Thu, 24 April 2014  
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The Global Economic Crisis impact on Tuvalu Seafarers Remittance: the story of Tangata's Family
[Funafuti, Tuvalu November 2009] Fafine is a 28 year old woman, living in Niutao atoll, Tuvalu formerly known as the Ellice Islands. This Polynesian country is located in the Pacific mid way between Hawaii and Australia and is close to Kiribati (Gilbert Islands), Samoa and Fiji.

Her husband, Tangata, has been working as a seafarer in a German cargo ship since 2000. Getting married in 2005, they have been blessed with a beautiful three year old daughter, Catherine. From 2005, Fafine has been staying at home looking after their daughter and managing household chores when Tangata is out working and has always been dependent on the remittances sent by her husband.

Even though Tangata found the work on the boat difficult at first, because he had to leave his beloved wife and daughter, the job's wages were satisfying. As a graduate from the Tuvalu Maritime Training Institute in Funafuti, Tangata was proud of being accepted to work in a cargo ship which is very often a dream job for many young men in Tuvalu. He also made good money from his job and could support not only his wife and daughter but also his younger brother who went to school in Motufoua, on Vaitupu atoll, the only secondary school in Tuvalu. He and his family had a better life compared to other families in Niutao who live on fishing. However things changed in December 2007. Returning home this time is different from the previous ones. This time Tangata went back home to Tuvalu without knowing if he would ever go back to work on the ship. His contract with the cargo ship was not extended. The Global Economic Crisis (GEC) has impacted global export-import activities and led to lower demand for seafarers from Tuvalu.

The current GEC began in the summer of 2007 with the collapse of the financial system in the United States (US). The crisis in housing sector followed by the collapse of the American investment bank Lehman Brothers in September 2008 has led to sharp falls in investment around the world including falls in trade and production. Exports orders got cancelled, export financing was cut back and as the result of mistrust on banks, companies and people alike withdraw their deposits and money from banks. This GEC soon affected not only developed countries but also developing countries including Asia-Pacific region.

In the Pacific however it is highly likely that the full impact of the global economic crisis has not yet been felt in 2009 but will be to likely impact in 2010. Demands for exports from developing countries have been falling and massive unemployment has taken place in many countries.

The impact of the GEC is not only affecting Tangata. Remittances have traditionally been an important source of income to most of the families in Tuvalu and are an important part of the Tuvaluan economy. Apart from lower demand for seafarers from Tuvalu, those who are still on the ships have also been facing a hard time. Most of the wages for the seafarers are set in US dollar and the GEC has led to the depreciation of the US currency against the Australian dollar, the currency used in Tuvalu.

Based on a joint report by the United Nations Children's Fund (UNICEF) and the United Nations Development Programme (UNDP), "Protecting Pacific Island Children and Women during Economic and Food Crisis", since early 2006, the average US dollar monthly remittances from the seafarers have declined by more than 20% in Australian dollar value. The report also states that over the last few years, most of the families who rely on US dollar remittances as their main source of income have faced a reduction in their real income by around a quarter.

The economic growth in the Pacific has been affected by the GEC. Even though Papua New Guinea and Solomon Islands reached 5.1% of economic growth in 2008, the Asian Development Bank (ADB) noted that some countries in the Pacific are very vulnerable to the impact of the crisis with Kiribati, Solomon Islands and Tuvalu as the most vulnerable ones. While many forecast that economic growth rates could gradually recover in 2010, the full impact of the crisis has not yet been felt in the Pacific and therefore it could take longer for the countries in the Pacific to fully recover from the crisis.

For the time being, Tangata is fishing with his father and Fafine is learning how to make handicraft as a means of earning money for their livelihood. Tangata and his wife are still hoping that things will soon go back to normal again and are eagerly waiting for the German cargo ship to hire Tangata again. 
 

By: Lincoln Sihotang, UNESCAP Pacific Operations Centre