Guest Column

Why We Need to Recognize Migrant Domestic Workers’ Contribution to Our Economies

By Tomoko Nishimoto 15 June 2018

On Saturday we will celebrate two important days, the International Day of Family Remittances and the 7th anniversary of the adoption of the landmark Domestic Workers Convention (No. 189) of the International Labor 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. Southeast Asia and the Pacific employ some 9 million domestic workers. More than 2 million of them are migrant domestic workers, constituting nearly 20 percent of all migrant workers in the region.

Due to an aging population, lower fertility rates and women’s increasing labor 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 the 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, Laos, Myanmar and Vietnam upon their return from Thailand and Malaysia found that 93 percent 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 worldwide reached $466 billion in 2017, an increase of 8.5 percent since 2016. Migrant workers from the Asia-Pacific region sent $256 billion home in 2017; this is more than 10 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 percent to a receiving household’s income. In Asia and the Pacific, the Philippines and Vietnam remained the top remittance destinations with inflows to the Philippines at $33 billion and to Vietnam at $14 billion in 2017.

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

Barriers to Sending Money Back Home Safely Hampers Development

Maximizing the 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 Laos 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 that helps migrant workers compare remittance costs to find the best rates and money saving options. The portal also helps migrant workers 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

Saturday 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.

Also of critical importance are 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.

Tomoko Nishimoto is assistant director-general and regional director of the ILO Regional Office for Asia and the Pacific.