Do remittances really help at home?

In a small, farming district in Indonesia’s West Nusa Tenggara province, thousands of women leave home each year to cook, clean and take care of children for families in the Middle East.

The migrant domestic workers of Sumbawa district – with about 400,000 residents – sent home nearly $100 million over the past five years, paying for new, modern homes and mobile phones, as well as education and healthcare, researcher Gregory Randolph said.

Yet for all the money pumped into Sumbawa district by generations of people who have left to work abroad over the past half century, people continue to leave for lack of opportunities at home, Randolph said at the launch of his study on migrants’ communities of origin.

“Labour migration simply is not delivering economic development to communities of origin,” Randolph said on Wednesday at the close of a three-day conference on migrant labour in Bogor.

“Whatever benefits migration and remittances might deliver … they have not included the type of development that creates good jobs. This was confirmed time and time again in the interviews I did in West Nusa Tenggara.”

The province lies in the south and centre of the Indonesian archipelago.

There are an estimated 250 million migrant workers globally, who are expected to send home about $440 billion in remittances this year, according to the World Bank.

Remittances remain a key source of funds for developing countries, far exceeding official development assistance and even foreign direct investment, the World Bank says.

In the 1980s Indonesia even began including migration in its economic plans, putting “manpower services export” as one of its top priorities in its 1994-1999 plan, Randolph wrote in his study.

Between 2006 and 2013, more than 50,000 people from Sumbawa left for jobs overseas, Randolph wrote, almost all of them women leaving for domestic work.

He found that migrants’ greater spending on education and healthcare for their families had not created stable local jobs, or shifted better-educated young people toward high-skilled migration.

“Remittances do not positively impact anyone except the migrant and his or her family, and even then, the impacts do not alleviate the need for future generations to migrate,” he wrote in the report.

The problem, he said, is that there is no effort to channel remittances into the economic development of home communities.

“Governments are more likely to see migrants as consumers in their origin communities … they send money back that can be spent, or they bring money back and spend it. Governments for the most part cannot imagine that migrant workers can also be producers in most communities,” he said.

In addition to focusing on migrant labour exploitation and protection, Randolph urged the 200-plus migration and labour experts at the conference to consider economic development in the migrants’ origin communities.

“We really need new models and new ways of imagining how the hard work that migrants do abroad can bear fruit in their home communities,” he said.

“We could help migrant workers pool their resources and set up cooperatives or producer companies … they might actually be able to lead the effort to replace the old broken paradigm of development … with a new one that empowers migrant communities and makes migration a choice rather than a compulsion.”

He pressed the government to train migrants in management and investment of their remittances, and to develop models of collective investment by which migrants can pool savings to start small and medium enterprises.

In the report, Randolph proposed that Sumbawa, which has seen a tenfold increase in corn yields over the past decade, might develop agro-processing businesses, rather than shipping out its raw crops for processing elsewhere in Indonesia.

This article is published in collaboration with Thomson Reuters Foundation. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Alisa Tang is a Sub-editor at Thomson Reuters Foundation.

Image: Migrant workers heading for Middle East countries hold their documents at an immigration office in Tangerang, Indonesia’s Banten province. REUTERS/Beawiharta