52799 Migration and Remittances in CIS Countries during the Global Economic Crisis Sudharshan Canagarajah and Matin Kholmatov1 Despite the fact that the free flow of people across borders is the lynchpin of todays globalized world, Key messages more importance is usually given to the unrestricted The current economic crisis has severely movement of capital and goods. As a consequence, the affected migration and remittance trends in effects of the financial crisis on the issue of migration the ECA region. Countries that are most have largely been ignored by the international community. The World Bank and other international dependent on migration and remittances are organizations are examining ways to mitigate the effects bearing the brunt of the crisis. of the financial crisis on migration and foster productive CIS countries2 have to focus on implementing dialogue and partnerships among both sending and a coordinated migration policy that protects receiving countries, and the migrants themselves. This migrants' rights, develops efficient migration article describes the effects of the crisis in the CIS, support services in both sending and proposes reforms to mitigate its effects, and suggests actions to encourage self-sustaining progress in the area receiving countries, and creates a unified of migration in the future. labor market. The World Bank can help enable and Significance of Migration in CIS coordinate regional, practical, self-sustaining dialogue and action on migration issues in Free population movement in the CIS countries has been ECA. the most important link among the former Soviet republics and a powerful resource for economic Global Economies Rely on the Free Flow of development in the region. Citizens formerly living in a People common country, the USSR, are now separated by borders, disparate states of economic growth, and CIS countries have taken a multi-pronged hit in the demographic imbalances. As a result of poverty and lack global economic crisis: recent gains in combating of jobs in sending countries, and a need for labor in demographic trends in the region (declining population hosting countries, there was a surge in international growth and mortality rates in Russia and slowdown in migration in the region. However, lay-offs and late fertility in CIS countries) have been lost and, wage payments, rising unemployment, industry declines, simultaneously, job loss in the region has been and cancellation of construction and other projects where significant. There has been an attendant decline in migrants tend to congregate came with the onset of the remittances from migrants, leading to declining global economic crisis. CIS countries experienced a standards of living in their countries of origin. Migrants significant decline in remittances. For example, figures working in CIS countries remain vulnerable to for the fourth quarter of 2008 showed remittances from exploitation from both employers and local populations. Russia to other CIS countries down by 25 percent from the previous quarter, a direct result of the crisis.3 Those 1 The authors would like to acknowledge the support and guidance of Luca Barbone (ECA Sector CIS countries that are most dependent on migration and Director), Gary Fine (ECA GDLN coordinator) and Mikhail Bunchuk (GDLN Adviser, Moscow World remittances (some of them to the tune of up to half their Bank Office). 2 Commonwealth of Independent States. (CIS) was created in December 1991. In the adopted gross domestic product) have been most direly affected Declaration the participants of the Commonwealth declared their interaction on the basis of sovereign equality. At present the CIS unites: Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, 3 17th Economic and Environmental Forum of the Organization for Security and Co-operation in Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine. Europe, May 2009. ECA Knowledge Brief by the crisis--namely, Armenia, Tajikistan, Kyrgyzstan, education. As a stable source of foreign exchange, they and Moldova. Though the picture is bleak, migration help to finance imports and service foreign debt, thus does present some opportunities if countries of origin indirectly financing development. On the other hand, and destination can find ways to partner for solutions. remittances can generate costs for sending countries by causing domestic currency appreciation and by easing Migration and Remittances Affect Labor pressure on governments to implement reforms and correct external imbalances. Markets Remittance flows in CIS countries are substantial, as Migration is a powerful economic force in CIS would be expected in a region where 31 million people countries, with every country having a significant share have left their countries of origin to work elsewhere. In of its population residing abroad. Figure 1 shows the all CIS countries, remittance flows exceed official percentage of emigrants as a share of the population in development assistance (ODA) by several multiples and CIS countries. contribute significantly to export financing. Table 1 Figure 1: Emigrants as a Share of Total Population shows remittances as a percentage of GDP, exports, in CIS (2005) imports, and ODA in CIS countries. Turkmenistan 5 Russian Federation Remittances to CIS countries have fallen 20-25 percent 8 Uzbekistan since the global financial crisis hit, amounting to a loss 8 12 12 Kyrgyz Republic of US$ 1.1 billion in the last quarter of 2008, and the Tajikistan decline continues.4 Migrants are not returning to their 13 Ukraine countries