THE LABOR MARKET EFFECTS OF MIGRATION IN KAZAKHSTAN AND KYRGYZSTAN

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1 International Journal of Civil Engineering and Technology (IJCIET) Volume 9, Issue 11, November 2018, pp , Article ID: IJCIET_09_11_198 Available online at ISSN Print: and ISSN Online: IAEME Publication Scopus Indexed THE LABOR MARKET EFFECTS OF MIGRATION IN KAZAKHSTAN AND KYRGYZSTAN Ainura F. Maxyutova, Ainur A. Adieva, Kalmurat I. Dzhangaziev, Nurzhan M. Tynymseitova and Akzholtoy K. Abikova International University of Kyrgyzstan, Bishkek, Kyrgyz Republic ABSTRACT The present paper, based on the statistical data, comparatively analyzed the migration impact on the labor market of the Republic of Kazakhstan and the Kyrgyz Republic. The main indicators of population migration in previously mentioned countries for the period of years considered and scrutinized. Positive and negative aspects of the state program of support for repatriates and its influence on migration process of the countries are identified. The general trend of external migration of both countries and its reason are pointed out. Countries-recipients of emigrants from Kazakhstan and Kyrgyzstan and countries-donors of labor migrants in above mentioned countries are identified. The research can be recommended for use for graduate students, teaching staff and all interested people, as well as the labor market, social and labor relations specialists. Key words: migration, labor market, Kazakhstan, Kyrgyzstan Cite this Article: Ainura F. Maxyutova, Ainur A. Adieva, Kalmurat I. Dzhangaziev, Nurzhan M. Tynymseitova and Akzholtoy K. Abikova, The Labor Market Effects of Migration in Kazakhstan and Kyrgyzstan, International Journal of Civil Engineering and Technology (IJCIET) 9(11), 2018, pp INTRODUCTION At the present time the rapidly changing situation in the world political and economic arena has a decisive influence on the movement of the inhabitants of the country from one region to another, according to their points of view, the most safe, prosperous and promising regions. Like any other process, such a redistribution of the population has some certain consequences that affect the most diverse spheres of society, and especially in the labor market. The impact of migration on the labor market is expressed in significant changes for both parties - the host country and the one from where there is a leak of labor. Migration can advance growth in the receiving economy and diminish growth in the home economy [1] editor@iaeme.com

2 Ainura F. Maxyutova, Ainur A. Adieva, Kalmurat I. Dzhangaziev, Nurzhan M. Tynymseitova and Akzholtoy K. Abikova The majority of Asian migrant workers are in the prime of their reproductive lives, leaving families including children behind in home countries. Although no accurate statistics are available, it is believed that tens of millions of children around the world are being left behind by their migrant parents, mostly lower-skilled workers from developing countries [2]. Despite widespread skepticism towards Eurasian economic integration, the five countries of the Eurasian Economic Union (EEU) have thus far achieved a certain degree of success. It is remarkable that since the beginning of 2015 the common labor market has been in place [3, 4]. According to the Global Competitiveness Report 2015 [5], the countries of the Eurasian economic union are ranked as follows: Armenia 85, Kyrgyz Republic 108, Russia 53 and Kazakhstan 50. Obviously, movement of labor force occurs from countries with low income, low wages and high unemployment to countries with higher standards of living. Therefore, an example of Kazakhstan is illustrative. Among the factors that affect the attractiveness of Kazakhstan, we can distinguish the following: the stable economic growth contributing to the development of various industries and creating new jobs; the great potential for the food industry development, the development of livestock, the organization of reception and harvesting of agricultural products and raw materials; and the last one the political stability. Thus, taking into account Kazakhstan's advantages over neighboring states like Kyrgyzstan, Uzbekistan, Tajikistan and China, it should be noted that usually low-skilled workers come to Kazakhstan [6]. The main purpose of the present work is to consider the impact of migration processes on labor markets of Kazakhstan and Kyrgyzstan; to review and analyze the main indicators of population migration in previously mentioned countries for the period of years; identify the general trend of external migration of both countries and its reasons; to analyze the countries-recipients of emigrants from Kazakhstan and Kyrgyzstan, and the countriesdonors of labor migrants in above mentioned countries. 2. LITERATURE REVIEW The present paper scrutinized migration process and its influence on labor market [1, 2, 7, 8, 9]. Particularly, labor market of Kazakhstan and Kyrgyzstan and economic development of these countries within Eurasian economic union are analyzed [3, 10, 11]. International migrant remittance flows emphasized as a significant point in foreign trade transactions [12]. 3. METHODS In the process of research and analysis of information, methods of systematic, logical and comparative analysis were used based on statistical data characterizing the current state and development trends of the study s object, as well as monographic and statistical analysis of data for the period of years. 4. RESULTS Migration as a demographic process is reflected in various aspects of human life. It affects politics, culture, economy, causes changes in the epidemiological and environmental situation, and changes the level of public health [7]. Moreover, demographic factors of the state, migration processes and etc., have a great influence on the dynamics of changes in the country's labor market, in this case Kazakhstan and Kyrgyzstan are no exception. For a more detailed analysis, the Table 1 General migration of Kazakhstan and Kyrgyzstan for 2012 and 2016 years should be considered editor@iaeme.com

