Tess Rod and Jill Murphy

Early data from a large survey of recently arrived permanent migrants show that the migrants most likely to send remittances back to relatives in their country of origin are those least likely to be able to afford it.

INTRODUCTION

Migrants send portions of their wages in cash or in kind (e.g. consumer goods or airline tickets) as remittances to kin and community organisations in their country of origin and they also receive remittances in the form of financial and other assistance from their relatives there. Remittances sent annually by individual households may be relatively modest, but the total amounts entering the economies of recipient countries are substantial. For countries in the South Pacific, for example, remittances received from their migrant workers overseas constitute a major form of economic assistance from host countries.

There are no official data on the flow of remittances to and from Australia. Rough estimates of remittances outflows (based on official receipts from various receiving countries) indicate that at least $500 million is sent annually through official banking channels to family and communities overseas.¹ This amount would be considerably more if unofficial transactions were added, such as consumer goods sent by mail or gifts and cash carried by returning migrants or their emissaries. Remittance outflows from Australia are undoubtedly much greater than remittance inflows. However, if we balance the assets brought in by new immigrants against remittance flows, Australia probably continues to enjoy capital gains from these aspects of its migration and humanitarian programs, since the net gain in asset transfers probably far outweighs the net loss in remittances.

REMITTANCES IN THE LSIA

This article is based on the results of a study undertaken by the former Bureau of Immigration, Multicultural and Population Research on remittance behaviour (both the propensity to remit and the amount remitted) of recently arrived immigrants to Australia. It uses data from the first wave of the Longitudinal Survey of Immigrants to Australia (LSIA) - the only complete data set available at the time this study was undertaken. In the LSIA, some 5,000 recently arrived 'principal applicants' (or 'PAs') and members of their families who migrated with them are being interviewed three times over several years to record their settlement experiences in Australia. The survey commenced in March 1994 and the last interviews are expected to be completed in late 1998.

At the time of their first interview, the respondents had not been in Australia long (two to seven months) and many had not yet found employment. So, not surprisingly, only a small proportion (just over eight per cent) of PAs had sent remittances overseas, and 80 per cent of these payments were for amounts of $1,00 or less. Around seven per cent had received financial assistance from overseas. Despite the preliminary nature of these results, it is worth analysing the characteristics of those recently arrived immigrants who commence remitting so soon after coming to this country. The results contribute to a greater understanding of the incentives to migrate and the pressures on newly arrived immigrants. They also provide a baseline for future research - once immigrants become more financially settled the number of remitters and the magnitude of the outflows are likely to increase and the need for financial assistance from overseas to decrease. This can be tested using later waves of the LSIA.

It should be noted that one of the limitations of the LSIA is that it only seeks information about money sent to relatives overseas since arrival in Australia or money received from overseas since arrival in Australia. No distinction is made between funds sent through official banking channels or by unofficial means.

CHARACTERISTICS OF REMITTERS

A number of studies have found that the factors affecting the propensity to remit and the amount remitted can be broadly classified into five categories: migrants' demographic characteristics; their socioeconomic status (both in their home country and in the host country); the number and closeness of kin remaining in the former homeland; economic factors in the home country and host country; and the purpose and the duration of migration. The LSIA focussed on those factors highlighted by the LSIA. The results paint a fairly consistent picture of the ‘typical’ recently arrived remitter.

Of the main demographic characteristics examined in the LSIA, including gender and age, birthplace was the most significant. There are differences in the incidence and amount of remittances between some birthplace groups, most noticeably the high proportion of remitters born in Oceania, Northern America, Southeast and South Asia, (especially Fiji, Thailand, the Philippines, Indonesia, the USA and Sri Lanka) compared with the proportion born in Western Europe. Most of the former countries have less wealthy per capita incomes than Australia, although the inclusion of the USA is unexpected and warrants further examination. It is possible that many immigrants from the USA intend to return eventually to their homeland and thus continue to maintain their financial commitments there.

Previous research shows that the employment status of the migrant is a more important determinant of the propensity to remit than income levels,² although income levels are a significant determinant of the level of remittances.³ This is supported by LSIA results. Respondents who were employed, but on very low incomes, had a relatively high propensity to remit, although the amounts remitted were on average smaller than amounts remitted by those on higher incomes. Higher income groups had the lowest propensity to remit - the results also show that when immigrants bring their wealth into Australia, this tends to inhibit the propensity to remit.

Given that only just over a third of respondents were employed at the time of the first wave of the LSIA, their current occupation was not tested. However, a clear pattern emerged when examining the previous occupation of the PAs in their country of origin - those employed in lower-skilled occupations were more likely to remit soon after arrival than those in higher status occupations. But the apparent link between remittances and occupation could be related to factors other than occupation per se. For example, researchers have suggested that immigrants with higher status occupations, because of their higher education level, are more aware of alternative uses for their money and more sensitive to exchange rate variations.⁴ They also tend to take their dependants with them when migrating and are thus under less pressure to remit for family support.

Not surprisingly, one of the strongest determinants of remittances is the number and the identity of kin remaining in the home country. LSIA results indicate that married PAs who did not migrate with their spouses were more likely to send remittances, as were those who had two or more children overseas. Parents were also important recipients, particularly where only one parent remained overseas and the propensity to remit also increased with the number of siblings living overseas.

The needs of kin remaining in the home country appear to be more important than the immigrant’s present economic circumstances. Consistent with the above findings, propensity to remit increased among LSIA respondents who indicated that they had difficulties meeting basic needs in their home country. It also increased among those who had previously lived in a large household (11-15 members). Immigrants who arrived in Australia with no money or possessions were more likely to remit than those who arrived with assets. This suggests that remittances are an important source of income for recipients living in less wealthy countries and that remitters make considerable sacrifices to send money and other items as soon as they can after arrival in the new country.

Although visa category was not a significant determinant of the propensity to remit among recently arrived immigrants, a relatively high proportion of those who sent remittances were in the points-tested Independent Skill and Concessional Family categories, and also in the Humanitarian Program. These results are not unexpected: immigrants in points-tested categories are more likely to find employment quickly and arrivals in the Humanitarian Program are likely to have left behind relatives living in straitened circumstances. Not surprisingly, respondents who indicated that they came to Australia to seek better employment opportunities had a greater propensity to remit than those who migrated to get married or to enjoy a better lifestyle.

THE TYPICAL REMITTER

Recently arrived remitters typically have come to Australia from less affluent circumstances and still have close kin in the country of origin. They previously lived in a large household and were employed in a low skilled occupation. They arrived with few assets and came to Australia seeking better employment opportunities.

FURTHER RESEARCH USING THE LSIA

Comparison of the first wave with subsequent waves of the LSIA will be useful to investigate whether remittance behaviour patterns persist and whether there is any change in respondents’ behaviour after being in Australia for a longer period of time. One of the advantages of the LSIA is that respondents have been in Australia for similar lengths of time. This gives some control over the effect of duration of migration on the level of remittances and allows more accurate assessment of differences in propensity to remit and the levels of remittance between immigrant groups, in both cross-sectional and longitudinal analysis.⁵ But there are limitations - the LSIA only provides data for immigrants who arrived in Australia within a certain time period and excludes established immigrant groups, settlers from New Zealand (who are not part of the formal immigration program) and temporary residents.

References

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