Remittances from Foreign Workers Exceed 8 Billion, Yet Balance Remains Negative

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Remittances: A One-Way Street for Italy

For every euro that flows into Italy, approximately 20 euros are sent abroad.
This striking disparity is highlighted in the realm of “remittances,” referring to the income that foreign workers save and send to their families back home.
Italy’s balance in this regard has remained heavily negative for nearly three decades.
Since the mid-1990s, the money sent abroad by foreign workers in Italy has consistently surpassed that which Italians send home.
Currently, this gap continues to widen.

We’re discussing billions of euros that represent hard-earned money in Italy, yet leave the country each year.
Some might view this as “lost” funds, yet it’s crucial to recognize that individuals have the freedom to allocate their earnings as they see fit.
These remittances often serve as vital sources of financial support for developing economies.

Statistics from the Bank of Italy

The Bank of Italy is responsible for compiling the national balance of payments, which includes official statistics on both incoming and outgoing remittances.
It is important to note the use of the term “official,” as a significant amount of undocumented transactions may skew these figures.
In 2023, remittances from foreign workers in Italy reached €8.2 billion, stable compared to the previous year.
In contrast, remittances sent by Italians abroad amounted only to €480 million, leading to a staggering negative balance of over €7.6 billion—a growing trend in recent years.

Between 2010 and 2020, the estimated average negative balance was about €5 billion annually.
In 2023, the negative balance exceeded €7 billion for the third consecutive year.
Just a few years prior, in 2017, the negative balance was markedly lower at €4.4 billion.
Additionally, the official figures do not account for money transfers made through informal channels, which can add an extra 10% to 30% to the total remittances.

The Evolution of Migration and Remittances

The current trends reflect significant changes in migration.
For decades, Italians sending money abroad played a crucial role in the national economy.
Today, with around 5.9 million Italians living overseas and slightly more than 5 million foreigners in Italy, the outflow versus inflow of remittances reveals a stark imbalance.
This can be attributed to the fact that earnings generated in Italy are often essential for families living abroad, whereas families in Italy are less dependent on their compatriots’ incomes from abroad.

Interestingly, newer communities tend to send higher remittances.
In the first quarter of 2024, approximately 14.4% of remittances from Italy went to Bangladesh, followed by Pakistan (8.2%) and the Philippines (7.3%).
Despite the Moroccan community being one of the largest in Italy, dating back to the 1970s, they ranked only fourth (6.9%) for outgoing remittances.

The Landscape of Money Transfers

Quantifying money transfer services (like Western Union or MoneyGram) in Italy poses a challenge.
The OAM (Organismo per la gestione degli elenchi degli agenti in attività finanziaria) tracks only agents formally mandated by Italian companies, which is a fraction of the total.
In 2016, during a parliamentary hearing, Guardia di Finanza estimated approximately 22,000 agents were providing transfer services, with 95% linked to foreign operators.

In conclusion, remittances have become a crucial element of the financial landscape in Italy, but the reality paints a picture of one-sided flows.
Understanding these dynamics is essential for grasping the broader implications for both Italy and the countries that benefit from these transfers.

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