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					                                        Making Remittances Work for
                                        Migrant Workers—the Role of
                                        Global Business
                                        BSR
                                        January 2011


About BSR                        Introduction
A leader in corporate
responsibility since 1992,       International migrant workers—those workers who cross borders for
BSR works with its global        employment—total approximately 215 million people, thus making up a
network of more than 250         significant portion of the global workforce. These workers often leave their
member companies to              countries of origin for protracted periods, sending up to 40 percent of their wages
develop sustainable business     back home in periodic installments to support their families and the communities
strategies and solutions         from which they hail. The World Bank estimates these remittances total more
through consulting, research,    than US$300 billion dollars annually. In nearly 40 countries, remittances make up
and cross-sector collab-         more than 10 percent of the gross domestic product (GDP). Indeed, migrant
oration. With offices in Asia,   countries of origin have begun to depend on remittances since they often exceed
Europe, and North America,       official development assistance (ODA) and foreign direct investment (FDI)
BSR uses its expertise in the    combined.
environment, human rights,
economic development, and        Since 2008, BSR has been working with multinational corporations that source
governance and account-          from suppliers (e.g. private employers) in countries of destination for migrant
ability to guide global          workers to educate them on migrant labor issues; help them engage with
companies toward creating a      suppliers, labor unions, rights groups, and government officials; and expand
just and sustainable world.      solutions to help ensure that migration facilitates positive socioeconomic
Visit www.bsr.org for more       development. BSR also works with suppliers to address the very practical
information.                     challenges that stem from employing migrant workers. This “horizon” brief on
                                 remittances represents the first in a series of reports that will focus on specific
                                 issues in the discourse surrounding migrant workers. As such, this brief:

                                 »      Analyzes the importance of remittances for national economies
                                 »      Provides an overview of the current remittance “system,” where value
                                        erosion currently occurs for migrant workers
                                 »      Outlines a fairer system for migrant workers

                                 Ultimately, a fair remittance system that limits cost and risks for migrant workers
                                 can have a significant impact on these workers’ take-home pay 1.This is why
                                 business has an important role to play in making remittances work for migrant
                                 workers.




                                 1
                                     As per International Labour Organisation (ILO) Conventions on decent wages.

                                 BSR | Making Remittances Work for Migrant Workers—the Role of Business                1
EXECUTIVE SUMMARY

The contribution of remittances to social and economic development is a hotly
debated topic. Regardless of where one falls in the debate, indications are that
remittance flows around the world have not abated significantly during the
economic downturn of the past few years. In certain countries, remittances
account for more than double the combined ODA and FDI they receive. Migrant
workers are thus contributing to growth and development on both sides of the
equation—in destination countries through the labor they provide, and in origin
countries, through the money they send back home to their families.

The system that migrant workers use to send money home is set up in a way that
erodes the value of their “take-home” pay. Research indicates this value erosion
varies depending on specific migration corridors, industries, and the level of
workers. Still, it is apparent that more needs to be done to look out for individual
workers, ensure they have access to fairer deals, and help them avoid risks
inherent in channeling money through this informal system. The business world,
composed of global buyers, private employers, and financial intermediaries
operating in both destination and origin countries, has a clear role to play to help
create a fairer remittance system for migrant workers. This fairer system can only
be created if business educates itself about the current remittance mechanism
and anatomy of a migrant worker’s paycheck, engages with actors in the
remittance value chain, and expands solution sets through cross-sector
collaboration.




BSR | Making Remittances Work for Migrant Workers—the Role of Business             2
                                        THE IMPORTANCE OF REMITTANCES

                                        Sheer Volume
                                        Despite the global economic downturn, remittance flows in the developing world
                                        have not abated. The World Bank estimated that US$325 billion in remittances
                                        would flow from migrant countries of destination to migrant countries of origin in
                                        the developing world by the end of 2010, an increase of about 6 percent from
                                        2009, and an increase of about 300 percent from 2000.By virtue of the sheer
                                        volume of these transactions, development literature has focused a significant
                                        amount of attention on the potential of remittances for positive socioeconomic
                                        impact. As depicted in the chart below, on average, some of the most important
                                        migrant origin countries in the developing world receive more from annual
                                        remittances than they do from ODA or FDI combined.