of origin, preferring to remain abroad and cut 16 Azerbaijan their living costs. In their countries of origin, the 18 18 Moldova Belarus households they left behind are facing more difficult times.5 23 Georgia 24 Kazakhstan 27 Armenia 0 5 10 15 20 25 30 Can the Crisis Become an Opportunity? Source: 2007. Mansoor, Ali, and Bryce Quillin. Migration and Remittances: Recognizing that labor migration and remittances are a Eastern Europe and the Former Soviet Union. World Bank vital source of livelihood for millions of CIS households, Migration affects labor markets both quantitatively and and that the global economic crisis has both endangered qualitatively. On the quantitative side, it reduces the livelihoods and impaired the economies of these labor surplus and, hence, unemployment in sending countries, can anything be done to mitigate the countries, thus driving up wages. In destination damaging effects? The World Bank and other countries, migration can put downward pressure on international organizations believe that there definitely is wages by increasing the labor supply; however, an opportunity now for partnerships to emerge that can immigrants may complement rather than replace local address three broad categories of migration issues: labor. Migrants are also consumers, and their presence adds to total demand. On the qualitative side, when The creation of a unified migration space and skilled workers migrate away from their home labor market economies, their countries can suffer a ,,brain drain, Protection of migrants rights though this may be offset by the new skills migrants bring back to their own countries. For receiving Development of an efficient migrant support countries, the inflow of large numbers of low-skilled system. migrant workers can increase productivity if they are meeting acute labor shortages, and increase profits to finance more investments. Remittances, a significant source of external financing for CIS countries, have both potential benefits and costs for migrant-sending countries. The remittances can contribute directly to poverty reduction by providing a 4 Clark, Torrey, and Alice Nicholson. "Russia Recession Sends ,,Damaging Waves through CIS means of consumption for poor households. They are (Update 1)." Bloomberg.com, June 22, 2009. also a source of potential saving and investment in 5 "The Crisis Hits Home: Stress Testing Households in Europe and Central Asia", World Bank, households, including investments in health and September 2009. ECA Knowledge Brief Table 1: Remittances as a Percentage of GDP, Export, Import, and ODA in CIS Countries Country 2005, 2006, 2007, 2005, 2006, 2007, 2005, 2006, 2007, 2005, 2006, 2007, GDP GDP GDP Export Export Export Import Import Import ODA ODA ODA Armenia 10.2 10.3 9.2 35.27 44.1 47.9 23.5 26.3 23.5 257.9 308.4 240.6 Azerbaijan 5.2 3.9 4.1 8.3 5.8 5.7 9.9 10.0 13.7 308.8 395.2 571.4 Belarus 0.8 0.9 0.8 1.4 1.5 1.3 1.4 1.4 1.2 445.4 468.6 425.4 Georgia 5.4 6.3 6.8 16.0 19.0 21.7 10.5 11.0 11.8 111.9 134.8 182.0 Kazakhstan 0.3 0.2 0.2 0.6 0.5 0.4 0.7 0.6 0.5 80.2 109.1 110.1 Kyrgyz Republic 13.1 17.0 19.1 33.8 40.7 42.7 22.7 21.5 21.2 120.0 154.6 261.1 Moldova 30.8 34.7 34.1 60.2 46.7 74.6 33.6 37.8 34.8 480.9 527.5 556.6 Russian Federation 0.4 0.3 0.3 1.1 0.9 1.0 1.8 1.5 1.5 33.6 35.0 42.1 Tajikistan 20.2 36.2 45.5 77.6 155.2 220.5 38.2 63.0 68.6 185.8 424.6 764.0 Ukraine 0.7 0.8 3.2 1.3 1.7 7.0 1.4 1.6 6.3 144.9 171.3 1111.1 Source: World Development Indicators, World Bank, 2009. Unified Migration Space and Labor Market restrictive as a result, when it is more likely that further liberalization of legislation will be the path to A unified migration space, in which CIS citizens have improvement. Unless member states implement existing the right to choose their place or residence, to work and bilateral and multilateral agreements and encourage new be free of the burden of quotas, time limits, and other ones (including migration amnesties), massive illegal administrative barriers, should be the goal. Achieving migration is a possibility. this goal requires that CIS member states develop a coordinated, agreed-upon migration policy in consort Protection of Migrants' Rights with other stakeholders such as diasporas, trade unions, public agencies, and NGOs. The policy would remove Once in their host countries, migrants should be free to existing impediments to free movement, prevent future maintain their ethnic, linguistic, cultural, and religious limitations, harmonize legislation, and develop common identities, as well as ties to their home countries. mechanisms for regulating territorial movement. It Governments should support diasporas and combat would establish one common migration zone. The activities that contribute to migrants exclusion and establishment of the right to move visa-free in the marginalization. All CIS countries should have a no- region, as stipulated in the 1992 Agreement between the tolerance policy for any kind of discrimination based on CIS countries, is a laudable step toward these goals. race, religion, ethnic or social status, language, gender, political and other views, or property or marital status; To establish a common labor market, CIS states will should enforce their own legislation; and should oppose need to simplify and harmonize their labor migration extremist organizations in this regard. Governments regimes, including legal procedures for registration and should also ensure that migration issues are presented in work authorization. Until a common labor market is a neutral fashion in their