Back home, jobs are sometimes hard to come by, and usually far less well paid than they are in the west. British pounds are thus a vital source of foreign exchange for families in poorer countries
The Independent Voices
In 18 countries across Africa and Asia, say Unesco, remittances increased education spending by 35 per cent, and in Latin America by 50 per cent-plus ( Getty )
Imagine, for a moment, a world where the bank skims off 7 per cent on every transaction you make. So every time you use your Switch card, make a direct debt or, for the old fashioned, write a cheque for, say, £1,000, your bank charges you £70 just for the privilege of doing so. Every time.
That, in fact, is the position the world’s migrant workers find themselves in, when they want to wire cash home to support families and, in particular, their children’s education. According to a Unesco report, too much of this “hard-earned money” is being taken in transfer charges by banks and other financial institutions. Unesco argues that poorer people wiring money should only have to pay 3 per cent in charges – but the global average is 7 per cent. The Association of UK Payment Institutions adds that fees would be lower if regulators allowed more companies to compete in this market. With some due diligence about money laundering and terrorism, that should be possible to do.
Does it matter? Although remittances abroad are “bad” for, say the UK balance of trade, the sums involved are relatively modest for richer countries: £8bn flows out of the UK, for example, out of a total national income of about £2,000bn. It compares with the overseas aid budget of £13bn – even together not much more than £1 for every £100 the UK economy generates.