Remittances - Setting the Scene
As pacific islanders, the term “remittances” often sounds abstract to many of us, despite the practice being widespread among our communities. So, what exactly are remittances? Simply put, the term remittance describes the practice of individuals sending financial support to family or community members either locally or internationally. Remittances come in many forms, but for our series on this topic we will be focusing mainly on those remittances that members of the Pacific Islands diaspora based in wealthy countries commonly send to support family still living in the Islands. For pacific islanders, this comes as fairly second nature, with a great many of us accustomed to sending money to our families in the Islands. Remittances is a way of life, familial obligation and sustenance. We either receive remittances or send them to family or in some cases it goes both ways.
The social and economic impact of remittances has been heavily studied, but it is mostly looked at from the context of how remittances impact a country’s national economic and financial status. Given this macroeconomic lens, such studies are often undertaken by intergovernmental organisations such as the World Bank, University Development policy centres such as DevPolicy at the Australian National University and think tanks such as the Lowy Institute for International Policy. These sources typically focus on the trends of incoming funds to the recipient countries, how much the giving accounts for in terms of annual GDP and musings about transfer fees. However, for all the literature on the topic, there is a clear gap in work addressing the perspective and impact of the practice on the diaspora responsible for sending this money. Moreover, there is also limited research that provides a broader analysis of the sustainability of the practice, and its efficacy in propelling a country’s longer-term economic development.
For this reason, we will be using the platform we have created here to address some of these gaps and explore the topic of remittances from the view of the diaspora. Specifically, we will be assessing some of the cultural and social impacts of the practice and then looking at the impact of remittances on the diaspora responsible for sending them.
The diaspora – how remittances impact those sending them
The population of Pacific Islanders abroad is significant and growing. In Australia, the most recent census data showed that the number of people claiming Pacific Islands ancestry was growing strongly both in absolute terms and as a proportion of the overall population. Whereas the Australian population increased by 8.8% between 2011 – 2016, those claiming Pacific Island ancestry grew by 37.7% between 2011-20116. This trend has provided many of our families with a better start in life; with access to better education and employment opportunities, we have been able to secure work as professionals in traditionally higher paying jobs. This was effectively the bargain our parents made for us, and it has paid off. Partly because of the sacrifice our parents made to get us where we are, we are naturally expected to use our success to support them and the family at large.
Indeed, as higher earning individuals we carry an expectation that we will send higher amounts of money for family needs and understand that not accepting this responsibility may result in familial shaming and communal backlash.
But whilst this expectation doesn’t sound unreasonable on the surface, the sheer size of islander families means that if we respond to every request we will have little left for ourselves. From a wealth building standpoint, this puts us at significant odds with some of our other peers in Australia that not only do not carry financial responsibility for large overseas families, but in many cases still receive financial assistance from their own parents and broader families in Australia to assist with paying bills and putting down house deposits.
This difference is important and has long term implications for us as individuals and our communities. Wealth and prosperity are not simply tied to a good job and education; it is an intergenerational project. There is thus a question mark over how well our own pacific island intergenerational project can be progressed when our responsibilities make building any foundation a challenge. For instance, how does a pacific islander – even a successful higher earning one – compete with others at their level to, say, purchase their first family home and pay for the sort of education their children will need to maintain and build on their success when an often not insignificant percentage of their salary is being redirected towards remittances. How does this impact their ability to invest their income in accretive sources of investment such as savings, small business, equities or property? More often than not, the diaspora is torn between these two choices.
The diaspora of Pacific Islanders now includes youth who were born in the countries their parents emigrated to – Australia, New Zealand, US or Europe and are now either 1st or 2nd generation migrants abroad. How does this impact the strength of the cultural ties and obligations of these generations to the homeland of their ancestors and how will this impact trends going forward for remittances. The World Bank notes that officially recorded remittance flows to the East Asia and Pacific region are projected to have fallen by 4% in 2021 to $131 billion – largely influenced by COVID - however, is expected to grow by 3.3% in 2022.
The COVID pandemic will also be having an impact on income levels, consumption and spending patterns of the diaspora. At a time when many people have lost jobs, experienced increased economic uncertainty, or in some cases passed away – how does this impact the amount or frequency of remittances that people can send? What is the expectation on the other end during this period?
There is much to discuss on this topic which is intricately linked with our sense of identity, familial obligation, legacy and survival. As a result, it is a conversation that is difficult to have with loved ones but maybe we can delve in here and explore the different social and economic layers of remittances and how they impact the diaspora.
We will have a mini-series on all the different angles of remittances and would love to hear your thoughts on the topic. Please email our contact us email if you’d like to write a piece on remittances and share with our members.
The next piece in the series will explore the impact of remittances on social mobility of the diaspora and their families.
