LABOR MIGRATION AND ITS POTENTIAL CONSEQUENCES FOR CENTRAL ASIA

Central Asia was a place of forced exile during the Soviet Era. Now, labor migrants are moving by their free choice to earn their livelihoods. While Kazakhstan is a major recipient, migrants from the poor neighboring countries of Kyrgyzstan, Tajikistan, and Uzbekistan seek livelihoods on construction sites, tobacco and cotton fields there and in Russia. The reintegration of Central Asia with the world after the Soviet Union creates a new structure in the region’s political economy; and this is the forerunner of the further change in all aspects of societies and social life in the region.

BACKGROUND: Since gaining independence, the post-Soviet countries of the Southern tier have displayed political, social, and economic outcomes distinct from their Baltic and Slavic counterparts. Central Asian countries in particular are seen in the West to have shown frustrating political and economic performances in their regime and market transitions. After independence, Kazakhstan and Kyrgyzstan followed liberalization policies in their economies, while Turkmenistan and Uzbekistan opted for statist and gradualist economic transition policies. Tajikistan remained somewhat of an outlier because of its prolonged civil war, and its ethnic and social composition.

It is safe to say that most of the post-Soviet economies have still not fully recovered from the economic shock of the collapse of the Soviet system; however, some of them have remained far behind compared to their counterparts. The percentage of population under the poverty line reached 80% of Kyrgyzstan’s, over 90% of Tajikistan’s, and almost 50% of Uzbekistan’s populations in the aftermath of the 1998 Russian crisis. And all countries of Central Asia, except Kazakhstan, have remained in the category of the seven-poorest countries of the CIS, known as the CIS-7. The direct outcome of the relative economic austerity was out-migration to search for livelihoods.

In Central Asia, a wide dichotomy has opened in later years: wile southern Central Asian states are exporters of migrants, a World Bank report ranks Kazakhstan in 2007 as the world's ninth-biggest destination for labor migrants.

Keeping track of labor migration and migrants has been limited due to the existence of formal and informal procedures; however, according to Kazakh official registries at customs, the number of Uzbek migrants entering the country daily is 4,000. On the other hand, Russian officials estimate up to 2,5 million Uzbeks (from a population of 27 million), and 800,000 Kyrgyz (population 5 million) work in the Russian labor market. Based on information from regime insiders, the number of Uzbek labor migrants might be 5-6 million in total. The official website of the U.S. Department of State gives a similar figure: “Estimates range from lows of 3 million to highs of 5 million Uzbek citizens of working age living outside Uzbekistan, most in neighboring countries or Russia.” Some estimates suggest that the magnitude of remittances might be as much as 30% of Kyrgyzstan’s, and 50% of Tajikistan’s corresponding GDPs. Most of these funds go directly to rural households. Then, the critical question is how those monies are spent.

IMPLICATIONS: The most important feature of the labor emigration is migrants’ remittances along with all other potential material and immaterial benefits to the households left behind and to the entire sending nations. On the positive side, out-migration brings about improvements to the well-being of migrants and their families, reduction of poverty in the sending regions, much needed capital in the form of money and goods, a safety net for households, increasing local savings and investment, and alleviation of unemployment and underemployment pressures, especially in the densely populated Ferghana Valley.

As is the case for all remittance-receiving communities and nations in the world, it is visible in the big cities of Central Asia that remittances are spent for construction or improvement of housing. In the urban centers, there are new patterns in the daily lives of people: increasing connection to the world through the internet, transportation, and communication, and new life styles. Walking the streets of the urban centers, one comes across many migration-related businesses: IP-phones or internet cafes to provide communication between migrants and their relatives; foreign exchange bureaus; firms that sell bus or airline tickets; and real-estate agencies that offer newly-built modern houses.

One crucial effect of external migration is the redistribution of wealth, and this might potentially change the balances in the so-called clan politics of Central Asia. Besides, labor migration is seen as an effective mechanism for the formation of a middle class in the entire post-communist area. Given the increasingly active role of migrants in the politics of their home or host countries, it is argued that they can come to push for political reforms. Diasporas can be mobilized to advance the interests of the sending country. Or in the reverse case, host countries, mainly Russia and Kazakhstan, may use the “migration card” as a bargaining chip in bilateral relations with sending countries. In the domestic realm, it is likely that out-migration might cause increasing conservatism. Arguably, migrants are likely to be able and open-minded, and their outflow might change the balance of domestic power in favor of conservative ideas and actors. Besides, increasing hostility towards migrants in the host countries may cause increasing nationalism and nationalistic ideas among migrants and their families back at home. They may become either more religious or ultra-nationalistic or both (like Turkish migrants in the EU) and then spread these life patterns back to their home communities. For national politics, remittances through informal channels might be potential sources of terrorism, drug, and money laundering, since there is no effective control due to the ambiguity or nonexistence of jurisdiction in the global waters. Indeed, as reported in the 20 February issue of the CACI Analyst, this is one reason why Uzbekistan seeks to channel remittances through the bank system.

Another scope is the financial system. Considering that the percentage of bank customers to the population is very low in those labor-exporting Central Asia nations – and that for many rural people, receipt of remittances represent their first contact with the banking system – remittances have a strong potential to strengthen the banking sector if national governments prepare corresponding infrastructure to this cause.

Pessimists argue that migration and associated remittances bring nothing but dependency. Migration causes brain-drain, and remittances are spent for non-productive causes, especially for conspicuous consumption which distorts local economies; and create social inequality. Migrants lock themselves into a semi-permanent role of supplying labor for the dirty, difficult, and dangerous (3D) jobs in the receiving countries. Spending remittances for luxury items causes a growth in imports, inflationary pressures, appreciation of the local currency, diminishing export performance, and increasing land and real estate prices. Most remittance-taking families experience moral hazard problems, some entirely forgo productive activities, and tend to live lucrative and lazy lives. Migrants and their families become relatively rich; and they tend to move to urban areas. Urban-rural inequality further increases with the end result of social conflict due to relative depravation. Moral hazard is also possible for the national or local governments. They escape from the pressures for the urgently needed structural reforms; they tend to ignore economic imbalances (e.g. trade deficits), since remittance inflows do not require any conditionality, unlike the IMF.

CONCLUSIONS: Migration and remittances pose both prospects and challenges to the labor exporters. There is visible and statistical evidence to support the migration pessimists’ arguments. One is that there is currently a shortage of skilled personnel in the labor exporting nations of Central Asia. In Bishkek, Tashkent, and Dushanbe, real-estate prices have increased significantly. However, remittances might still be part of the solution in the broader fundamental reforms in the labor exporters of Central Asia. There are good reasons to be hopeful that sending countries would find ways to be connected with their citizens abroad. The main solution is the rationally designed and improved institutional context. Labor exporting nations should think about channeling remittance inflows to the SMEs; gradual transformation of rural and agricultural population to the urban and manufacturing jobs through broader national policies including education, strengthening banking and financial system, fostering job creation, raising productivity, improving public service delivery, spatial inequality especially between migrants non-migrants.

AUTHOR’S BIO: Kursad Aslan is a PhD Candidate at Kent State University, Ohio.