Why we need to recognize migrant domestic workers’ contribution to our economies

Op-ed by Ms Tomoko Nishimoto, Assistant Director-General of the International Labour Organization and Regional Director for Asia and the Pacific

Comment | 16 June 2018
Today we are celebrating two important days, the International Day of Family Remittances and the 7th anniversary of the adoption of the landmark Domestic Workers Convention, 2011 (No. 189) of the International Labour Organization (ILO). In light of that, let us take a moment to appreciate the significant economic and social contribution migrant domestic workers make to the homes, communities and countries where they are employed, as well as to those they originate from.

The ILO estimates that more than 67 million people, mostly women, are employed in domestic work around the world. South East Asia and the Pacific employs some 9 million domestic workers. More than 2 million of them are migrant domestic workers, constituting nearly 20 per cent of all migrant workers in the region.

Due to an ageing population, lower fertility rates, and women’s increasing labour force participation, the care economies in many countries in the region including Brunei, Malaysia, Singapore, and Thailand, are heavily dependent on the work of migrant domestic workers. Projections indicate that the demand for domestic workers in the region will continue to grow in the near future, a demand that most likely will require migration.

At the same time, remittances sent home by migrant domestic workers also make a significant contribution to the well-being of their families and development of their home countries.

Migrant worker remittances contribute considerably to socio-economic development

A 2017 study by the ILO and the International Organization for Migration (IOM) surveying over 1,800 migrant workers from Cambodia, Lao PDR, Myanmar and Viet Nam upon their return from Thailand and Malaysia, found that 93 per cent of migrant workers regularly sent remittances home while working abroad. These remittances were used for a range of purposes, including immediate household needs, children’s education, paying off debt, savings, and supporting family members.

Remittances remain hugely important to developing economies, and the Asia-Pacific region is the biggest receiver of remittances worldwide. According to the World Bank, officially recorded remittances to low- and middle-income countries world-wide reached US$466 billion in 2017, an increase of 8.5 per cent since 2016. Migrant workers from the Asia-Pacific region sent US$256 billion home in 2017 – this is more than ten times the amount of development aid received in the region. A total of 320 million family members were supported by remittances across the region and remittances contributed on average 60 per cent to a receiving household’s income. In Asia and the Pacific, the Philippines and Viet Nam remained the top remittance destinations with inflows to the Philippines at US$33 billion and to Viet Nam US$14 billion in 2017.

The average cost to send remittances from Thailand to Cambodia, Myanmar, Lao PDR and Viet Nam ranges from 3 per cent to 20 per cent, depending on the service provider used, according to the United Nations Capital Development Fund (UNCDF). Given that, we still have some work do to realize the Sustainable Development Goal Target 10.c which aims to reduce the transaction costs to less than 3 per cent and eliminate remittance corridors with costs higher than 5 per cent by 2030.

Barriers to sending money back home safely hampers development

Maximizing development impact of migrant remittances requires that migrant workers have access to affordable and migrant-friendly remittance and banking services. This is, unfortunately, not yet the case in the ASEAN region.

The ILO and IOM survey found that informal remittance channels were the most popular among migrants from the Lao People's Democratic Republic and Myanmar. Vietnamese migrants preferred using banks or hand carry, while Cambodian migrant workers preferred money transfer organizations. In addition to a greater risk for the migrant worker to lose their earnings on its way home, reliance on informal remittance channels in the region has led to the existence of a significant shadow economy which needs to be brought to formality.

Barriers to migrant workers’ use of formal remittance channels include inaccessibility, high costs, low awareness of available remittance service providers, and a lack of trust. Lack of identification documents poses another challenge, especially for irregular migrant workers. Migrant domestic workers are among the most disadvantaged in accessing banking and formal remittance channels as they typically work very long days, have few days off, and are often unable to leave their places of work.

Realizing the development potential of remittances

To make sure that remittances can contribute to development and reach their destinations safely and affordably, the ILO is working on a number of initiatives on both the demand and the supply side of financial services. On the supply side this involves working with financial institutions so they can develop adequate financial services and products matching the need of the migrant worker. One of the initiatives linked to the demand side of financial services is the soon-to-be-launched SaverAsia. SaverAsia is a digital platform which helps migrant workers compare remittance costs to find best rates and money saving options. The portal also helps migrant workers to find financial services such as savings, payments, credit, and, insurance products, suited to their needs. A first user group testing of SaverAsia will take place in Singapore next week with Indonesian and Filipino migrant domestic workers, and it will be formally launched in September 2018.

More remains to be done

Today is an important opportunity not only to recognize the contribution that migrant domestic workers, most of who are women, make to their host countries, but also to celebrate their important role in supporting socio-economic development of their home countries.

However, in addition to building individual migrant workers’ capacity to make wise choices about their finances, an enabling environment needs to be created to maximize the development potential of their remittances. This requires making safe, affordable and migrant-friendly remittance and banking services available to all women and men migrant workers.

Of critical importance is also partnerships at the national, bilateral and regional levels that make migration a win-win proposition for countries of origin, destination and migrants themselves. Decent work for domestic workers, the essence of the Domestic Workers Convention, can only be achieved through a commitment to improving laws, making employers and workers aware of their obligations and rights, and partnerships among governments, workers and civil society that empower women migrant workers and protect their rights.

Ms Tomoko Nishimoto, Assistant Director-General and Regional Director, ILO Regional Office for Asia and the Pacific.

This opinion piece was first published in the Irrawady and the Malaysiakini.