Remittances are one of the driving factors for labor migration, especially within Asia. Of the $581 billion global remittances recorded in 2015, around 75% or $432 billion came from developing countries, particularly East Asia, the Pacific, and South Asia. Remittances by migrants from developing countries are expected to grow by 4.1% to $484 billion in 2018. Such inflows are significant not only for their size, but also for their development impact. Remittances increase household income that can be spent on social services such as education and health. They can also contribute to expansion in financial services and inclusive finance. According to UNCTAD, a 10% rise in remittances may lead to a 3.5% reduction in poverty.

Unfortunately, the impact of remittances is not fully realized because of the high transfer costs that substantially reduce migrants’ earnings and prevent the efficient flow of remittances. Although the costs of sending funds have decreased, they still remain substantial at 14–20% of remittances. Remittances costs in Asia have gone down to 8%, but are still above the global average (7.4%) and the targets set in the sustainable development goals (3% by 2030). Reducing the costs of remittances is central to reaping development gains. Evidence shows that a 5% decline in remittance costs will generate $15 billion in savings.

While migrants own their remittances and they decide, with their families, how to spend them, there is ample scope to enhance support for migrant needs and the development of the country of origin. One possibility is to develop formal financial instruments that link loans and financial services to formal remittances. For example, diaspora associations and other organizations can provide information to migrants and their families on how to access financial tools and options (e.g., diaspora bonds and diaspora funds) in order to channel their private funds to productive investments. Another option is for the government to integrate remittance policies into national polices related to financial inclusion, tax and credit, capital market, and financial services. New technologies and innovations should be provided to reduce costs of remittances. ICT can be used to make labor migration channels and remittances more accessible, facilitate job matching, and provide support to migrant workers.

This learning event examined trends in regional migration, labor market supply and demand, and remittance flows; recent policy changes and their impact on labor migration with a focus on bilateral agreements, especially those addressing compliance and illegal employment; remittance channels and policies that specifically affect their costs and accessibility as well as those that impact financial literacy and financial inclusion of both migrants and their households and; The use of ICT to improve the experiences for all stakeholders.