Capturing information on remittances and other

flows – a fact-finding in Europe

Violetta Damia

24 - 25 January 2005

International Technical Meeting on Measuring Migrant Remittances

General considerationsDefinitions (BPM5)Fact-finding exerciseResults – Methodological issuesResults – Magnitude of flowsMain conclusionsQuestions?

Overview

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)

General considerations

General considerationsDefinitions (BPM5)Fact-finding exerciseResults – Methodological issuesResults – Magnitude of flowsMain conclusionsQuestions?

Overview

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

Definitions (BPM5)

General considerationsDefinitions (BPM5)Fact-finding exerciseResults – Methodological issuesResults – Magnitude of flowsMain conclusionsQuestions?

Overview

EU Member States were requested to send available information on

1. Compensation of employees, 2. Workers remittances, and 3. Migrant transfers

with the objective to assess the magnitude of flows at the European level

Fact-finding exercise (WG-ES)

data and metadata if available, with geographical allocation

General considerationsDefinitions (BPM5)Fact-finding exerciseResults – Methodological issuesResults – Magnitude of flowsMain conclusionsQuestions?

Overview

Compensation of employees: The information reported is 1. partly collected by settlement systems, tax and social security systems and the resident credit institutions2. partly estimated based on the previous years, number of foreign workers, average wages, social contributions and census

Results: Meth. Issues (1)

Compensation of employees: Main caveats: 1. high thresholds2. diversity of methods to transfer money3. 1-year-rule : difficult to apply in practicedifficulty to differentiate between compensation of employees and workers’ remittances

Results: Meth. Issues (2)

Workers’ remittances: The information reported is 1. mainly collected by settlement systems, by banks and post offices, through household surveys, from foreign exchange reports2. difficult to estimate

Results: Meth. Issues (3)

Workers’ remittances: Main caveats: 1. high thresholds2. diversity of methods of money transfers3. the presence of illegal foreign workers4. 1-year-rule : difficult to apply in practice

Results: Meth. Issues (4)

Migrant transfers: 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

Results: Meth. Issues (5)

General considerationsDefinitions (BPM5)Fact-finding exerciseResults – Methodological issuesResults – Magnitude of flowsMain conclusionsQuestions?

Overview

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?

General considerationsDefinitions (BPM5)Fact-finding exerciseResults – Methodological issuesResults – Magnitude of flowsMain conclusionsQuestions?

Overview

Main conclusionsneed 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?