                                                   GDP        Population           Total              Total          Total           Total
                                                   2009         (Total),         Amount of           Amount         Amount           ODA +
                                                   US$           2009           Remittances          of ODA          of FDI         FDI 2008
                                                (billions)        US$            Received             2008            US$             US$
                                                               (millions)        2008 US$             US$          (millions)      (millions)
                                                  (PPP)
                                                                                 (millions)         (millions)
                            Bangladesh             230             162               8,941            2,061           1,010          3,071
                            India                 3,783           1155              49,941            2,108          41,169          43,277
                            Indonesia              967             230               6,794            1,225           9,318          10,523
                            Nepal                   34              29               2,727             716               1            717
                            Nigeria                333             155               9,980            1,290           4,876          6,166
                            Pakistan               446             170               7,039            1,539           5,438          6,977
                               Philippines        326                92                 18,642                 61  1,544 1,605
Factors limiting the
potential of remittances
                                         Source: World Bank – remittance data inflows – developing countries, 2010
Access to remittance-
sending and -receiving                   A Conduit to Economic Diversification, Increased Consumption, and
mechanisms can work to                   Development
inhibit their potentially                Remittances can provide a platform for migrants and their families to engage in
positive impacts. For                    economic activity from which they otherwise might be excluded. In particular,
example, it is difficult for             when migrants and their families are considered as enablers for value chain
recipients to travel to their                                                                                        2
                                         linkages, benefits can accrue to the migrant countries of origin. Development
nearest town to collect                  agencies have concentrated on ways to forge links between diaspora members
money on a regular basis.                and the remittances they send home to maximize the potential for positive
Additionally, incumbent                  development.
regulatory regimes ensure
that competition between                 Additionally, remittances can spark better financial decision making among
financial institutions and               individual recipients. For example, a report by the International Fund for
money transfer operators                 Agricultural Development (IFAD) finds that in Africa those who receive
                                                                                                                   3
(MTOs) for the remittances               remittances save twice as much money as those who do not.
market is limited, resulting in
onerous fees being borne by              Despite these positive findings, the potential of remittances to contribute to
both remitters in migration              economic development is far from assured. Questions remain about how the
destination countries and                remittance system in its current form needs to be changed to ensure that the
recipients in origin countries.*         financial value of the money that migrants send home does not erode. In most
* Source: IFAD – Sending Money
                                         cases, value erosion usually begins at the onset of the value chain. The purpose
Home to Africa, remittance markets,
                                         of this paper is to see if this is the case with remittances today, and to analyze
enabling environment, and
                                        2
prospects, 2009                             “Creating Value Through Migration – guidelines for technical cooperation for promoting value chains
                                             in the context of migration,” GTZ, 2010.
                                        3
                                            “Sending Money Home to Africa, remittance markets, enabling environment, and prospects,” IFAD,
                                             2009.

                                        BSR | Making Remittances Work for Migrant Workers—the Role of Business                               3
                                   the current system as it relates to the worker—the remitter—and the businesses
                                   that employ them.

                                   THE CURRENT REMITTANCE SYSTEM

                                   The Remittance Process
                                   The diagram below details the typical remittance process. A migrant worker is on
                                   one end; his or her family is on the other.

