Transcript Kein Folientitel

Workers' remittances, current private transfers and
compensation of employees in the German Balance
of Payments Statistics
Luxembourg Group
1
Background
❙ The main source for statistics on international remittances is the Balance of
Payments (BOP)
❙ In this regard, BOP compilers have been faced with an increasing interest in
remittance data in the last decade
❙ This increasing interest, however, puts some pressure on compilers as data on
remittances been judged by users as less reliable compared to other BOP
items.
❙ Especially the lack of comparability (usually remittance credits exceed debits)
indicate differences in the coverage and compilation
What are the reasons for these differences?
2
Background
❙ Generally, the multitude of channels used for sending remittances
make the collection of data difficult.
❙ The channels vary from country to country, from remitter to remitter,
from the financial system in the sending and receiving country, the
convenience and cost.
❙ Furthermore, the small size of the individual transactions makes it
very difficult to detect remittances in the frame of the general BOP
collection system.
❙ It should be also mentioned, that a certain “lack of interest” in
developed countries in this sub-item of the BOP, which is of minor
importance for them compared to other items, may contribute to
some of the inconsistencies
3
Outline
1. Current data sources and data published for the components of
the future items "personal transfers" and "personal remittances"
a) Workers' remittances
b) Current private transfers
c) Compensation of employees (net)
2. Weaknesses of the current system
3. Measures to improve the current statistic
4. Compiling and presenting remittance data
Luxembourg Group
4
1 a) Workers' remittances
General remarks
The collection of data on workers' remittances is embedded in the general
reporting requirements. These requirements stipulate that all payments
above the relevant reporting threshold (at present 12,500 EUR) must be
reported to the Bundesbank.
In Germany, it was assumed throughout the years and regardless of the
respective amount of the threshold (DM 500, DM 1,000, DM 2,000 etc.), that
remittances of migrant workers to their home countries exceeded the
threshold only in rare cases. Accordingly, a method was implemented to
estimate these flows for the German Balance of Payments.
Luxembourg Group
5
1 a) Workers' remittances
Sources
 Monthly collective reports by selected banks. Some of them are branches
of foreign banks (primarily Turkish but also from other countries like the
Philippines). The reports comprise cash deposits with a beneficiary abroad
 In addition, some banks report monthly collective reports about cash
deposits or transfers of foreigners into accounts held by foreign banks
 Data from the Federal Employment Office about the number of employed
and unemployed foreigners subject to social insurance contributions
(corrected by cross-border and seasonal workers).
To assure that the mentioned bank reports contain also information about
cross border payments below the threshold, special agreements between
the banks and the Bundesbank were made.
Luxembourg Group
6
1 a) Workers' remittances
Calculation method
1. To differentiate between workers' remittances and payments for other
reasons, percentage rates for each receiving country are applied to the
amounts reported in the case of payments to accounts abroad.
2. Remittance flows per capita are calculated by dividing the reported values
by the number of non-residents reported by the labour agency.
3. It is assumed, that every (registered) guest worker in Germany remits a
minimum amount of EUR 1,200 and a maximum amount of EUR 2,000 to his
home country each year.
4. The average amount per capita is calculated on the basis of bank reports
and compared with the minimum/maximum amount. If the reported amount
lies in between the min/max amount, the reported value per capita is used.
If the reported amount is below/above, the min/max amount is used.
5. Multiplied with the number of registered persons per nationality yields to
the total amount per country.
Luxembourg Group
7
1 b) Current private transfers
(household to household)
General remarks
Current private transfers are collected via the regular collection
system, i.e. only payments exceeding the exemption threshold of
EUR 12,500 are reported.
For transactions below the threshold an estimation method is
applied, however this method was not specifically developed for
private transfers.
Depart from this “estimation”, no other corrections/estimations are
made.
Luxembourg Group
8
1 c) Compensation of employees
General remarks
Similar to workers remittances, salaries paid are normally below the
respective threshold and therefore not captured by the reporting system.
