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April 2009, Volume 16, Number 2

Remittances, Recession, Women

The World Bank estimated that global remittances to developing countries reached $305 billion in 2008, led by $45 billion in remittances to India; $34 billion to China; $26 billion to Mexico; $18 billion to the Philippines; and $11 billion to Poland. The World Bank estimates include monies transferred via informal channels, and are generally higher than central bank reports.

Remittances have been called a "stable" source of financing for development, since they do not fall as sharply as private capital flows in recession. However, the World Bank revised downward its estimates of remittances in 2009 to $290 billion, the first decrease in a decade. The steepest decline is expected in Europe.

The World Bank cited five reasons for remittances falling less than other capital flows to developing countries in recession. First, many remittances are from migrants who have settled abroad, such as Filipinos living in Canada and the US, rather than newly deployed migrants whose numbers may shrink. Second, remittances are a relatively small share of migrant earnings, and thus can be continued even if earnings shrink.

Third, unauthorized migrants abroad may stay longer because of increased difficulty returning if recession-impacted countries step up border controls. Fourth, migrants who return are likely to bring with them accumulated savings, which temporarily increases remittances. Fifth, stimulus spending in migration-receiving countries is likely to create jobs for migrants directly and indirectly.

The World Bank named three countries that host migrants and are "especially vulnerable" to the recessionÑ Russia, South Africa and Malaysia. It noted that remittances from Gulf Cooperation Council countries are "uncertain," with Dubai, which has limited oil revenue, especially vulnerable to reduced migrant employment.

Recession. Estimates of the shrinkage of the global economy became larger in 2009, as global banks and institutions such as the IMF revised their projections of growth and trade downward. The OECD predicted that the global economy would shrink almost three percent in 2009, and the WTO predicted that global trade would fall by nine percent.

Asian economies began to slow down after Lehman Brothers collapsed in September 2008 and credit tightened around the world, pushing export-dependent economies from Japan to Singapore into recession; Singapore's economy may shrink 10 percent in 2009. Thailand is one of the few countries in Southeast Asia to offer unemployment insurance benefits.

Global unemployment, expected to rise by up to 50 million as a result of the recession (including 22 million women), could rise even more. The OECD in April 2009 said that unemployment in its 30 member countries could rise to 10 percent by the end of 2009, double the level of 2007.

Tourism has been hard hit by the 2008-09 recession around the world. The UN World Tourism Organization (www.unwto.org) reported that international tourist arrivals reached 924 million in 2008, up two percent over 2007. Over half of the tourist arrivals were in Europe, 490 million; followed by a 20 percent in Asia, 190 million; and 15 percent in the Americas, 140 million; and about 50 million each to the Middle East and Africa. In southeast Asia, the number of tourist arrivals was 60 million in 2007 and 62 million in 2008.

Temp firms have seen their business shrink. The three major temp or staffing firms, Adecco, Manpower, and Randstad, account for 30 percent of the global temp revenue of $260 billion a year. The temp industry is fragmented, with many small firms supplying workers to a particular industry in one country.

Women. International Women's Day (IWD), celebrated on March 8, saw the release of reports on the status of women workers and the impacts of the recession on female migrants. The global recession is expected to hit men harder than women as employment shrinks in construction and trade-dependent manufacturing. However, women are concentrated in some types of manufacturing, such as sewing garments and assembling electronics, and many face layoffs in these sectors.

The ILO's Global Employment Trends 2009 report, which focused on women workers, noted that in developing countries over half of female workers are employed informally in agriculture. Women who do obtain formal sector jobs often earn less than men.

The ILO's GEP put the global unemployment rate at six percent in 2008, suggesting 193 million of the world's 3.2 billion workers were jobless. The unemployment rate for women, 6.3 percent, was higher than the 5.9 percent rate for menÑ the global male labor force was 1.9 billion in 2008, and the female labor force was 1.3 billion. Many women in developing countries work at home and are not classified as in the labor force.

Of the 1.2 billion women and 1.8 billion men employed in 2008, half were in vulnerable employment, meaning they were not in wage and salary jobs. The ILO projected that the female unemployment rate could rise to 6.5 percent by the end of 2009, and that the male unemployment rate could rise to 6.1 percent.

A UN report summarizing past experience with women workers and recession concluded that "Women bear the brunt of the crisis because of the paradigm of the male bread-winner that prevails all over the world across cultural dividesÉ When job retrenchment takes place, the tendency is to protect employment for men and compromise on women's jobs."

The International Trade Union Confederation reported that women earned an average 22 percent less and a median 20 percent less than men in 2008, based on an internet survey 300,000 women in 20 countries. Brazil and Mexico had some of the highest pay gaps, 38 and 36 percent respectively, while Denmark had one of the lowest pay gaps, 12 percent.

The ITUC report concluded that women workers in developing countries suffer most in recession, reflecting the dominance of women workers in cyclically sensitive industries such as manufacturing (in industrial countries, a higher share of women are employed in more stable services). Sales and jobs in export-oriented textiles and garments, electronics, and similar industries can fall sharply, leading to layoffs; female workers also dominate export-oriented food processing work forces. The attitude that women are "secondary income earners" is sometimes used to lay off women before men.

During the 1997-98 financial crisis, many low-skilled women lost jobs in clothing, food processing, and retailing. Many of the women who lost jobs in formal-sector export oriented industries were forced into informal jobs, where wages are lower and benefits non-existent.