                                       Migrant Destination Country                                  Migrant Origin Country

1                                  2                                 3                          4
                                                                            Worker Takes
                                            Worker Receives               Money to Money                  Remittance
    Employer Payroll Distributes
                                           Monthly Check and              Transfer Operator             Recipient Collects
      Pay Check to Worker
                                           Withdraws Money                 and Transfers to                  Money
                                                                           Origin Country



                                   Throughout the process, there are instances when the value of the money being
                                   sent is eroded for the migrant worker and his/her family, and when that value is
                                   transferred to other actors in the system:

                                   1. Employer payroll distributes paycheck to worker in destination country.
                                   » Deduction from monthly payment by employer of original recruitment fee if
                                      migrant worker was recruited through the formal agency system.
                                          - Employers can deduct fees from migrant worker paychecks to
                                              recoup original recruitment fees. According to research by Verité,
                                              those fees can be up to US$4,100 for an Indian worker migrating to
                                              the Gulf region 4. The average monthly take-home pay for a
                                              “fresher”—a recently recruited Indian construction worker—in the
                                              United Arab Emirates (UAE) is 1,100 Dirhams per month (approx.
                                                        5
                                              US$299) . Paying back 1 percent of the original fee per month (not
                                              accounting for interest) would take the worker 8.5 years and reduce
                                              his/her gross paycheck by 14 percent on a monthly basis.
                                   2. Worker receives monthly check and withdraws money in destination
                                      country.
                                   » Financial services institutions charge monthly services fees for workers to
                                      operate a checking account, which includes use of ATM machines on the
                                      migrant worker camp.
                                          - These service fees vary, but can be more than 5 percent of the
                                                                             6
                                              worker’s gross monthly salary .
                                   3. Worker takes money to Money Transfer Operator (MTO) and transfers
                                      money to origin country.
                                   »     MTOs charge a minimum fee to workers per transaction.
                                           - Again, fees vary greatly depending on the migration corridor, but can
                                               be up to 1 percent of the worker’s gross monthly salary.




                                   4
                                     “Help Wanted: Hiring, Human Trafficking and Modern-Day Slavery in the Global Economy,” Verité,
                                      2010.
                                   5
                                     Based on an interview in UAE, October, 2010
                                   6
                                     Based on an interview in UAE, October, 2010

                                   BSR | Making Remittances Work for Migrant Workers—the Role of Business                             4
         4. Remittance recipient collects money in origin country.
         » A migrant worker’s family member in the origin country expends valuable
            time and money traveling to a money collection point or bank in an urban
            center.
                - A collection fee sometimes can be charged to the recipient of the
                    funds transferred.
                - Opportunity costs can vary, but a two-hour return journey from a
                    semi-rural setting to an urban center money collection point in India
                                                                  7
                    can cost the recipient family upward of US$3. In rural areas of
                    Central America, it can be upward of US$10.

         Geographical Differences
         Recognizing these practices vary across geography and sector, the following
         table provides a sample of migrant remittance value erosion in the UAE/Indian
         migration corridor.

                                    UAE/India Migration Corridor
Sector                              Construction/hospitality
Average Monthly Wage,               1100 Dirhams (approx. US$299)
New Migrant Hire
Average Recruitment                 154 Dirhams (approx. US$41)
Fee Payback Amount                  assumes total fee of US$4,100 paid back over 8.5
                                    years at 1% per month


Average Checking                    50 Dirhams (approx. US$13.60)
Account Service Fee

Average Money Transfer              15 Dirhams (approx. US$4.08)
Operator Fee
Recipient                           11 Dirhams (approx. US$3)
Transportation Cost

Total Value Reduction               234 Dirhams (approx. US$61.68)
Total Value Reduction               21
(% of gross monthly
salary)
         Source: Interview with expert in UAE, December 2010


         The above represents a “back-of-the-envelope” calculation based on BSR’s on-
         the-ground experiences in the UAE, and on conversations with those familiar with
         remittance systems involving migrant workers from an employer perspective. It
         should be noted that the figures do not include fees levied on migrant workers for
         pre-departure medical checks, one-way airplane tickets from origin to destination
         countries, visa application charges, and other “service” fees; these are tallied in
                       8
         other reports. In addition, migrants usually incur fees for housing and food, and
         these are deducted from their gross monthly paychecks. Again, the table does
         not account for these.




