Measuring remittances: the issue of definitions

1. Measuring remittances: the issue of definitions Hania Zlotnik Population Division/DESA United Nations

2. International definition of migrants Source: Recommendations on Statistics of International Migration: Revision 1 United Nations, 1998 Provides: • Definition of international migrants to measure flows • Framework for reporting flow statistics • Guidelines to measure stocks

3. Definition of country of usual residence • The country in which a person lives, that is, the country in which he or she has a place to live where he or she normally spends the daily period of rest. • Temporary travel abroad for purposes of recreation, holiday, visits to friends and relatives, business, medical treatment or religious pilgrimage does not change a person's country of usual residence.

4. Long-term migrant A person who moves to a country other than that of his or her usual residence for a period of at least a year (12 months), so that the country of destination effectively becomes his or her new country of usual residence. Short-term migrant A person who moves to a country other than that of his or her usual residence for a period of at least 3 months but less than a year (12 months) except in cases where the movement to that country is for purposes of recreation, holiday, visits to friends and relatives, business, medical treatment or religious pilgrimage. Definition of international migrants to measure flows

5. Implications of the definition of international migrant • No distinction is made between foreigners and citizens • A returning migrant is classified as a “long-term immigrant” • A key use of data on flows based on the definition of long-term migrant is calculation of the yearly growth of the population

6. Data on migration flows • It is difficult to obtain reliable information on the length of stay of migrants, both prospectively and retrospectively • The flow data available for most countries do not conform to the definition of long-term migrant

7. International definition of remittances Source of international definitions: IMF Balance of payments manual: Fifth edition (1993). Remittances appear in the current account of the balance of payments which reflects transactions in real resources (goods, services and income)

8. Entries in the balance of payments related to migration B. Income 1. Compensation of employees C. Current transfers 2.1 Workers’ remittances 2.2 Other transfers

9. Resident Individuals, households, legal and social entities such as corporations are “resident” in country A if their “centre of economic interest” is in country A. Non-resident Individuals, households, legal and social entities such as corporations are “non-resident” in country A if their “centre of economic interest” is in country B. Definition of residence

10. Resident Anyone belonging to a country who is absent from that country for less than a year. Non-resident Anyone belonging to a country who is absent from that country for at least a year. Residence of migrants

11. Compensation of employees “Wages, salaries and other remuneration, in cash or kind, earned by individuals in an economy other than the one in which they are resident for work performed (and paid by) a resident of that economy”. Resident Non-resident worker

12. Country of origin perspective The line item “compensation of employees” represents the earnings originating abroad of migrant workers who stay abroad for less than a year (they are non-residents of the economy of destination).

13. Workers’ remittances “Remittances are one type of current transfers between households. They consist of all current transfers in cash or kind from non-residents to resident households. Usually, they are regular transfers between members of the same family in different countries, with persons abroad being absent for a year or longer.”

14. Varied practices • Philippines and Thailand: the bulk of the data interpreted as “remittances” is reported as “compensation of employees” (70-85 per cent). • Bangladesh reports a higher sum as “Other transfers” than as workers’ remittances.

15. Use of balance of payment data • Researchers usually calculate “total remittances” as the sum of compen-sation of employees, workers’ remittances and migrant transfers. • The compensation of employees may be an estimate based on number of tem-porary migrants abroad and average wage. It may not represent ACTUAL receipts by country of origin.

16. In sum • The international definitions of remittances and long-term migrants are consistent • Inadequate measurement of both is related to the difficulty of determining actual length of stay • Both disregard differences between citizens and foreigners, which are crucial in practice

17. Conclusions • Measures of migrant stock NOT of flows are closely related to the measurement of remittances • The UN Recommendations on Migration Statistics suggest that the migrant stock be measured in terms of the foreign-born and the foreign population