Migrant workers keep home economies afloat

Many foreign workers send a proportion of their income home Keystone

Foreign workers based in Switzerland send home around SFr3 billion ($2.4 billion) each year, according to the Swiss National Bank (SNB).

For many poorer countries, remittances from workers living abroad form the backbone of their economy and offer poverty relief with no strings attached.

Switzerland is ranked fifth after the United States, Saudi Arabia, Germany and Belgium by a World Bank study, which says worldwide remittances made through official channels amounted to $72.3 billion in 2001 – the most recent figures available.

The true figure is believed to be in excess of $100 billion a year. However, determining the precise amount of money sent home by migrant workers is nearly impossible because the figures include all private transfers of funds abroad.

They also take account only of money transferred through formal channels such as banks. Analysts say migrant workers likely send substantial amounts through unofficial schemes (although the use of these may have declined since more stringent controls were introduced after the September 11 attacks).

Recipients

Migrant workers in Switzerland sent home SFr3 billion in 2002, according to the Swiss National Bank (SNB), but it admits its figures are far from perfect.

“One should be aware that this is not calculated on a sound statistical basis,” the SNB’s Thomas Schlup told swissinfo.

There are currently 1,471,033 foreigners registered in Switzerland – of which 809,000 are active on the labour market.

The SNB’s SFr3 billion figure is based on the estimated total earnings and savings of a foreign worker.

The SNB assumes that, if a migrant worker is not spending all of his or her money in Switzerland, then it is being remitted to the country of origin.

For countries like Tunisia, more than 50 per cent of the money coming into the country comes from international payments of this kind.

Money

With 4,600 Tunisians living in Switzerland, according to the Federal Immigration Office, it is likely that many are sending money back home.

Similarly, remittances to Sri Lanka in 2001 amounted to $1.1 billion, equivalent to seven per cent of its gross domestic product. There are currently 29,000 Sri Lankans based in Switzerland.

But the lion’s share of migrant-worker remittances from Switzerland is probably being sent to Italy and the Balkans.

Italians and immigrants from the former Yugoslavia account for 20.7 per cent and 13.6 per cent respectively of the total number of foreigners in Switzerland.

Aid budget

Such remittances dwarf Switzerland’s official aid budget, which is approximately SFr1.5 billion a year.

Walter Hofer, deputy head of multilateral relations at the Swiss Agency for Development and Cooperation, told swissinfo that developing countries and development agencies had been aware for some time of the significant effects that remittances had on developing economies.

He added, however, that Switzerland did not take the level of foreign-worker remittances into account when setting its aid budget.

“The prime criteria are the need of the developing country and also the whole governance context to see that our money is used properly,” Hofer said.

Good news

The World Bank is convinced that funds sent home by migrant workers will continue to increase.

While this is good news for the receiving countries, they are likely to face greater scrutiny in the way they use this money.

“If one thinks a bit further down the road, it will be necessary to create more incentives for receiving countries to tap other financial resources, particularly if [development aid budgets are reduced] and come increasingly in the form of grants,” said Hofer.

Moves are already underway to encourage developing countries to find better ways of using other financial resources, including remittances, as well as improving financial services to facilitate money transfers.

swissinfo, Faryal Mirza

Key facts

Private transfers from Switzerland – which include foreign-worker remittances – totalled more than $8 billion in 2001, placing the country in the top five of remitting nations.
It is ranked fifth after the United States, Saudi Arabia, Germany and Belgium by a World Bank study.
The report says worldwide remittances made through official channels amounted to $72.3 billion in 2001.
The true figure is believed to be in excess of $100 billion a year.

In brief

Migrant workers in Switzerland send home an annual SFr3 billion, according to the Swiss National Bank.

There are more than 800,000 migrant workers registered in Switzerland.

The Bank assumes that if migrant workers’ earnings are not spent or saved in Switzerland, they are remitted abroad.