European governments’ crackdown against migrants hasn’t let up, even with the summer holiday period in full swing. The Italian government recently hailed a drastic drop in the number of migrants arriving on their shores following new investments in the Libyan coast guard. Meanwhile, Germany started sending asylum seekers back to Greece, despite the fact that reception centres in the country remain vastly overcrowded.
Yet the crackdown comes only days after a major UN-led round of global consultations put the spotlight on how much migrants contribute to the economies of their new homes and, more broadly, to the Sustainable Development Goals (SDGs). The meetings highlighted the vast gap between most Europeans’ perceptions of how much migrants contribute to development and the actual role they play. Bridging this gap – as well as other key measures, like reforming the remittances market – will be critical toward leveraging what migrants can do for global development.
As the UN Special Representative for International Migration, Louise Arbour, highlighted at the recent meetings, public attitudes can have a dangerous impact on what might otherwise be sound migration policy choices. And has recent history has shown, Europeans’ perceptions of migrants tend to be highly inaccurate. According to the International Organization for Migration (IOM), people in destination countries tend to overestimate the actual number of migrants living there by as much as 200%.
Anti-immigrant media, notably in the UK, tend to fan the flames of such sentiments by publishing inflammatory stories about the supposedly constant arrival of crime-ridden, grasping migrants on Europe’s shores. The anti-immigrant rhetoric of right-wing parties like Alternative for Germany have only made matters worse, with 8 in 10 Europeans now believing that incoming refugees increase the chances of terrorism in their country. The result is that, especially in times of economic stress, migrants tend to be blamed for a host of societal problems, from increased violence to unemployment.
Yet in reality, the net benefits of migration far outweigh their costs. In 2016, migrants sent home more than $429 billion to their families in their countries of origin, helping them afford basic needs like food, healthcare, and education. In total, migrants’ remittances are three times greater than official development assistance and more stable than most kinds of private capital flows. At nearly half a trillion dollars, remittances were among the migrants’ most tangible contributions towards achieving the SDGs in developing countries.
And it’s not only countries of origin in the Middle East and Africa that benefit from these flows. According to European Commission figures, the refugee crisis has in fact started to have a ‘sizeable’ positive economic impact in certain EU countries, boosting annual GDP growth by 0.2-0.5%, especially in states where refugees make up a higher proportion of the population, like Sweden. This is because non-EU migrants tend to pay much more in taxes and social contributions than what they receive in individual benefits. And in a continent with a shrinking, greying population, the arrival of predominantly youthful migrants couldn’t come at a better time.
The first step, then, towards maximizing the contributions of migrants is addressing deep-seated biases in host countries that need them far more than they’d like to admit. After all, at this point, there’s really only one set of stakeholders that has realized just how much the surge of migrants from the Middle East and Africa is worth: that is, money transfer operators (MTOs). The world’s biggest MTO, Western Union, was among the first to realize the extent to which the Syrian civil war, as well as conflict and deprivation in Africa, had sparked a massive new wave of arrivals in Europe. For Western Union, this influx represented a huge new customer base, as the receivers of today become the senders of the future.
Unfortunately for the migrants, this also meant a massive chunk eaten out of their pay checks that they might have been able to avoid at home, as the most dominant MTOs charge exorbitant fees for migrants to transfer money to their families. Even worse, fees are highest in some of world’s poorest countries. Remittance costs to Turkey and the Middle East are well above the global average of 7.45%, with median fees of 8.3% for sending $200 to a Middle Eastern country in the first quarter of 2017. Meanwhile, fees for sending money to Africa are the highest in the world, with average costs of 14.6% for sending the same sum to the southern part of the continent.
With remittances sent to the Middle East and Africa totalling $85.1 billion in 2016, that’s a sizeable chunk of cash going into the pockets of a single corporation. Western Union manages to get away with swallowing such a large piece of these remittances because for one thing, with a 13% global market share that’s much higher in certain countries, the firm is insensitive to price competition. For another, the company has further consolidated its control over the crucial remittances market by leveraging exclusivity clauses with banks and other partners, especially in low-volume and rural transfer corridors.
As more and more migrants move to Europe, start working, and begin sending money back home, the often-prohibitive cost of dealing with middlemen like Western Union is only going to become increasingly problematic. What the EU needs, then, is a two-pronged campaign not only to combat negative perceptions of migrants, but also to crack down on exclusivity agreements by MTOs to lower transaction costs – and leverage the full power of remittances for development. Such a campaign would go far towards helping refugees maximize their contributions to the SDGs in their new homes, as well as in the countries they left behind – thus helping to minimize the need to undertake the dangerous journey to Europe in the first place.