3 The Labor Market Effects of Migration in Kazakhstan and Kyrgyzstan Table 1 General migration of Kazakhstan and Kyrgyzstan for 2012 and 2016 (%) Kazakhstan Kyrgyzstan Years emigrate migrate emigrate migrate ,20% 2,19% 0,88% 0,71% ,66% 3,54% 0,63% 0,60% Source: compiled by the authors based on [13, 14] From the abovementioned table, we can observe that 2.20% of the population emigrated from Kazakhstan in 2012 and this figure increased to 3.66% in Despite the fact that, economically, Kyrgyzstan was one of the poorest Soviet Republics and depended on the union budget during the Soviet era and since independence, the situation has not improved much because of corruption, state mismanagement and the huge impact of a shadow economy [10] in Kyrgyzstan, the percentage of emigrants is significantly lower than in Kazakhstan and this figure is declining, thus, 0.88% of the population left the country in 2012, and - only 0.63% in It should be pointed out that low migration rates are often cited as a potential explanation for the lack of convergence in income around the world [8]. The percentage of immigrants in Kazakhstan is also higher than in the neighboring republic. In 2012, this indicator was equal to 2.19% and in 2016 it increased to 3.54%, whereas in Kyrgyzstan the percentage of migrants decreased from 0.71% in 2012 to 0.60% in Thus, both countries are characterized by a negative balance migration - the excess of the number of departures for permanent residence over the number of arrivals. The formed negative balance also indicates the outflow of the countries labor resources. 5. EXTERNAL MIGRATION It should be mentioned that emigrants from Kazakhstan in left mainly to Russia and Germany and from Kyrgyzstan to Russia and Kazakhstan. At the same time, economic theory suggests that immigration into a closed labor market affects the wage structure in that market by lowering the wage of competing workers and raising the wage of complements [9]. For a more detailed analysis, the Figure 1, which presents the main countries - importers of emigrants from Kazakhstan and Kyrgyzstan for years should be considered. Figure 1 The main countries - importers of emigrated people from Kazakhstan and Kyrgyzstan for years Thus, 87.13% of emigrants from Kazakhstan took places in Russian Federation and 5% - in Germany. This is due to a higher percentage of the European ethnic component in the demographic structure of certain regions in Kazakhstan. For instance, from Karaganda region editor@iaeme.com

