Network of Asia-Pacific Schools and Institutes of Public Administration and Governance (NAPSIPAG) Annual Conference 200 Beijing, PRC, -7 December 200 Theme: The Role of Public Administration in Building a Harmonious Society Workshop on Constraints and Challenges Arising from Demographic Transitions/Imbalances Labor Migration in the Kyrgyz Republic and Its Social and Economic Consequences Roman Mogilevsky Executive Director, Center for Social and Economic Research CASE-Kyrgyzstan, Kyrgyz Republic 1
I. DEMOGRAPHIC SITUATION IN KYRGYZSTAN Tremendous social and economic change related to the break-up of the Soviet Union strongly affected demographic situation in Kyrgyzstan. The transition to independence and market economy accompanied by sharp political and economic shocks and continuous period of instability, the necessity for people to adopt to a new environment characterized by significantly increased risks and uncertainties, cessation of massive subsidies from the central Soviet budget and resulting decline in quantity and quality of social services have led to a significant drop in fertility and birth rates and some decline in death rate in the country 1 (see Figure 1). As a result, population natural growth rate have felt from 24.1 in 1987 (could be considered as the last quiet year of the Soviet period) to 14.7 in 2004. Still population of the country is growing relatively fast; in 200 it achieved.1 million people, i.e., 0.6 million more than at the moment of gaining independence in 1991. Figure 1. Demographic trends in Kyrgyzstan Per 1000 people 3 30 2 20 1 10 0 32.7 4.1 8.6 19.7 2.6 6.9 6.9 1987 2000 2004 21.6 2. 4 3 2 1 0 Per woman Birth rate (lhs) Death rate (lhs) Fertility rate (rhs) Sources: World Development Indicators, World Bank; National Statistical Committee of the Kyrgyz Republic Population of the country is predominantly rural (6% of total population) and young (approximately 40% of population are children and 0% are people of working age). With such population structure the issue of employment and especially rural employment is very acute. While official unemployment figures are rather low (registered unemployment is just 3% and estimated unemployment according to ILO definition is 9%), these figures are based on an assumption that all peasants having some piece of land are employed. As during the land and agrarian reform in the 1990s virtually every peasant received some plot of land, the problem of rural unemployment is officially non-existent. In reality, however, the previously existing mode of agricultural production based on extensive use of resources and permanent inflow of subsidies to large agricultural enterprises fully collapsed and agricultural activities in their current form are not able to feed growing rural population. A natural response to this situation is migration of young people from rural to urban areas and, increasingly, abroad in search for employment opportunities. Migration has become a major social and economic phenomena in the country. 1 The mortality decline is mainly due to the decline in infant mortality rate (from 69 per 1000 live birth in 1990 to 2 in 2002 according to the World Development Indicators), which, in its turn, is a consequence of reduced fertility rate and accompanying it increase in intergeneric interval.
II. MIGRATION PATTERN IN THE COUNTRY Both emigration from Kyrgyzstan and immigration to Kyrgyzstan have been traditionally large since the end of XIX century. However, in pre-soviet and especially Soviet period migration was mainly immigration from Russia and Ukraine and had forced or organized character (Cossack settlers in pre-soviet times, evacuees during the World War II, specialists and skilled workers participating in the post-war industrialization, students coming to other Soviet republics universities); voluntary migration was marginal. The situation had changed dramatically since independence, when large outflow of people happened in the first part of 1990s; all these people emigrated voluntarily being led by ethnic identity and economic considerations. All these migrations (apart from students) were associated with permanent change of the living place. Recently a new trend has emerged, which related to temporary migration driven by exclusively economic reasons. Temporary migrants are mainly ethnic Kyrgyz, while ethnic minorities are also well represented. This makes the phenomenon different from the permanent migrations, where minorities (mainly Russians, Ukrainians and Germans) prevailed. Main destinations of temporary migration are Russia (especially Ural and Siberia) and Kazakhstan. Total number of migrants from Kyrgyzstan is not known as no reliable official statistics exist. By conservative estimates altogether 160-200 thousand people from Kyrgyzstan are working abroad, i.e., approximately 10% of total labor force, which slightly exceeds 2 million people. The Department of Migration Service of the Ministry of Foreign Affairs of the Kyrgyz Republic provides larger estimates: 300 thousand people working in Russia, 40-80 thousand in Kazakhstan and 20 thousand in Western Europe (UK, Italy ), Korea, Turkey, and the US. Journalists operate with numbers of 00-700 thousand people, but these last figures seem to be too emotional and ungrounded. Reasons of the migration are purely economic ones. Living standards, wages, employment and market opportunities are significantly higher in oil-booming Russia and Kazakhstan, than in Kyrgyzstan, Tajikistan or Uzbekistan. Labor abundance connected to high birth rates in Central Asian countries makes a large supply of labor force readily available to fill in the niches on the labor markets of Russia and Kazakhstan, which are not sufficiently attractive for citizens of these countries having much better employment choice options. Apart from good economic growth during last five years, the migrants selection of Russia and Kazakhstan as destination countries is closely related to the possibility to use Russian language, which is universally spoken in Kyrgyzstan (this is unconditionally true for people in their 30s and 40s, younger people may have problems with Russian depending on the area within Kyrgyzstan they originate from), to very big similarity between Kyrgyz and Kazakh languages (an option for those with limited Russian language skills) and to cultural proximity of the former Soviet republics. Interestingly that relatively few Kyrgyz temporary migrants work as hired workers, majority of them are self-employed or small entrepreneurs mainly in trade and also in different services. This circumstance is often overlooked, when the legal status of migrants is discussed, because people (and policy makers) think traditionally of migrant hiring rules, while in the Kyrgyz case the right for and conditions of selfemployment and entrepreneurial activity are much more important. Labor migration to Kazakhstan has its specifics; Kyrgyz migrants work there in agriculture