Economic Development, Economic Updates, Government

Workers Remittance, the Global Economy, and its Impact on Canadian Economic Policy

To be Canadian is to inherently be international. The vast majority of Canadians are only a few generations removed from their immigrational heritage, and a strong immigration policy continues to be an integral part of Canada’s economic development strategy. With a significant portion of Canadian immigration originating from developing nations, how does workers’ remittance figure into not only Canada’s economy but the global economy as well? And is it important for economic developers to take an active role in improving remittance strategies?

Read on, and we’ll discuss.

Canada and Remittance

Canada’s population growth in the past decade has largely been fueled by international migration. With that in mind, it’s no surprise that the Canadian remittance industry was valued at $24.6B. That’s an increase of nearly $1B in just 2 years since the $23.7B World Bank estimate in 2015. That increase was enough reason for Statistics Canada (StatsCan) to conduct its own formal study on the movement of money from Canada.

The scope of StatsCan’s study is only a portion of the massive industry, which covers “naturalized Canadians, landed immigrants, and temporary residents born in ODA-eligible countries aged 18 years and over who sent money from Canada”. ODA-eligible countries are those that receive “official development assistance” from official agencies, like other governments and economic development organizations.

The findings are in. On average, remitters send $2855/year out of the Canadian economy and to their families abroad. Men tend to send more money than women, at a difference of $3250 to $2470 over the year. Southeast Asia is responsible for the largest portion of overseas transfers, at more than 25% of all remittance in 2017.

What are the motivations behind remittance? It seems to vary from country to country, there are a few trends. Let’s look at some of them.

Cultural Ideologies

In the Philippines, the government actively promotes the practice of working overseas in the interest of sending money back home to families. In fact, “overseas Filipino workers” (a term coined by the government) are considered modern-day heroes of the economy.


The timing of one’s migration to Canada is a significant factor in determining the likelihood and extent of overseas remittance. According to StatsCan, newly landed immigrants and temporary residents are far more inclined to remit money as opposed to naturalized Canadian citizens. Like many other temporal patterns, this tendency subsides as time passes. This is likely due to families migrating to Canada to join the overseas worker, or because of weakening overseas ties to family and friends back home.


Individuals actively employed in the labour force, particularly those working full-time, are most likely to send money abroad. Simply put, those who “have” are more willing to part with their earnings.

Where does all the money go?

There are two main destinations for all Canadian remittances, and it’s not close. First up are the Philippines (at a massive $1.2B total) followed by India ($794B). There’s a significant gap between the top two countries and the third (the USA, at $390B) and fourth (China, at $292B) countries. That’s almost half a billion dollars! In turn, this has resulted in remittances accounting for an average of 27% of annual GDP in developing countries. In particular, over half of Canadian remittances (more than $1.4B) go to lower-income countries.

Clearly, the large impact of remittances on developing countries is chief among the United Nations’ vested interests in reducing the costs of remittance fees.

How do remittances work?

The main means of moving money abroad is through money-transfer stores. With average transaction charge of 5%-7%, companies like Western Union and iRemit are accumulating healthy revenues on remittances – not exactly to the delight of the United Nations and the Government of Canada.

The typical pattern of remittance is via smaller transactions at high frequencies, which results in greater transaction fees. Though increased competition in the money-transfer space has somewhat reduced transaction fees, the “hand-carry” method remains popular. As the name suggests, remitters use opportunities like vacations to transport physical cash on their personage to entirely side-step transaction fees.


Overall, remittances are going to be an increasing part of the economy. As immigration continues to be a part of Canada’s growth strategy, remittance services are going to be increasingly needed, but not in traditional methods through Western Union and Money Mart, but primarily through quick, cheap online solutions. It’s important for companies, economic developers and stakeholders to see these trends and make the necessary organizational decisions to position themselves for success.

Clearly, remittances are going to be an increasingly significant part of Canada’s economy as it’s population diversifies. With immigration continuing to be a part of Canada’s growth strategy, new perspectives on remittance services are increasingly needed. Losing sizeable monetary amounts to companies like Western Union and Money Mart are simply out-dated methods. Rather, it’s time to focus on using technology to create cheap, quick and readily accessible online solutions for all of those in need.

It’s important for companies, economic developers and stakeholders to see these trends, adopt and utilize new forms of GovTech, and ultimately position themselves for continued success in the future.