Even if a single transaction exceeds the threshold, reporters are often not
aware about their obligation to report because, from their point of view, the
payments often take place between two resident accounts (for instance,
wages of German employees paid by foreign embassies).
Hence, the Bundesbank uses indirect sources to estimate compensation of
employees gross and net.
Luxembourg Group
9
1 c) Compensation of employees
Sources
Statistics of the Federal Employment Office (number of cross
border/ seasonal workers and the respective country of the
employee)
Statistics of the Federal Statistical Office (quarterly calculation of
average gross income (credits/debits for neighboring countries)
Statistics of the Federal Ministry of Finance (compensation of
German employees working for foreign military forces stationed in
Germany)
Statistics of the Federal Foreign Office (compensation of foreign
employees working in German embassies abroad)
Annual reports of International Organizations (compensation of
German employees)
Partner country data for receipts of German workers employed in
CH, LUX, NL, FR
Luxembourg Group
10
1 c) Compensation of employees
Calculation method
1. FSO calculates an average income, separately for cross border and
seasonal workers. The average wage is multiplied with the number of
employees (foreigners in Germany, Germans abroad). To this amount the
contribution of the employer to social insurance is added. For German
receipts from CH, LUX, NL and FR we use partner country information.
2. To come to the net income, the total contribution to social insurance and
taxes on income is deducted from the gross value. Finally, a correction for
travel is made by the Bundesbank.
3. Regarding income received from foreign military forces and international
organizations, no additional corrections are made. In the case of income
paid/received by embassies in Germany/abroad, information from the
national accounts are used.
Luxembourg Group
11
2 Main weaknesses
Workers remittances
i.
Money flows through informal channels and by illegal workers
from countries which are not included in the database of the
Federal Employment Office are not reflected adequately.
ii. Assumed minimum/maximum amount has not been proofed
iii. Estimation method does not take into account the propensity to
remit.
iv. Current data from the banks do not allow to distinguish in all
cases for what purpose the actual payment is made, e.g. for
basic needs of relatives or for other purposes like deposits in
own accounts.
v. No information about workers remittances credits
Luxembourg Group
12
2 Main weaknesses
Current private transfers
Data source does not assure an adequate coverage of all private
transfers.
The breakdown by country is distorted as only the information of reported
payments above the threshold is used.
Compensation of employees
Germans who work abroad for more than one year are treated as
residents and their salaries are included undistinguishable in
compensation of employees.
Luxembourg Group
13
3 Measures to improve the current statistics
Remittances:
Use of data from money transfer companies (Western Union etc.).
Currently, the Bundesbank is checking the usefulness of aggregated
information provided to us by the Federal Financial Supervisory
Authority.
Results:
Information from this source could be another piece in the puzzle, for
instance regarding the country breakdown, but is not the final solution.
However, it is planned to use this source as a starting point to estimate
workers’ remittances credits.
Luxembourg Group
14
Measures to improve the current statistics
With view to future definition of “private transfers”
It will be necessary to collect more detailed sector information to capture
household to household transfers.
Problems:
- The sector in the receiving country is not always exactly known by
private declarants (how would a private person sectorise a payment
via a non profit organisation?) → distortion of the results
- Second, political pressure to reduce the statistical burden for private
persons. This could result in a complete exemption of private person
from all or most of their reporting obligations → use of secondary
information may result in less quality and comparability
Luxembourg Group
15
Collection approaches to obtain data
(a) Transaction Reporting
❙ Remittances transferred using international networks, typically from the
banking system.
COUNTRY A (sender)
COUNTRY B (receiver)
A cash
BANK A
BANK B
ACCOUNT
ACCOUNT
cash A
ACCOUNT
B
ACCOUNT
C
B
ACCOUNT
C
ACCOUNT
transfer via
international network
e.g. SWIFT
receiver
sender
DATA COLLECTION
❙ Data can be collected from banks using international transaction reporting
systems (ITRS) based on the information given by the sender in the payment
order.