growing crops (e.g., tobacco), in which they have much more experience than Kazakh peasants. It is worth to note that Kyrgyzstan not only supplies labor migrants to other countries, but also receives them from other countries, basically from Tajikistan and Uzbekistan. They are hired to work at Kyrgyz agricultural and construction enterprises and successfully compete on the Kyrgyz domestic labor market due to attractive combination of availability of needed skills, readiness to work for modest, even in Kyrgyz scales, wages and good labor moral. Again, no reliable statistics exists as they largely work on informal basis, but certainly there are thousands of migrant workers during agricultural season in Kyrgyzstan. While migration motivated by economic considerations constitutes a core of all inter-country human flows in the region, there is also pretty intensive movement of people for their business (but non-employment) and personal needs. This is very easily understandable, if one accounts for still close economic, cultural, scientific, and, last, but not the least, family ties between people of Central Asia. Unfortunately, this movement is hindered by introduction of visa regime for Kyrgyz citizens by Uzbek and Turkmen 3
Governments, complicated registration rules in Russia and Kazakhstan, burdensome border checks on virtually all borders. Accounting for the corruption and ineffectiveness of the government agencies in all countries of the region, these measures creates problems mainly for ordinary people and are not a serious barrier for those involved into illegal activities, who, theoretically, should be prevented from crossing the borders. III. ECONOMIC AND SOCIAL IMPLICATIONS OF MIGRATION The availability of such big cohort of labor force working abroad has numerous economic, social and human implications for Kyrgyzstan. From economic point of view, positive consequences of the migration are two-fold: (i) softening unemployment situation within the country, and (ii) even more importantly, large inflow of remittances from the migrant workers. National Bank of the Kyrgyz Republic has estimated incoming remittances in 2004 in the amount of USD 179 million 2. This amount accounts only for money sent to Kyrgyzstan through intermediation of financial institutions (mainly Western Union and the like); however, it is well known that a large part of money is sent to the country in cash, when people periodically return back to see their families or through relatives, friends, neighbors. By different estimates the amount of remittances may achieve USD 300 million, i.e., much more than gross FDI inflow. By opinion of many experts, remittances are one of the main reasons of poverty reduction, which has been registered during last years. Apart from poverty-reducing, the remittances have also inequality-reducing effect, because in general migrants originate from non-rich families, and these families are main recipients of remittances. This money is spent mainly on personal consumption or saved by means of investments into housing; during last three years real estate prices in Bishkek and Osh (largest towns of the country) increased four-five-fold. Unfortunately, the concentration of remittances in the capital and largest towns and their limited use for production investments contribute to increase in regional inequality within Kyrgyzstan and reduce potential positive impact on the Kyrgyz economy. Another less positive influence of migration on domestic situation consists in outflow of young and well-educated people, who easily find employment on much less competitive markets in Almaty, Kazakhstan, or in Moscow and other Russian cities. From the other side, the possibility to find well-paid employment abroad support inflow of young people to the Kyrgyz universities, especially to those having reputation of providing their graduates with proper skills level. Until recently, despite of obvious large importance of the migration in economic and social development of Kyrgyzstan and the recipient countries, the Governments paid too little attention to their problems. Legal status of migrants abroad is unclear, especially those self-employed and employed in agriculture; migrants, who are urban hired workers in Russia, are subject now to protectionist-type legislation, which makes hiring of foreign (including Kyrgyz) migrants pretty costly process. Especially large difficulties are connected with getting temporary registration in Russian cities. Therefore, official employment opportunities are not many, and people work mostly in shadow economy having no legal protection. This makes them very vulnerable to exploitation and crime and leaves them without good access to health care and education for children. Now the Kyrgyz Government addresses these problems by concluding agreements with Russian and Kazakh central and regional governments, which are to provide more stable status to the Kyrgyz migrants. An important direction of support to migrants is establishing of recruiting companies in Kyrgyzstan, which have to organize the labor migration according to legislation of recipient countries and provide needed legal guaranties to Kyrgyz workers. Creation of such companies matches also the intentions of Russian and Kazakh Governments. Obviously, a targeted policy with regards to migration needs to be developed, which has to account for long-term nature of the process and its potential for further expansion in the view of the decrease in population numbers in Russia and still high population growth in Kyrgyzstan. The policy is to be active not only in protecting legal rights of the Kyrgyz migrants abroad, but also in providing them with training suitable for target labor markets, creation of hiring infrastructure, strengthening of financial infrastructure helping migrants to send money back safely, etc. This policy is to be developed with participation of migrants; the problem here is that they did not organize 2 8.1% of GDP at current exchange rate. 4
themselves yet to become a partner for discussions with the Government. On the other side, incoming labor migration also requires proper policy response. Recently Uzbek and Tajik labor migrants become so visible and competitive that the Parliament of Kyrgyzstan (Jogorku Kenesh) even made an attempt to introduce a protectionism measure against migrant workers by setting prohibitively high rate of deductions to the Social Fund 100% of their wage as compared to 2% for Kyrgyz hired workers. As almost all policies of this kind it could not solve the problem as the migrants remained in shadow economy, while this measure created unnecessary distortions on the Kyrgyz labor market. Thus, labor migration has recently emerged as an important item of the country s long-term development agenda. It requires proper regulation and policy environment, which yet is to be created. The government and the society of Kyrgyzstan are just in the very beginning of this process.