Labour market, social welfare, and migrant remittance: COVID-19 implications in the UK

The study investigates how the COVID-19 pandemic affected remittances sent from the UK to Turkey by Turkish migrants, focusing on the interplay between migrants’ labour-market participation and access to pandemic-related financial support. The context is a global health crisis that rapidly triggered recessionary pressures, disrupted labour markets, restricted human mobility, and affected both formal and informal remittance channels. The purpose is to understand determinants of remittance decisions, amounts, and channels under the combined pressures of travel restrictions, income/job loss, and tightly regulated welfare systems in the UK. The importance lies in clarifying how host-country labour market irregularity and welfare regulations shape remittance practices and may exacerbate vulnerabilities among migrant households in both sending and receiving countries.

The paper frames remittances through micro/behavioural and macro/structural determinants, drawing on Lucas and Stark (1985), Blue (2004), and Marwan (2011). Micro determinants include motives such as altruism, obligation, and insurance. Macro determinants encompass exchange and interest rates, inflation, growth, employment opportunities, and incomes in both origin and host countries (Faini, 1994; Holst & Schrooten, 2006; Aydas et al., 2004; El-Sakka & McNabb, 1999; Sultonov, 2013). Structural/legal factors—immigration status, access to welfare and financial services, costs of transfers, and institutional regulations—shape both the decision to remit and channel choice (Kosse & Vermeulen, 2014; Mallick, 2017; Agarwal & Horowitz, 2002). Informal channels may be attractive due to cost, speed, accessibility, reliability, and anonymity (Freund & Spatafora, 2008; Pieke et al., 2005), and legal status affects migrants’ transnational engagement and remittances (Zewdu, 2018; Vickstrom & Beauchemin, 2016). During COVID-19, official data suggested surprising resilience in remittances, potentially due to shifts from informal to formal channels and fiscal stimulus in host countries (Kpodar et al., 2021), though questions persist about the accuracy of data given job losses and exclusion of some migrants from benefits.

Qualitative, inductive design using in-depth, semi-structured interviews with Turkish migrants in the UK. Data collection: 31 online video-call interviews (30–60 minutes each), conducted in Turkish during May–July 2021 due to travel restrictions. Sampling: two groups differing by immigration background/status: (1) 16 migrants with political refugee backgrounds (arrived 1970s–2000s); (2) 15 migrants under the Ankara Agreement. Participants were aged 23–52; gender balance relatively even among Ankara Agreement migrants (7 women), but only 3 women among the political refugee group. Socioeconomic profiles: Ankara Agreement group mostly higher education, working as contractors/freelancers/self-employed; political refugee group generally lower education, concentrated in Turkish ethnic economy jobs, often part-time registered but working full-time, some self-employed. Analysis: thematic analysis with attention to four interlocking themes: pre-migration socio-demographics; pre-pandemic working conditions and benefit eligibility; pandemic-induced changes in work and access to financial support; remittance practices before and after the pandemic. Ethical approval obtained; informed consent secured.

• Pre-pandemic dichotomy in remittance practices: Political refugee-background migrants (often with indefinite residence/citizenship, lower education, rural origin) saw remitting as an obligation and typically used informal channels due to undeclared work and strict oversight linking benefits and transfers. Ankara Agreement migrants (more educated, urban origin, middle-class) had lower remitting propensity, limited by lower early-stage incomes and no eligibility for social assistance, but used formal channels when they did remit.
• Structural determinants: UK’s tightly regulated welfare system and monitoring of income/benefits via transfer mechanisms push undeclared workers away from formal channels. Housing benefit eligibility incentivized part-time registration despite full-time work, affecting reported income and remittance channel choice.
• Ankara Agreement constraints: Requirement to demonstrate self-sufficiency and tax payment discouraged benefit use and cash work; low initial earnings reduced remittances; when remitting, formal channels were more accessible due to absence of benefit-related restrictions.
• Pandemic impact: Dramatic decline in remittances across both groups. • According to field data, none of the Ankara Agreement migrants remitted during the pandemic period; only 4 migrants from the political refugee group sent small amounts via formal channels. • Three key determinants of decline: (1) travel restrictions curtailed informal, in-person transfers; (2) income/job losses and uncertainty led to precautionary saving; (3) dependency on strictly regulated financial support created fear of repercussions, discouraging transfers even when small amounts were affordable.
• Policy-relevant insight: Financial supports calculated on pre-COVID registered income disadvantaged migrants whose actual pre-pandemic earnings exceeded declared amounts, reducing their capacity to remit. Irregularity in labour markets propagates irregularity in remittance channels under strict institutional regimes.

The findings address the research question by showing that host-country labour market status and welfare regulations are central, macro-structural determinants of both the decision to remit and the choice of remittance channel, especially during systemic shocks like COVID-19. Restrictions on mobility removed a critical informal channel; simultaneously, income shocks and dependence on tightly controlled support programs suppressed remitting, even among migrants with ongoing familial obligations. The UK’s approach—linking welfare eligibility and transfer monitoring to declared income and employment status—effectively pushed undeclared workers out of formal remittance systems and diminished transfer volumes overall. This underscores the importance of considering institutional and regulatory environments, beyond individual motives or macroeconomic indicators, in remittance dynamics. The results contribute to literature by evidencing a vicious cycle wherein labour market irregularity begets remittance irregularity under strict welfare regimes, and by highlighting that immigration status stages (e.g., Ankara Agreement) condition remitting capacity and channel use.

The study demonstrates that during COVID-19, travel restrictions, migrant income/job losses, and reliance on tightly regulated financial support substantially reduced remittances from the UK to Turkey via both formal and informal channels. It reveals how UK labour market arrangements and welfare regulations, tied to declared income and benefit monitoring, shape remittance behavior and exacerbate vulnerabilities. Policy implications include the need for flexible, inclusive crisis support decoupled from strict pre-crisis tax/NI records, and measures that facilitate formal remittances without punitive oversight that deters usage. The paper proposes a Temporary Basic Income Support (a minimum base wage for part-time workers calculated as full-time) during crises to stabilize migrant livelihoods and sustain remittances. Future research should expand to other migrant groups in the UK and assess how facilitating formal remittances can reduce global inequalities in line with SDG 10.

• Qualitative, small-N sample (31 interviews) of Turkish migrants limits generalizability beyond the groups studied.
• Sample restricted to two specific migrant categories (political refugee background and Ankara Agreement) in the UK; findings may not transfer to other nationalities, contexts, or immigration regimes.
• Data collected during May–July 2021 under pandemic constraints via online interviews; time-bound perceptions and conditions may differ across other pandemic phases.
• Reliance on self-reported employment and remittance behaviors, including undeclared work, may introduce reporting bias.
• The study does not quantify the magnitude of shifts between informal and formal remittance channels beyond reported behaviors.