4 Ainura F. Maxyutova, Ainur A. Adieva, Kalmurat I. Dzhangaziev, Nurzhan M. Tynymseitova and Akzholtoy K. Abikova 17.4% immigrated to previously mentioned countries, from Pavlodar region 12.7% and from East Kazakhstan region 12.4% [13]. In Kyrgyzstan, the main outflow of population among CIS countries is in Russia and Kazakhstan, 75.50% and 20.60%, respectively and from non-cis countries Kyrgyz people prefer Germany % [14]. An analysis of the migration situation in Kyrgyzstan indicates that there are significant systemic problems due to the practical absence of full control and registration of both internal and external migration of foreigners stay in the republic. During the period of Kyrgyzstan s independence there is a steady outflow of the population. Most of the able-bodied population of the Kyrgyz Republic works in the states members of Eurasian economic union, basically in Russia as it is the most important external political, military and security guarantor for Kyrgyzstan [11].The main motive of citizens departure is economic. Low wages and high unemployment rate in the country makes citizens look for incomes abroad. Members of low-income families leave for labor migration, which allows them to overcome the poverty threshold through cash remittances [15]. Migration of highly qualified specialists, reduction of the economically active population led to a sharp deterioration in the country's production potential. As a result of external migration, Kyrgyzstan has irreparable losses like a brain drain, deterioration of the intellectual potential in science and educational system. However, the export of labor force brings significant foreign exchange proceedings to Kyrgyzstan. Migrant remittance flows in Kyrgyzstan are more than 2 times higher than the amount of official foreign financial assistance provided through various channels. As Seyed Soroosh Azizi [12] pointed out, on the one hand, workers remittances can increase human capital investments of poor households, hence increasing the labor supply. On the other hand, remittances can loosen budget constraints, raise reservation wages, and, through the income effects, reduce the labor force participation of remittance-receiving individuals. In case of Kyrgyzstan, the republic receives an additional and very significant source of foreign currency to finance imports. International migrant remittance flows play a large role in foreign trade transactions. As a result of migration, new niches of consumer demand are emerging, trade between Kyrgyzstan and host countries is increasing that contributes to the country's involvement in global processes. Labor migration of citizens, especially of indigenous nationality, is generally beneficial to Kyrgyzstan. At the present time, Kyrgyzstan has a real opportunity to improve the material situation of thousands people, replenish the republican budget and solve many social problems through the labor export. According to various estimates, about half a million citizens of the republic work abroad. Among the positive aspects of modern labor migration of Kyrgyzstan s indigenous population, the following facts can be emphasized: departure of indigenous labor migrants contributes to solving the problem of labor surplus in the republic and the unemployment rate is decreasing. Moreover, labor migrants improve their skills: acquire production and organizational skills [16]. Further, the information regarding countries from which there is mainly an influx of immigrants into the territory of Kazakhstan and Kyrgyzstan for the period of years can be consider in detail. The data are presented in Figure editor@iaeme.com

5 The Labor Market Effects of Migration in Kazakhstan and Kyrgyzstan Figure 2 The influx of immigrants into the territory of Kazakhstan and Kyrgyzstan for the period of years From Figure 2 we can see that the majority of migrants in Kyrgyzstan come from Russia %, Kazakhstan %, Tajikistan -7.30% and Uzbekistan - 6%. It should be mentioned that immigration from Uzbekistan, the Russian Federation is also observed to Kazakhstan. Thus, the influx of immigrants to Kazakhstan occurred mainly from Uzbekistan (50.3%), Russian Federation (19.5%) and China (7.5%). Moreover, 67% of the total immigrant populations in are kazakhs, which is explained by the state support program of repatriates - "oralmans". The process of immigration, organized to reduce the labor shortage in the North, East and Central regions of Kazakhstan, in fact, just strengthened this trend. This is due to the fact that oralmans before the beginning of 2016, who make up the bulk of immigrants, moved to Kazakhstan without taking into account the social and economic needs of the state s regions. Thus, the increase in the labor force deficit in the northern, central and eastern regions of the country was not compensated by the immigration process. In addition to the number of migrants, the discrepancy between the departed and arrived labor resources also arises by the level of education. The analysis of emigrants in terms of education indicates an increase in the outflow of migrants with a higher and secondary education and an influx of migrants with a secondary general education. The situation is accentuated by the fact that, taking into account the excess labor force in the regions where the oralmans are located and the high competition from both legal and illegal labor migrants, they begin to engage in activities that are not related to their education, which leads to a decrease in the level of human capital. So, currently 1.8 million Kazakh people, about 20% of the economically active population, do not work according to their professions. The negative impact of the outflow of the population on the growth of the labor resources shortage is aggravated by the fact that 74.9% of the emigrants were the able-bodied population in In addition, with the outflow of the population from the labor-deficient regions and the retirement of professional staff of technical specialties, a disproportion in the labor market is created. At the same time, the imbalance in the replenishment of labor resources in some regions is partially smoothed out by the state policy on attracting foreign workers, where employers independently determine the number of necessary specialists. This process is regulated by the established quota in order to protect the domestic labor market, but in general, the established quota is not fully used. For example, in 2016 the quota was set at 0.7% of the economically active population, but on October 1, 2016 there were only 0.2% of the number of employees editor@iaeme.com