         7
             Based on figures provided by St. John’s Medical Centre, Bangalore, December 2010.
         8
             “Help Wanted: Hiring, Human Trafficking and Modern-Day Slavery in the Global Economy,” Verité,
              2010.

         BSR | Making Remittances Work for Migrant Workers—the Role of Business                               5
                                    According to an employer in the UAE, the “contribution” per migrant worker to
                                    food and housing on a monthly basis increased in response to the global
                                    downturn, and this has resulted in higher monthly deductions. Employers did this
                                                                                                                  9
                                    to protect their margins and ensure they did not have to lay off any workers.

                                    The Formal vs. Informal System
                                    Our calculations pertaining to value erosion are based on an analysis of the
                                    “formal” remittance system. In order to understand the full picture, however, there
                                    also is a need to analyze the “informal” remittance system. This sphere is
                                    characterized by intermediaries and interfaces that are not legally authorized to
                                    handle financial transactions (unlike banks, MTOs, and other officially registered
                                    institutions).

                                    The exact global volume of informal flows is unknown. Estimates have varied
                                    significantly. In 2005, a World Bank-IMF study guessed that anywhere between
                                    35 to 70 percent of remittance flows were being sent through informal
                                               10
                                    channels. With such a significant volume of flows through the informal system it
                                    is clear that a large number of legal international migrant workers currently
                                    employed in global supply chains are utilizing this system.

                                    Migrants use these informal channels for a number of reasons, though cost
Importance of the Informal          appears to be the major determinant for why a worker would choose to use the
System for the Malaysia-            informal system. It has been estimated that reducing remittance commission
Indonesia Corridor:                 charges by 2 to 5 percent could increase the flow of formal remittances by 50 to
It is estimated that only about                11         12
                                    70 percent . Studies also have found that high usage of informal channels by
10 percent of the total             migrant workers is the result of the following:
remittances (US$2.7 billion)
sent from Malaysia to                    »    Low financial literacy
Indonesia by Indonesian
workers is processed through             »    Lack of bank account
formal channels*                         »    No government-issued identification card
* Source: The Malaysia-Indonesia         »    Unregulated official remittance-sending industry not providing ease of
Remittance Corridor. Raul                     service access for workers
Hernandez Coss. World Bank. 2008.
                                         »    Geographic ease of access provided by informal money changers

                                    All told, a combination of speed, low cost, convenience, versatility, and potential
                                    for anonymity are key determinants of usage by workers. Despite these positive
                                    benefits, substantial risks exist for workers utilizing informal channels. For
                                    example, the cash-courier method is common and can lead to seizure of cash at
                                    customs checkpoints and financial losses due to robbery or outright theft by the
                                    courier him or herself. In these instances, there is no form of redress for the
                                    worker.



                                    Risk of Informal Transfers—Testimony From a Malaysian Migrant Worker
                                    “Initially I saved my earnings. When I knew that a friend was going home, I gave her my
                                    money to give to my parents. I had met her at my agent’s place. I didn’t know her that well,
                                    but I trusted her. … My parents received the money a month late. I rang my family in the
                                    village and told them that I had given her (my friend) US$422 and they told me that she
                                    had only given them US$112, which she had paid in three installments. They should have
                                    received the equivalent of US$422.”
                                    Source: The Malaysia-Indonesia Remittance Corridor. Raul Hernandez Coss. World Bank. 2008.

                                    9
                                      Based on an interview in UAE, October 2010
                                    10
                                       “Remittances: Transaction Costs, Determinants, and Informal Flows,” Freund and Spatafora, 2005.
                                    11
                                       The World Bank Group.
                                    12
                                       “Approaches to a Regulatory Framework for Formal and Informal Remittance Systems:
                                       Experiences and Lessons,” International Monetary Fund, 2005.

