Transcript Labor migration and remittances in Tajikistan

Labor migration and remittances
in Tajikistan
Zafar Burhonov
Presentation structure
• Why remittances and migration is
important for Tajikistan
• What Tajikistan is trying to do postcrisis?
• What are the policy options for Tajikistan
to make remittances work for
development?
Why important? …some hard facts
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Migration is large while remittances are substantial and growing again in 2010
(after over 30% reduction in 2009)
Migration is still mainly driven by:
- large wage differentials (more then 10 times on average)
- strong growth in Russia (pre-crisis) and demand for labor (demographics) –
demand is expected to continue in 2010 with Russia’s economy recovering
- lack of employment opportunities in Tajikistan (over 150,000 jobs are created
but still lagging behind)
As a results – in 2008, Tajikistan topped with world with remittance to GDP at
over 50% (37% in 2009)
Main source of economic growth and poverty reduction during 2003-2008
(TLSS 2007)
- average 8 percent growth since 2000
- poverty fell 72% in 2003 to 53.5% in 2007
Migration will likely continue to be a key cooping mechanisms, especially for the
poor in Tajikistan
- increase in remittances between 2003-2007 is accountable for 50% reduction
in poverty (conservatively) – TLSS (2007)
Mostly financed consumption boom (boosting aggregate demand)
Russia is the main destination country for Tajik migrants (96% of migrants; incl.
55% in construction and 35% in services)
Billions
Remittances are large….
3.0
60
2.5
50
2.0
40
1.5
30
1.0
20
0.5
10
-
0
2003
2004
2005
2006
2007
amounts
Total
in % GDP
2008
2009
… but have been falling since crises and at
present below 2008 level but better then 2009
Tajikistan: Inflowing Remittances, 2007-2009, year-on-year changes (in USD)
350,000,000.0
300,000,000.0
250,000,000.0
200,000,000.0
150,000,000.0
100,000,000.0
2007
2008
2009
2010
December
November
October
September
August
July
June
May
April
March
February
January
50,000,000.0
What Tajikistan is trying to do
post-crisis
• Substantial amount of work already done (IOM, WB,
ADB) focusing on potential impact of remittances on
incomes and poverty with less focus on labor market
impact and what how to make migration work for
growth in Tajikistan.
• No real actual actions to make migration work for
growth and development but work is ongoing
• Need to recognize that despite crises, migration will
likely remain an important element of Tajik economy
(balance of payment, revenues, consumption,
poverty effects)
What Tajikistan is trying to do?
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Develop a national Labor migration strategy and an Action Plan (with World
Bank) as well as new Law on Labor migration to have sufficient understanding
of the phenomenon, and ensure that emigration, and migration policy in
particular, is incorporated in the broad development model
Develop and implement explicit and precise policy measures in the area of
migration policy, in particular:
Establish an effective labor migration management system with transparency, accountability
and the rule of law as key features, and aimed at strengthening of national and international
cooperation and coordination.
Develop effective tools and methods for labor migration management based on expanding
economic freedoms, respect for human rights, development of bilateral and multilateral
international relations.
Improve of labor migrants skills along with improvement of pre-departure training and
vocational skills, ensuring social security and increasing contribution of migrants to the
national development.
Expand and strengthen public-private partnerships in the area of training, recruitment and
protection of rights of migrant workers abroad as well as achieving mutually acceptable
relations with entities and employers in labor receiving countries.
What are the policy options for Tajikistan to make
remittances work for development?
In the short run:
• Macro policies to deal with drop in remittances, possible depreciation of
currency, promotion of exports, etc.
• Temporary social assistance provided this does not create a disincentive to
work in home country.
• Facilitation of re-entry into domestic labor market.
• Tapping into the human capital and financial resources that migrant workers
bring e.g. by creating a favorable environment for business creation, SMEs
etc
In the medium run:
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Do not prevent second round emigration when economic conditions in migrant
receiving countries improve.
Promote circular migration, by simplifying registration procedures for migrants
and better “employment” services and closer contacts with employers in Russia
– strengthen bilateral agreements with Russia
Develop efferent welfare protection mechanisms by the government
Strengthen financial literacy of migrants and financial products for migrants by
the bank
Improve overall labor migration management and coordination within the country
and with the donor community
Improve vocational education and training (but this should be broadly targeted,
beyond just potential migrants)