6 Ainura F. Maxyutova, Ainur A. Adieva, Kalmurat I. Dzhangaziev, Nurzhan M. Tynymseitova and Akzholtoy K. Abikova Moreover, 24.7% of the last figure are managers and top managers, 69% are qualified specialists, 6.3% are seasonal workers, and etc. Today the main countries of labor migrants are China (38.9%), Turkey (11.8%), Uzbekistan (10.2%), Great Britain (4.7%) and India (4.4%). The main percentage of foreign labor forces are attracted to the construction industry %, mining - 6.8% and manufacturing industry - 5%. At the same time, the increasing import of foreign labor into Kazakhstan has become a problem for the able-bodied population of Kazakhstan. The bulk of labor migrants are workers and middle technical staff imported by foreign companies for the implementation of investment projects. National staffs for technical specialties are recruited by foreign companies reluctantly or with lower wages compared to the salaries of foreign specialists. This is especially true for oil and gas projects carried out by foreign companies. An important problem in the labor market in Kazakhstan is the issue of increasing the number of illegal labor migrants. The main reasons for this fact are the lack of jobs in the unskilled labor market; lack of workers in agriculture; low requirements of migrant workers to the conditions, modes, wages, as well as the use of unregistered migrant worker s labor, which is cheaper for employers. Moreover, Kazakhstan is considered as a frontier country of labor migration due to low living standards in neighboring countries. 6. CONCLUSIONS In conclusion, it should be mentioned that the overall percentage of migrants in Kazakhstan is higher and goes to increasing contrast to Kyrgyzstan, where the number of arriving population decreases within analyzed period. However, despite the fact that the socio-economic development of the society in Kazakhstan is higher than in Kyrgyzstan, the percentage of emigrants is much lower in Kyrgyzstan, and from 2012 to 2016 this figure decreases in contrast to Kazakhstan. The emigrants from Kazakhstan went mainly to Russia and Germany due to the implementation of the repatriation program in these countries. The emigrants from Kyrgyzstan preferred neighboring countries like Kazakhstan and Russia, where the standard of living is much higher than in other countries-members of the Eurasian economic union. If the influx of migrants to Kyrgyzstan was observed mainly from Kazakhstan and Russia, then the territory of Kazakhstan was migrated by population from Uzbekistan, Russia and China. The reason is the actual return of the Kazakhs from the listed countries to their historic homeland due to the state program of support for repatriates. REFERENCES [1] Nica, E. Labor Market Determinants of Migration Flows in Europe. Sustainability, 7(1), 2015, pp [2] Yeoh, B.S.A. and Lam, T. The costs of (im)mobility: Children left behind and children who migrate with a parent. Regional Seminar on Strengthening the Capacity of National Machineries for Gender Equality to Shape Migration Policies and Protect Migrant Women. United Nations Economic and Social Commission for Asia and the Pacific, Bangkok, 2006 pp editor@iaeme.com

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