                                    BSR | Making Remittances Work for Migrant Workers—the Role of Business                          6
                                        A snapshot of the formal and informal systems—intermediaries and their
                                        transaction tools
           Point of Remittance Transfer              Transaction Tools                               Point of Remittance Transfer
           (Destination Country)                                                                     (Origin Country)

Formal     »   Commercial Bank                       »     Messaging and Settlement                  »     Commercial Bank
           »   Money Transfer Operator               »     Infrastructure                            »     Money Transfer Operator
           »   Credit Union                          »     Society for Worldwide                     »     Credit Union
           »   Post Office                                 Interbank Financial                       »     Post Office
                                                           Telecommunication
                                                           (SWIFT)
                                                     »     Telegraphic Transfers
                                                     »     Telephonic Message –
                                                           mobile phone-based
                                                           transfers
                                                     »     Web-enabled Instructions
Informal   »   Bus/Courier Company                   »     Physical Transport of Cash                »     Bus/Courier Company
           »   Collection Agen(t)(cy)                      and Goods                                 »     Collection Agency's
           »   Friends/Relatives
                                   13                                                                      Operator
                                                                                                     »     Recipient's Location
                                        Source: IMF, International Transactions in Remittances: Guide for Compilers and Users. October 2009.




                                        CREATING A FAIRER SYSTEM

                                        The Role of Business
                                        Independent of systemic regulatory reform, businesses—namely global buyers,
                                        private employers, and financial service institutions—have the potential to
                                        address certain root causes to migrant remittance value erosion. Actions by
                                        employers and global buyers in particular fall into two primary categories:

                                        1. Practical steps that can be taken within a company’s own operations.
                                        2. Collaborative steps that can be taken by business across key sectors to
                                            improve worker access, manage cost, and limit risk.
                                        Inherent in all of the recommended business actions is BSR’s Educate, Engage,
                                                             14
                                        Expand framework . There is a need for business to educate itself and better
                                        understand the remittance system as well as the migration value chain that
                                        underpins it. Each of these actions also requires business to engage workers and
                                        other stakeholders, reinforcing the fact that in an interconnected system—no
                                        solutions can be achieved in isolation.
                                        Lastly, more innovative solutions require business to expand beyond normal
                                        stakeholder and commercial relationships and seek collaboration with other


                                        13
                                           The Hawala System is one such example used in the Middle East. This is an alternative or parallel
                                           remittance system with origins (as a term) in Islamic law. It exists and operates outside of, or
                                           parallel to, 'traditional' banking or financial channels. The components that distinguish it from other
                                           remittance systems are trust and the extensive use of connections such as family relationships or
                                           regional affiliations. Unlike traditional banking, Hawala makes minimal (often no) use of any sort of
                                           negotiable instrument. Transfers of money take place based on communications between members
                                           of a network of dealers. (See www.interpol.int)
                                        14
                                           “International Labor Migration—a responsible role for business,” BSR, 2008

                                        BSR | Making Remittances Work for Migrant Workers—the Role of Business                                  7
                                       industry players in overcoming barriers to a fairer system such as cost, and
                                       geographic and service access.

