IMPACT OF REMITTANCE INFLOWS DURING COVID-19: A HOUSEHOLD-LEVEL ANALYSIS OF DISTRICT SHANGLA, PAKISTAN

Abstract

Foreign remittances are a significant component of household income in developing countries, especially in the communities where emigrant work is an important livelihood option. The COVID-19 pandemic caused major disruption to international mobility, employment and economic activity, and thus to migrant workers and their families in the countries of origin. The objective of this research is to explore the fluctuations in remittance receipts and their impact on income and wellbeing of households in District Shangla, KP, Pakistan during COVID-19. Primary data was obtained from the 60 households in Tehsil Besham by conducting semi structured interviews with closed and open ended questions. The study used a combined mixed method, quantitative data was analysed with frequencies and percentages while the qualitative data was analysed thematically. The results show a significant impact on the employment of migrants and remittance transfers during the pandemic. Prior to COVID-19, 100% of all migrant workers in the sample reported being employed, while during the pandemic, 6.7% of migrant workers reported total unemployment, 55.0% reported partial unemployment and 38.3% reported unemployment. The number and size of remittances also dropped significantly. In the pandemic period, a greater proportion of households (41.7%) said that migrant workers never sent money home, compared to (1.7%) in the pre-pandemic period. There were reduced income and increased expenditure, especially health related expenditure, in the household. As a result, 46.7% of respondents were dissatisfied with household wellbeing and 43.3% were undecided regarding their wellbeing during COVID-19. The study also confirms that remittances play an important role in providing a safety net for households: 55.0% of respondents said that the lack of remittance had an impact on the wellbeing of their household “quite a bit”, while another 20.0% said it had an impact “very much.” Post-relaxation, employment and remittance transfers have mostly rebounded, while inflation and currency depreciation still had a negative impact on household economic conditions. The results show that remittance-receiving households are at risk of shocks and stresses at the global level and indicate the need for a diversified livelihood and their need for access to financial services and social protection in origin countries.