16
Collection approaches to obtain data
(a) Transaction Reporting
Strengths:
❙ Timely information as data are registered by ITRS at the moment when a
transaction is settled;
❙ Low cost as data on remittances are essentially a by-product of the cross
border settlement.
Weaknesses:
❙ Does not cover international payments outside the banking system or
transfers in kind.
❙ Depending on changing political environment (e.g. discussion in the EU on
raising the reporting threshold to EUR 50.000 to reduce the reporting burden
for banks in the frame of the Single European Payments Area (SEPA)).
17
Collection approaches to obtain data
(b) Direct Reporting
❙ Remittances sent by using Money Transfer Operators (MTO)
COUNTRY B (receiver)
COUNTRY A (sender)
DATA COLLECTION
C
A
B
C
A
ACCOUNT
of MTO
Centra
l
Cleare
r of
MTO
ACCOUNT
of MTO
B
C
cash
A
B
C
receiver
B
MTO
AGENT of MTO
cash
A
AGENT of MTO
sender
MTO
Information: sender, receiver, amount, etc.
❙ MTOs tend to aggregate and net settlement payments. As such, direct
reporting would seem to be an appropriate method for collecting detailed
information about individual transactions.
18
Collection approaches to obtain data
(b) Direct Reporting
Strengths:
❙ Low costs, because the number of reporters is normally not large.
❙ Reliable as all relevant information is available and full coverage of
remittances routed through the MTOs.
Weaknesses:
❙ No information about remittances sent through other channels or transfers in
kind
❙ MTOs cannot assure that transactions other than remittances are excluded.
19
Collection approaches to obtain data
(c) Household surveys
❙ Remittances sent outside the formal sector
COUNTRY A (sender)
COUNTRY B (receiver)
DATA COLLECTION
BUS
COMPANY
busdriver
B
C
A
CASH
CASH
Physical transport of the money
CASH
CASH
CASH
CASH
B
C
receiver
sender
A
busdriver
Information: sender, receiver, amount etc.
❙ Especially if remittances sent via informal channels, the appropriate way to collect
remittance data is asking senders and receivers directly.
20
Collection approaches to obtain data
(c) Household surveys
Strengths:
❙ Direct control over information collected.
❙ Possible to collect data sent through formal and informal channels.
Weaknesses:
❙ Costly and methodologically demanding.
❙ Under-reporting because information requested are considered sensitive by
the respondents.
21
Collection approaches to obtain data
(d) Data Models
❙ Direct reporting (asking banks, MTOs, senders/receivers) is difficult and
impractical for a number of reasons.
Direct data
collection
BoP COMPILER
Secondary
data
e.g. Administrativ Data:
BANK
MTO
- Data about foreign
population
SENDER
RECEIVER
- Income etc.
❙ If direct measurement is no option, models based on secondary data could
be used to estimate remittance.
22
Collection approaches to obtain data
(d) Data Models
Strengths:
❙ Estimations are definitely able to cover formal and informal channels.
❙ Low costs as secondary data (eg administrative data) is available at no extra
cost.
Weaknesses:
❙ Input data can be weak (e.g. if migrant population is partly estimated).
❙ Assumptions about variables which influence the propensity to remit may be
problematic (problem to test or verify them in practice) and fixed over time.
23
Further guidance
Given the multitude of channels and possible approaches that are available
for collecting/estimating remittance flows, the compilation guide of the
Luxembourg Group further contains a practical four-step approach to
develop a country-specific data development plan:
Step 1:
Step 2:
Step 3:
Step 4:
Understanding the current situation.
Evaluation of current data collection system.
Prioritization.
Improvement and Expansion of data by channel.
24
Further guidance
Besides providing definitions, compilation guidance and proposals how to
improve data the guide also reviews good practices in disseminating
remittance data.
❙
As a general rule, the DQAF of the IMF gives good guidance on diverse
aspects of dissemination practices
❙
Further recommended is the publication of bilateral data. However, it is
recognized that the collection of bilateral data is challenging
❙
The dissemination of bilateral data should therefore be part of a longer
term program and should focus on relevant corridors (pairs of countries
with large flows)
25