CENTRAL ASIA: Remittances on the Rise

Global Geopolitics & Political Economy / IPS

By Kester Kenn Klomegah

MOSCOW, Oct 7, 2010 (IPS) – Financial remittances to the Central Asian Republics by millions of both undocumented and legal migrants working in Russia have increased substantially, labour experts say.

"Russia is the most important source of migrant remittances for many CIS (Commonwealth of Independent States, former Soviet republics) countries, particularly Azerbaijan, Armenia, Kyrgyzstan, Moldova, Tajikistan, Uzbekistan and Ukraine," Nilim Baruah, senior migration policy adviser for Central Asia at the International Labour Organisation (ILO) in Moscow told IPS. "During the economic crisis the volume of remittances fell significantly but still remained large."

According to the Central Bank of Russia personal remittances from Russia to CIS countries in 2009 added up to 13 billion dollars. The World Bank estimates for Armenia are 729 million dollars, Azerbaijan 1.243 billion dollars, Kyrgyzstan 882 million dollars, Moldava 1.211 billion dollars and Tajikistan 1.747 billion dollars.

Baruah says remittances are particularly important in Tajikistan, Moldova and Kyrgyzstan where remittances as share of the Gross Domestic Product (GDP) in 2008 were as high as 50 percent, 31 percent and 28 percent respectively (World Bank).

An ILO study estimates that about 617 million dollars of remittances were saved by families in Tajikistan in 2008. But most of this did not enter the banking system in the form of deposits or accounts. The survey says 98 percent of remittance receivers did not have a bank account. It finds huge potential for attracting remittances into the banking system provided savers can have greater confidence in banks.

The impact in terms of brain drain is mixed, Baruah said. "On one hand in some professions the labour markets in the countries of origin are simply not able to absorb all of the available labour. On the other hand in certain professions, for example IT, medical, construction, there are skills shortages in countries of origin which are made worse by the emigration of skilled human resources."

In an ILO survey in Tajikistan in 2008, 52 percent of top managers of 100 surveyed companies said the company had employees who had resigned during the last three years to work abroad.

Prof. Timothy Edmund Heleniak from the geography department at the University of Maryland in the United States, who has researched labour migration in the ex-Soviet republics for the World Bank (WB), told IPS in an email interview that there is considerable brain drain from these ex-Soviet republics.

"However, much of it is not permanent and most consists of temporary labour migration. Most would prefer to live permanently in their countries along with their ethnic kin. Their economies cannot supply enough jobs to keep them employed and Russia, with its declining population, can. In the longer term, it might benefit these countries from having a temporary brain drain as their workers gain skills that could be used at home later."

When the global economic downturn became inevitable in mid-2008, Russian experts argued that a shrinking volume of remittances from labour migrants would be one major implication of the crisis in Central Asia. Yet, while remittances dropped significantly in the fourth quarter of 2008, now more Kyrgyz, Kazahk, Tajik and Uzbek citizens and those from Ukraine and Belarus seeking jobs in Russia are pushing up the volume of remittances.

Head of the Federal Migration Service (FMS) Konstantine Romodanovsky said at a meeting with Prime Minister Vladimir Putin last month that an estimated four million undocumented migrants from the ex-Soviet republics now live in Russia.

"There are over five million foreign citizens, of which only a million are officially registered; four million work in the shadow economy," Romodanovsky said. Labour experts estimated the number of undocumented workers at between 10 to 15 million.

Dmitry Valentey, liaison coordinator with the International Organisation for Migration in Russia told IPS that in the coming years it’s likely to become easier for Central Asian migrants to earn more as Russia ‘s economy expands due to the recent changes in the legislation, and a political will on the part of the Russian officials to simplify registration procedures for migrants.

The migrants are benefiting Russia as well. "It significantly benefits the Russian and Kazakh economies as these countries have relative labour shortages — manual or lower paying jobs that nationals do not fill — that are filled by migrants," said Baruah.

"The employment and working conditions in such jobs should be closely monitored by the authorities and social partners so that they meet national and international labour standards, and more people working in these jobs are brought into the formal economy."

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