Brexit Decision Hits Nigeria, India, Pakistan Migrant Workers’ Wages Sent Home | Independent Newspapers Limited
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Brexit Decision Hits Nigeria, India, Pakistan Migrant Workers’ Wages Sent Home

Brexit , UPDATE
Posted: Aug 19, 2016 at 6:10 am   /   by   /   comments (0)


Britain’s decision to leave the EU is rippling through the global economy via an important but hidden channel: the money that migrant workers in the UK send home, reports FT.

Nigeria, India and Pakistan are the top three recipients of remittances from the UK, excluding high-income countries who have wealthy and globally mobile workforces.

The World Bank estimates migrant workers sent back about $24.9 billion last year, making Britain the fourth-largest source of remittances in the world. The sharp fall in the value of sterling since the Brexit vote (down 14.6 percent and 13.2 percent against the dollar and euro, respectively) means those remittances are worth less to the people back home who receive them.

The money Tibor, a 32-year-old Slovak architect, sends home from London each month not only supports his disabled mother and elderly grandmother, it is also building his family a house in the small village of Bela nad Cirochou in the east of his native country.

But since Britain’s vote to leave the EU this summer, the pounds he sends home are worth a lot less than they used to be. “He is worried about the impact of Brexit,” says the architect’s grandmother Stefania, who declined to give her surname. “The plan was for him to come back home only after he retired.” But the hit to his income means he is now “waiting until the situation is a bit clearer”, Stefania adds.

Karolis Rudys has been working as an automotive engineer in the UK for two years, saving up to buy a house in his native Lithuania. He estimates his savings are now worth thousands of euros less than they were before the Brexit vote. He will need to become “a bit more creative about how to earn money”, he says, though that will not be easy.

Globally, remittance flows are three to four times larger than official development assistance, which makes them “really important for people in poor and middle-income countries,” said Vijaya Ramachandran, a senior fellow at the Center for Global Development, a US-based think-tank.

“Maybe migrants [in the UK] will work harder to make up some of that shortfall, but [given] the fall in the value of the pound, it is going to be hard to make up for all of that.”

The issue extends far beyond Europe.

In South Asia, a region that has strong historic ties to the UK — its former colonial power — millions of people depend heavily on remittances from overseas workers to stay afloat. India, which received £3.6bn in remittances from the UK last year, is the world’s largest recipient of overseas money sent home by migrant workers, accounting for approximately 3.4 percent of Indian GDP.

Though the amount of funds flowing from the UK to Bangladesh, Pakistan and Nepal is far lower than the total sent to India, these more fragile economies depend far more heavily on total remittances, which account for about 8.5 percent, 7 percent and 29 percent of each country’s GDP, respectively.

The only European economies to make the top 10 recipients of UK remittances are Poland and Hungary. Nevertheless, it is an increasingly important source of income in the “EU8” eastern European countries since they joined the EU in 2004. The UK is the second-biggest source of remittances to the EU8 countries after Germany. For example, they are now worth between 3 and 6 percent of GDP for Latvia, Lithuania and Hungary.