Last year, a significant portion of the economies of CIS countries was based on remittances from labor migrants. “Remittances from Russia constitute 35% of Tajikistan's GDP, 18% of Uzbekistan's GDP, 17% of Kyrgyzstan's GDP, 10% of Armenia's GDP, and 5% of Georgia's GDP,” says Yuri Gazaryan, consultant at the Expert Directorate of the President of Russia. Moreover, it should be noted that these funds affect not only the quantitative indicators of neighboring economies but also the qualitative ones. This money goes directly to the population and fuels consumer demand, which, in turn, is the foundation of qualitative economic growth.
Russia also benefits from migrant activity. “We must not forget that instead of this money, the country received goods and services produced by foreign workers, the volume of which is comparable to 7-10% of Russia's annual GDP,” says Nikolai Gusman, president of RUSSLAVBANK. That is, guest workers bring the country $70-100 billion annually.
The impact of labor migrants on the economies of post-Soviet countries is underestimated. For example, about 4.3 million Ukrainian citizens work worldwide, of which 2 million work in Russia. Ukrainian guest workers earn $8.9 billion a year in Russia, while their total earnings in all countries of the world amount to $35.3 billion. “Migrants sent $21.3 billion to Ukraine in 2006,” says Andrei Gaidutsky, assistant deputy chairman of the National Bank of Ukraine. For Ukraine, this is a considerable sum. The country's GDP is $81.6 billion, state budget revenues are $26.4 billion, National Bank reserves are $22.3 billion, and direct investments for 2006 were $4.8 billion. That is, remittances from Ukrainian guest workers are 4.4 times higher than direct foreign investments into the Ukrainian economy and almost equal to the state budget.
For residents of many CIS countries, working in Russia is the only way to ensure a decent living for their families. It is in Russia that they can earn large sums by local standards. Their fields of work include construction, transportation, trade, and services. While the average salary in Azerbaijan is $150, the average remittance from Russia to Baku is nearly $600. The same can be said for Armenia. In Uzbekistan, the ratio is even larger – a $50 salary compared to a $560 remittance. In Tajikistan, the average salary is 8% of the average remittance; in Turkmenistan, 9.3%; in Georgia, 10%; in Kyrgyzstan, 11.6%; in Moldova, 31%; and in Ukraine, 57.1%. Thus, a Tajik family, upon receiving a remittance from Russia, can afford not to work for a year.
Only last year, the number of foreign workers in Russia, according to official data, exceeded 1.1 million. In the first two months of this year, 713,000 migrants received work permits. Under such conditions, remittances become not only an economic but also a social factor. “The greater the difference between the average salary and the average remittance, the greater the pressure to overcome any barriers to the flow of funds,” believes Nikolai Gusman. And he reminds that 50% of remittances are in the “gray zone.”
However, remittances from labor migrants are important not only for CIS countries. In 2006, China received $22.5 billion from its citizens working abroad, and according to expert estimates, another 60% of this amount arrived in China “in the gray.” Even for a huge country like China, this sum is substantial. And if we recall that most foreign investment in China comes from the Chinese diaspora (huaqiao), we can confidently say that the role of Chinese living abroad is enormous for the Chinese economy. Other major recipients of remittances are Mexico ($25.1 billion) and India ($23.5 billion).
The main senders of remittances, according to the Central Bank, in 2005 were the USA ($40 billion), Saudi Arabia ($15 billion), Switzerland ($14 billion), Germany ($13 billion), Spain ($8 billion), and Russia ($6 billion). In 2006, net remittances from Russia reached $11 billion. $7.5 billion were transferred to individuals in Russia, while individuals sent $18.7 billion from Russia. Moreover, 66% of all funds transferred into the country were received by Russian citizens. As for remittances from Russia, the share of Russian citizens in them decreases to 54%. But still, most of them are made not by migrants but by people with Russian passports.
The largest sender of funds to Russia is the USA – $1.02 billion, or 13% of all remittances to Russia. In second place is Switzerland – $677 million, and in third, Kazakhstan – $597 million. Kazakhstan, by the way, is the only country in the post-Soviet space that, like Russia, is a net sender of funds. After Kazakhstan come the UK, Latvia, and Germany.
As for remittances from Russia, the top recipient is China – $3.02 billion last year, or 16% of all funds sent. But considering that the average transfer amount was $13,177, it can be said that a significant portion of these funds is payment for smuggling, not the earnings of labor migrants. In second place after China is Ukraine, with $1.274 billion transferred there from Russia by individuals in 2006. Next come Switzerland ($1.139 billion), Turkey ($1.104 billion), Uzbekistan ($1.089 billion), Tajikistan ($1.082 billion), and the UK ($979 million).
Experts note that the more transparent and simple the mechanisms for transferring funds, the smaller their share is in the shadow sector, which feeds criminal groups on both sides of the border. And this, as IA Rosbalt writes, is already a matter of national security. It is one thing if money transfers are carried out through the banking system, and quite another if money is moved using couriers in the form of cash currency. In this case, the percentage for the "transfer" is received by people close to both drug barons and terrorists. So far, 50% of all funds are transferred "in the gray", meaning billions of dollars end up "under the wing" of criminal groups.