media. Coercive measures to realized, quotas on the number of migrants should reflect arrest, detain, and deport migrants should be eliminated, only the true demand for foreign workers. This will as should corruption by law enforcement agencies with require cross-border consultations with public agencies, regard to migration issues. Migrants, regardless of their NGOs, diasporas, trade unions, and other civil society legal status, should have free access to legal stakeholders. representation and to advocate their rights through participation in civil society organizations, legal or Constraints diaspora-type NGOs, business structures, unions, and others. Migration policies and capacities have not kept pace with the burgeoning demand for labor mobility; the gap Constraints between demand for labor and the capacity for legal migration channels is wide, giving rise to widespread Irrespective of the global economic crisis, migrants often illegal migration at best and human trafficking and other live precarious lives characterized by deprivation and criminal activities at worst. Some CIS countries lean social exclusion. Economic depressions, which typically toward making their migration policies more rigid and undermine social cohesion even for populations not ECA Knowledge Brief already marginalized, exacerbate the situation for Going Forward migrants. The various tasks associated with protecting Migration may not be the priority issue for development migrants rights are more difficult now than ever. agencies, but important work on migration at the country Migrants often do not take advantage of state services, level has been undertaken by the World Bank, and the and states lacking effective monitoring systems simply effort continues. The ECA regions PREM (Poverty lose track of them. Following the example of the Reduction and Economic Management) department has European Commission, CIS countries should develop already delivered eight live and video-conference-based migration information exchange systems that should be events on migration, with the aim of reviewing the available to the public; this will help in quashing migration policies and practices of sending and receiving negative perceptions of migrants that are now based on countries6. These events drew on the lessons learned, rumor and speculation. particularly with regard to successful management of migration program from other parts of the World, and Support Services for Migrants contributed to the development of anti-crises action plans in relevant countries. A proposed ,,Declaration To mitigate cultural and linguistic adaptation challenges toward Creation of a Unified Migration Space was and help them obtain legal labor status, migrants should presented in July 2009 at an international workshop in be provided support by their governments, civil society, Moscow, lessons from which were shared at a cross and the private sector before they even leave their country learning session in October 2009. Future countries of origin. Such support could include sessions propose to examine successful migrant support secondary and higher professional and vocational projects, discuss the types of reforms that offer the training and education, as well as practical information greatest benefits in support of migrants, and review on job placement and housing in destination countries. country-level action plans. Migrants should have access to education, health, and The next step is to initiate a Migration and Remittance social security services. Grant schemes to support Peer Assisted Learning forum (MiRPAL), a community educational migration should be encouraged. Measures of migration practitioners who will meet periodically to aimed at improving the financial literacy of migrants share lessons learned. The goal is to develop a should be taken to facilitate efficient transfer of community of "technical champions of migration remittances and to expand access to migrant workers and reform", to build and share knowledge that will catalyze their families to the formal financial sector and itself into a self-sustaining expert entity. Migration holds transmission channels. Governments should encourage the promise for many countries who are struggling to migrants to save money by popularizing the use of bank increase and sustain their economic growth and reduces accounts and making it easy for migrants to invest in poverty and the international donor community needs to education, health and housing. All migrants, regardless support migration work in the coming decade. of their legal status, should have free access to law and protection. About the Authors Sudharshan Canagarajah is a Lead Economist, and Matin Constraints Kholmatov is a Consultant in the Poverty Reduction and Economic Management Unit at the Europe and Central Migrant receiving and sending CIS countries need to Asia Region of the World Bank. offer joint support services to migrants and coordinate mechanisms that are integrally connected with the _____________________ provisions for monitoring and guaranteeing migrant 6 For more information please see the ECSPE Migration Club Webpage: http://www.worldbank.org/eca/migration rights. Systematic, harmonized partnerships are important because the support element cannot exist outside a coordinated effort. "ECA Knowledge Brief" is a regular series of notes highlighting recent analyses, good practices and lessons learned from the development work program of the World Banks Europe and Central Asia Region http://www.worldbank.org/eca ECA Knowledge Brief