                                       Root Cause #1: Limited competition among remittance intermediaries
Regulatory Reform:                     results in high banking fees for migrant workers.
Incumbent regulatory
regimes ensure that
competition between                    Business Action
financial institutions and             » Global buyers and financial institutions push for changes in regulation and
MTOs for the remittances                  competition law through public policy advocacy.
market is limited. There is no               - While there are external advocates for such reform, there is no
doubt that a necessary                           industry lobby focused on this. The European Commission (EC) is
ingredient to improving the                      currently supporting developing countries establish policy
remittance system is                             frameworks more conducive to remittances and create more
regulatory reform. According                     favorable business environments. The EC’s Thematic Program on
to the International Monetary                    Migration and Asylum is one such example.
Fund (IMF), effective
regulations should not
impede the flows of                    Root Cause #2: Lack of financial literacy and access to licensed financial
remittances, nor should they           services leads workers to use money changers or informal channels where
drive remittance systems               risks (and fees) are higher than formal system.
underground*. However,
reform is difficult for myriad         Business Action
reasons:                               » Private employers partner with financial institutions to provide literacy
                                          courses for workers (with support from global brands).
»    There are a plethora of
                                              - ETA Ascon Star Group, a large, private employer operating in the
     available transaction
                                                 Gulf States, has partnered with both UAE Exchange and Western
     channels.
                                                 Union to conduct training in financial literacy on migrant worker
»    The demographics and                        camps. These training seminars help workers understand fee
     remitting habits of                         structures and how to construct family budgets.
     senders and receivers
     are diverse.
                                       Root Cause #3: Money paid to workers in destination-country currency
»    Financial systems in              results in currency exchange fees being paid by migrant workers.
     migration corridors (in
     origin and destination
     countries) are governed           Business Action
     differently.                      » Private employers work with financial intermediaries on a means to create
                                          two accounts per worker—one to distribute pay in destination-country
»    Reliable data to better
                                          currency, one to distribute pay in origin-country currency.
     understand system
     leverage points are                      - To date, given the complexities and specialization of the currency
     elusive.                                     buying business, this practice has not occurred. But the right
                                                  collaboration between specialized partners could make it happen
                                                  and spark significant change.
Further, the implementation
of reforms is challenging,
particularly in cash-based,
low-income economies
where access to banking and            Excessive Recruitment Fees Levied Upon Migrant Workers Still an Endemic
other financial services is            Issue
limited and enforcement                In its 2010 “Supplier Responsibility Progress Report,” Apple noted that as a result of
                                       audits and corrective actions, migrant workers have been reimbursed more than US$2.2
capabilities are lacking.
                                       million in recruitment-fee overcharges since 2008. Businesses must address the issue of
*Source: “Approaches to a Regulatory
                                       recruitment fees to ensure migrant workers are not subject to excessive payments and
Framework for Formal and Informal      deductions from their monthly paychecks. While some private employers (including
Remittance Systems: Experiences and    Western Digital Malaysia Bhd., with which BSR has worked) are using direct recruitment
Lessons,” IMF, 2005.                   as a disintermediation strategy to bypass recruitment agencies and reduce the financial
                                       burden on individual workers, this practice is not the norm.




                                       BSR | Making Remittances Work for Migrant Workers—the Role of Business                    8
Root Cause #4: Lack of access to financial intermediaries in rural and non-
urban areas in origin countries results in remittance recipients spending
time and money on transportation to collection point.


Business Action
» Financial institutions in partnership with ICT providers scale up access
   innovations for migrant workers, such as card-based transfers, mobile
   banking services, and dual-use debit cards.
       - According to a 2009 Ernst and Young report , in Kenya, few people
                                                         15

           have access to banking facilities, mainly due to the high transaction
           fees and a scarcity of bank branches. In response, Safaricom, in co-
           junction with its majority shareholder Vodafone, has established M-
           PESA, a mobile payment service. Partnering with Kenya Commercial
           Bank and Western Union, M-PESA has acquired around 6 million
           users. More than 10 percent of Kenya’s GDP passes through it.

The Need for Greater Cross-Sector Collaboration
The key to making the remittance system fairer for migrants and to limiting value
erosion is to improve worker access to transaction tools currently available. To
do this, barriers such as cost, geographic and service access, convenience, and
versatility must be addressed. ICT providers, MTOs, and financial institutions are
leading the way, collaborating on programs that leverage innovative technologies
currently in the marketplace. But these barriers must be addressed by other
business actors, in other industries, as well. Cross-sector collaboration—through
which global buyers, private employers, financial intermediaries, and
development institutions work together—offers the best means to create a fairer
remittance system for migrant workers moving forward.

