International Technical Meeting on Measuring Migrant Remittances Capturing information on remittances and other flows – a fact-finding in Europe Violetta Damia International Technical Meeting on Measuring Migrant Remittances 24 - 25 January 2005

Overview General considerations Definitions (BPM5) Fact-finding exercise Results – Methodological issues Results – Magnitude of flows Main conclusions Questions?

General considerations Workers’ remittances: 2nd largest source of external finance for developing countries size relevant to GDP vs. low volatility shown conceptual framework given by IMF BoP Manual (5th edition) Compensation for employment may be earned by persons residing in economies that differ from the economies in which they work on a temporary basis and also by persons residing in their own economies (e.g. international institutions may employ residents of the economies in which they are located) Workers’ remittances Migrants’ transfers are the more difficult to be captured

Overview General considerations Definitions (BPM5) Fact-finding exercise Results – Methodological issues Results – Magnitude of flows Main conclusions Questions?

Definitions (BPM5) Compensation of employees: the earnings of border, seasonal, and other workers paid by an employer resident in one economy to employees resident in other economies paid in kind and/or in cash – recorded under current account / income Workers’ remittances: the remittances of funds to families abroad by residents (living in the host economy for 12 months or more) recorded under current account / current transfers Migrants’ transfers: the net worth of migrants at the time of migration (cash and goods transferred) – recorded under capital account / capital transfers Compensation for employment may be earned by persons residing in economies that differ from the economies in which they work on a temporary basis and also by persons residing in their own economies (e.g. international institutions may employ residents of the economies in which they are located) Workers’ remittances Migrants’ transfers are the more difficult to be captured

Overview General considerations Definitions (BPM5) Fact-finding exercise Results – Methodological issues Results – Magnitude of flows Main conclusions Questions?

Fact-finding exercise (WG-ES) EU Member States were requested to send available information on Compensation of employees, Workers remittances, and Migrant transfers with the objective to assess the magnitude of flows at the European level data and metadata if available, with geographical allocation Compensation for employment may be earned by persons residing in economies that differ from the economies in which they work on a temporary basis and also by persons residing in their own economies (e.g. international institutions may employ residents of the economies in which they are located) Workers’ remittances Migrants’ transfers are the more difficult to be captured

Overview General considerations Definitions (BPM5) Fact-finding exercise Results – Methodological issues Results – Magnitude of flows Main conclusions Questions?

Results: Meth. Issues (1) Compensation of employees: The information reported is partly collected by settlement systems, tax and social security systems and the resident credit institutions partly estimated based on the previous years, number of foreign workers, average wages, social contributions and census

Results: Meth. Issues (2) Compensation of employees: Main caveats: high thresholds diversity of methods to transfer money 1-year-rule : difficult to apply in practice difficulty to differentiate between compensation of employees and workers’ remittances

Results: Meth. Issues (3) Workers’ remittances: The information reported is mainly collected by settlement systems, by banks and post offices, through household surveys, from foreign exchange reports difficult to estimate

Results: Meth. Issues (4) Workers’ remittances: Main caveats: high thresholds diversity of methods of money transfers the presence of illegal foreign workers 1-year-rule : difficult to apply in practice

hence migrants transfers are recorded under workers’ remittances Results: Meth. Issues (5) Workers’ remittances: The most difficult to measure difficulty for most countries to monitor the flows separately hence migrants transfers are recorded under workers’ remittances the estimations are based on number of migrants and the average assets transferred

Overview General considerations Definitions (BPM5) Fact-finding exercise Results – Methodological issues Results – Magnitude of flows Main conclusions Questions?

Results: Magnitude of flows (1)

Results: Magnitude of flows (2) Compensation of employees: mainly EU25: temporal, seasonal and border workers American continent (especially the debit side) Workers’ remittances: mainly EU25 debit side: balanced distribution worldwide Migrant transfers: even distribution of low level flows: underestimation?

Overview General considerations Definitions (BPM5) Fact-finding exercise Results – Methodological issues Results – Magnitude of flows Main conclusions Questions?

Main conclusions need to fill the recording gaps so as to have a more concrete measurement review thresholds applied importance to follow harmonised methods to ensure comparability (based on BPM5) further improvement of BPM5 in terms of definitions encouragement for the utilisation of formal channels by reducing transfers’ costs increase quality of information (underestimations) development of estimation methods for capturing reality (e.g. refinement of households surveys)

Questions?