Between Burden and Benefit: Migrant Remittances, Social Protection and Sustainable Development

In this report, we review the evidence for the linkages between migrant remittances and the social welfare of receiving households, communities and countries, as well as remitters themselves. In LMICs, where public forms of social welfare measures have been weaker and national social security systems underdeveloped due to fiscal constraints and limited government revenues, monetary and non-monetary assistance by family and community members have long constituted an important form of non-state social welfare. Rooted in social relationships and networks of family, kinship connections and social community, individual remittances offer informal mechanisms of social protection. And, while these may positively affect the social welfare of recipients, as recent studies have convincingly demonstrated, they are not a replacement for public forms of social protection. The compensatory effects of remittances on human welfare are complements to and not substitutes for the established state responsibilities for effective social policies and social protection. These external flows are seen to stabilize national economies and contribute to economic growth. Nevertheless, they produce difficult burdens for marginal remitters, especially when social programmes are weak in sending areas. The weak inclusion of these remitters in the social protection programmes of migrant-receiving countries is another less addressed dimension of remittances and social welfare. The report also addresses claims that remittances have a negative or “crowding out” effect on social welfare, by lowering citizens’ expectations for state-led social protection provisions. Migrant remittances and public social protection programmes are seen as competing processes, where the growth of remittances potentially depresses social protection by reducing public demand and need for state-led programmes by improving the quality of life of recipients. The opposite scenario, in which expanded state-led social protection reduces the need for remittances is also theoretically possible although the evidence for this, like the depression hypothesis, is weak and circumstantial. Both hypotheses need closer examination and more local area research, including in Southern Africa where the relationship between remittances and social protection remains largely unexamined.