17 Jul 2023

Data constraints could be skewing Pacific remittance figures

3:38 pm on 17 July 2023
New Zealand dollars have different nominaly

New Zealand dollars have different nominaly Photo: Copyright: rochu2008

Pacific nations could be under-reporting the amount of remittances entering their countries due to data constraints, according to a new study.

The report by the PACER Plus Implementation Unit, titled 'Constraints and Opportunities in Pacific Remittance Data Collection', looked at the remittances landscape in Kiribati, Solomon Islands and Tonga.

Lead author Alisi Holani said the study was commissioned by the Pacific island countries.

"The countries wanted to make sure that the data that they have is accurate and it reflects the actual value of the remittances received," Holani said.

Australia and New Zealand through their respective labour mobility schemes recruit workers from other countries to make up for labour shortages in certain sectors and also for seasonal work in areas where there are insufficient numbers of local workers and back-packers.

According to the report, for the 2022-2023 cycle, Australia has a quota of 35,000 workers and New Zealand offers up to 19,000 worker placements.

The report found that remittances in Tonga accounted for nearly 50 percent of the kingdom's Gross Domestic Product (GDP), trumping export receipts, foreign direct investment and overseas aid in 2020.

For Kiribati, remittances accounted for 7.5 percent of GDP and in Solomon Islands it was 2.5 percent.

"Countries are very much interested in having accurate data on the volume of remittances that they receive," Holani said.

"There are data collection constraints, data measurement constraints, which may lead to the reports on the value or volume of remittances received being less than the actual amount transferred by workers."

The report found one of the constraints was the limited capacity of the central banks to collect accurate data.

It also found that countries were dependent on the data from banks or money transfer operators.

However, Holani said money sent by workers could go through different channels, like being carried as cash or goods being sent back to their home countries.

She said surveys or other research methods could be done alongside the data being collected through formal channels, such as banks, to get a better picture of how much money was being sent back.

Holani said remittances have a direct impact on poverty alleviation because they are mainly private transfers.

"In times of economic downturn like with Covid-19, you will see remittances actually increasing and so it becomes a safety valve to cushion the impact of those economic downturns on household incomes."