billion*.This increase in remittance flow, despite the current economic climate, is demonstrative of how crucial international payments are to the migrant community.
The rising cost of living crisis, in addition to globally soaring inflation rates, has had a significant impact on migrants who support their loved ones overseas. A study** from WorldRemit revealed how, in response to inflation, migrants are changing their behaviours to maintain financial obligations to their families.
The global payments company connected with 1,000 international remittance senders living in either the US, UK or Australia, of which 20% were first generation migrants. Since the beginning of the year, 78% of respondents agreed that their cost of living has increased and cited the worst-affected areas as daily living (84%), utility costs (82%), transport (77%), housing (64%), and healthcare expenses (54%).
Inflation impacts both senders and receivers of remittances around the world. Respondents noted feeling the direct impacts of rising costs of living, and also noted that their loved ones back home share the same sentiment.
Globally, the main reason people cited that they send money to loved ones overseas for is day-to-day expenses (ie. food, transportation, clothing), accounting for more than half of all money sent overseas (53%), followed by one-off expenses, like travel (40%).
The increasing economic strain is likely to heighten the pressure that remittance senders experience, particularly in the event of incurring unexpected expenses.
In a testament to their resilience, migrants reported conserving their daily spending in order to sustain their ability to send money home. Examples included eating out less (49%), saving on day-to-day expenses (46%), limiting social gatherings to save money (28%), and opting for public transportation rather than driving (25%).
As the world adjusts to increased global inflation, more than half (52%) of respondents agreed that they now send money abroad to fewer people, with 72% now only sending to close family. Additionally, 75% of respondents said the cost of living for those they send money to has also increased since the start of the year. Notably, respondents reported that their outflow of remittances have either maintained or increased, despite financial stresses.
Since the onset of higher inflation levels, 60% of Americans and 57% of Australians who send money for healthcare reported an increase in the amount sent, while only 36% of Britons reported an increase. For those who send for education, 83% of Americans, 81% of Australians, and 62% of Britons reported maintaining or increasing the amount sent. For those who support loved ones’ rent, mortgage or utility bills, 79% of Americans and Australians, and 69% of Britons reported maintaining or increasing the amount sent.
More than 244 million people worldwide are classified as migrants, with 14.4% in the United States, 9% in the UK, and nearly half of the population in Australia classified as migrants (48%). With global inflation showing no signs of slowing, financial preparation and planning is essential to ensure that migrants and their families can continue to make ends meet.
* Figure converted from $626 billion as reported by the UN
** WorldRemit Cost of Living Study, 2022