The wide-ranging effects of the Covid-19 global pandemic are almost unfathomable. Every day we hear of a different sub-section of society who have had their world turned upside down. Beyond the catastrophic loss of life being experienced all over the world, the next most serious issue is economics. Almost every country has seen its economic prowess take a downward spiral, but for many countries, their economic makeup simply cannot account for a crisis of this magnitude.
In this kind of situation, it is always the poorest countries and by extension the poorest citizens that suffer the gravest consequences. There is a particular type of economy that is disproportionately affected by the pandemic, and it is remittance-dependent economies.
These are countries that see a large percentage of their gross domestic product made up of money that has been sent by migrant workers in another country. For example, if a Dutch person went and worked in France and sent that money home to their family in The Netherlands, that money would be classed as a remittance. It is crucial for many developing countries. The World Bank anticipated a 20% decline in remittance flows in 2020, which is the sharpest decline in recent history.
How does the pandemic affect this?
The simple answer is that the work abroad has disappeared. One of the most common trades for migrant workers is construction, and with developers tightening their belts all over the world, that work has either been paused or cancelled altogether. Major economies such as Russia have been steadily declining for almost a decade now, but the pandemic has exacerbated and accelerated that decline.
Another area of the world that sees constant construction work being carried out by migrant workers is the Middle East, more specifically Saudi Arabia, Qatar, the UAE, and Bahrain. Due to the immense wealth the Gulf states possess, they employ more migrant workers than their own populations. In the UAE, Qatar, Bahrain, and Kuwait, migrant workers outnumber the overall population. Saudi Arabia employs 12 million migrant workers, when its national population is only 20 million. In Qatar and the UAE, migrant workers make up more than 87% of the population.
Even these astronomically wealthy states are having to tighten the purse strings, and it is causing millions of migrant workers to head back to their families, often into abject poverty. Gulf governments have spent heavily on stimulus packages for their national populations, but this financial aid has been non-existent for migrant workers.
Which countries rely on remittance?
This is a problem facing smaller economies all over the world, but Tajikistan is an interesting case in point. It is the poorest of the Central Asian countries, and one of the main reasons for this is its lack of arable land, along with the lasting effects of the break-up of the Soviet Union. It is extremely mountainous, with over 90% of its land considered upland.
That’s why Tajikistan is heavily reliant on remittance payments from Russia. Over 33% of its GDP is made up of remittances. Tajik workers have been unable to travel to Russia since March 2020, due to travel bans put in place when the pandemic began. That increases the unemployment rate within the country, and workers who were already in Russia lost their work as cities began to lockdown. Russia’s economy has been stagnating since 2014, meaning remittances were already decreasing.
In April 2020 the Tajik President Emomali Rahmon wrote a letter to the International Monetary Fund which mentioned that remittances from Russia had declined by 50%. Russia’s economy is expected to enter a deep recession because of the pandemic, and the knock-on effect for Tajikistan will be severe. This will force Dushanbe to seek other ways to employ its population and reduce reliance on remittance.
Another country facing a similar plight to Tajikistan is Bangladesh. The lack of opportunities for migrant workers are undoing years of work by Bangladesh to improve its poverty statistics. Remittances were worth $15.29 billion a year to Bangladesh, and it was an avenue of work that the government encourages.
The Bangladeshi government reports its progress on reducing poverty to the United Nations, and they said the poverty rate had halved from 40% in 2005, to 20.5% in 2019. The pandemic is rapidly deleting this progress. By June 2020, the poverty rate had risen to 29.5%.
Whilst it may feel like the pandemic has been here for a long time, its ability to almost destroy decades of work in one year is staggering. This global event is going to force many countries like Tajikistan and Bangladesh to look inwards and decide how they can become less reliant on remittances, because global economies won’t recover for many years to come.
Euan Burns writes for immigrationnews.co.uk. This is a media platform that helps to raise awareness about migrant injustices and news around the world. The views and opinions expressed in this article are those of the author.