Below are some collaborative solutions already being rolled out for use by
migrant workers in the remittance process. While these efforts represent valiant
beginnings, there is a need to extend and amplify collaboration and coordination
among efforts, and to ensure migration corridors around the globe benefit from
similar practices.




15
     “Mobile Money: an overview for global telecom operators,” Ernst and Young, 2009.


BSR | Making Remittances Work for Migrant Workers—the Role of Business                  9
                                            Collaborative solutions used in the remittance process

Solution         Description                          Examples                         Attributes                Business Action

                 Using a mobile phone, a              »    Western Union mobile        »    Lower cost           Employers partner with
Mobile-          consumer with a mobile-                   money transfer              »    Improved             telecom providers in
Mobile           enabled account can send                  program with                     access               destination and origin
transfers        funds to a recipient with another         Vodafone                         (independent of      countries to offer mobile-
                 mobile-enabled account. Funds                                              bank access)         mobile transfer technology
                 are added directly to the                                                                       to workers.
                 recipient’s account balance.

                 Remittance features are added        »    FINCA International, a      »    Lower cost           Employers/global buyers
Card-based       to prepaid cards as follows:              microfinance                »    Financial            partner with banks to offer
            16                                             organization based in                                 workers dual-use debit
remittances      »   Card-to-cash—the recipient                                             access
                     does not have a card of               Washington, D.C.,                                     technology in destination
                     their own, but has the                established a pilot                                   and origin countries, linking
                     ability to retrieve the               card-based remittance                                 technology to workers (and
                     transferred funds directly in         sending program in                                    vice versa).
                     cash.                                 Uganda. The
                                                           organization
                 »   Dual card—two cards with              distributed access
                     access to the same                    cards to remitters who
                     account are issued. The               lacked previous
                     common account could be               access to banking
                     a sub-account of the main             services, and
                     account to prevent full               established point-of-
                     withdrawal of money on the            sale (POS) machines
                     recipient end.                        throughout the
                 »   Recipient only card—the               country. With a vastly
                     sender purchases a                    improved network and
                     prepaid debit card which is           access to low-cost
                     either sent directly to the           technology, this
                     recipient or issued in the            program has lowered
                     recipient’s country. The              remitter transaction
                     sender can then reload                fees significantly.
                     funds onto the card.


                 Local agents, or                     »    The South Korean            »    Improved             Employers partner with
Agent            “correspondents,” are                     Postal Service                   geographic           banks to identify and create
Banking          contracted by financial                   (sender) has a                   access to            agent banking opportunities
                 institutions and mobile network           relationship with the            financial            in geographies where
                 operators to offer their services         National Savings Bank            services             workers do not have
                 in hard-to-reach and                      of Sri Lanka                »    Lower cost           access to existing bank
                 geographically dispersed areas.           (receiver), through                                   branches.
                 Local agents can range from               which remittances can
                 retail to national postal outlets.        be received via 134
                                                           branches and 4,500
                                                                         17
                                                           post offices.




                                            16
                                               “Card based remittances: a closer look at supply and demand,” The Center for Financial Services
                                               Innovation, 2007.
                                            17
                                               “Promoting Financial Inclusion through Innovative Policies,” Juantia Woodward, Eurogiro, 2009.

                                            BSR | Making Remittances Work for Migrant Workers—the Role of Business                          10
CONCLUSION
There is an opportunity for business to take a leadership role in helping to
establish a fairer remittance system for migrant workers in global supply chains.
To date, labor-intensive industries such as manufacturing, construction, and
agriculture have struggled to be proactive in taking such leadership. As the
percentage of remittances sent through informal channels remains high and
value erosion for the migrant worker persists, a stronger link between these
industries and remittance service providers—banks, MTOs, and ICT providers—
is needed. Businesses can work to create a fairer system for migrant workers by
educating themselves on the remittances issue, engaging with value chain
actors, and expanding positive impacts through cross-sector collaboration.




BSR | Making Remittances Work for Migrant Workers—the Role of Business         11

				
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