ECONOMICS OF LABOR MIGRATION ECONOMICS OF LABOR MIGRATION FROM ARMENIA: A CONCEPTUAL STUDYFROM ARMENIA: A CONCEPTUAL STUDY

Aleksandr V. GevorkyanAleksandr V. GevorkyanNew School for Social Research and AIPRGNew School for Social Research and AIPRG  Karina MashuryanKarina MashuryanCity University of New YorkCity University of New York  Arkady GevorkyanArkady GevorkyanSt. John’s UniversitySt. John’s University  

Prepared for the AIPRG Fourth Annual International Conference  Prepared for the AIPRG Fourth Annual International Conference  Armenia: Public Sector’s Role in Influencing Economic OutcomesArmenia: Public Sector’s Role in Influencing Economic Outcomes

      

January 14-15, 2006January 14-15, 2006World BankWorld Bank

Washington, DCWashington, DC

OverviewOverview

InspirationInspirationTemporary Labor MigrationTemporary Labor MigrationArmenian Migrant: Profile…Armenian Migrant: Profile…Legal BasisLegal BasisMacroeconomic FrameworkMacroeconomic FrameworkThe ModelThe ModelConclusionConclusionQ&AQ&A

International Regulated LM International Regulated LM SchemesSchemes

The PhilippinesThe Philippines Philippines Overseas Employment AdministrationPhilippines Overseas Employment Administration

Sri LankaSri Lanka Sri Lanka Bureau of Foreign EmploymentSri Lanka Bureau of Foreign Employment

PakistanPakistan Bureau of Emigration & Overseas EmploymentBureau of Emigration & Overseas Employment

Population Outflow: General Population Outflow: General PicturePicture

Waves of MigrationWaves of MigrationPopulation Movement in NumbersPopulation Movement in Numbers Decrease by 2,000 persons a year;Decrease by 2,000 persons a year; Armenian nationals going to Russia: 2%-4.5% of both Armenian nationals going to Russia: 2%-4.5% of both

the total number of migrants into Russia and that of the total number of migrants into Russia and that of migrants from CIS, since 1997; migrants from CIS, since 1997;

The unemployed: steady 5-8% of labor resources The unemployed: steady 5-8% of labor resources (two thirds of the total population in 2003);(two thirds of the total population in 2003);

Economically active population: down by 13.2% for Economically active population: down by 13.2% for the last decade - 61.4% of the number of labor the last decade - 61.4% of the number of labor resources in 2003. resources in 2003.

Quis EstQuis Est Labor Migrant? Labor Migrant?

According to Recent Surveys*…According to Recent Surveys*… Russian Federation as the primary destination: Moscow, St. Petersburg, Russian Federation as the primary destination: Moscow, St. Petersburg,

Tumen, Rostov-na-Donu;Tumen, Rostov-na-Donu; Employment status and professional backgrounds of future migrants: Employment status and professional backgrounds of future migrants:

- half of labor migrants were involved in permanent or - half of labor migrants were involved in permanent or occasional occasional activity before their first trip abroad; activity before their first trip abroad;

- majority of the employed migrants were skilled workers or - majority of the employed migrants were skilled workers or white white collars, 26.5% were self-employed; collars, 26.5% were self-employed;

To Russia: 40.3% degreed specialists, 23.1% workers and 35.3% have To Russia: 40.3% degreed specialists, 23.1% workers and 35.3% have no profession;no profession;

Share of Armenian workers in Russia has remained at the same level in Share of Armenian workers in Russia has remained at the same level in the last two years;** the last two years;**

The absolute number of Armenian nationals employed in Russia has The absolute number of Armenian nationals employed in Russia has grown almost twofold in the last two years;**grown almost twofold in the last two years;**

The total official number of labor migrants in Russia has grown in 2005, The total official number of labor migrants in Russia has grown in 2005, comprising 19,5 thousand persons or 8.3% of the total amount of labor comprising 19,5 thousand persons or 8.3% of the total amount of labor from the CIS.** from the CIS.**

* AST, “Labor Migration from Armenia, 2002-2005”* AST, “Labor Migration from Armenia, 2002-2005”

** Federation Migration Service of Russian Federation** Federation Migration Service of Russian Federation

Looking for Income ElsewhereLooking for Income Elsewhere

Why Do They Migrate?Why Do They Migrate? lack of vacancies lack of vacancies family reunionfamily reunion unhealthy moral environmentunhealthy moral environment lack of work by specialtylack of work by specialty impossibility to earn enough funds to provide for their impossibility to earn enough funds to provide for their

subsistencesubsistence inability to earn a decent living inability to earn a decent living geopolitically unstable situation geopolitically unstable situation difficulties to carry out entrepreneurship difficulties to carry out entrepreneurship gender differences: while the number of females leaving the gender differences: while the number of females leaving the

country for the lack of work is half as much as the same number country for the lack of work is half as much as the same number of males, a roughly six-fold number of females tend to leave for of males, a roughly six-fold number of females tend to leave for the sake of reunification with their families.the sake of reunification with their families.

Russia: Something to ConsiderRussia: Something to Consider

Russia’s declining population Russia’s declining population

Russia’s target of doubling its GDP over Russia’s target of doubling its GDP over the next ten yearsthe next ten years

Migrant laborMigrant labor as a solutionas a solution

Controversial effectsControversial effects

Controlled and legalControlled and legal

Law and Order: Is Foreign Labor Law and Order: Is Foreign Labor Welcome in Russia?Welcome in Russia?

2002 Federal Law on Migration: system of 2002 Federal Law on Migration: system of quotasquotas

Russian Government Russian Government →→ Federal Migration Federal Migration ServiceService

Regulations allowing of legal status?Regulations allowing of legal status?

From limitations to a guest-worker From limitations to a guest-worker program: time for interstate cooperation?program: time for interstate cooperation?

RoA: Is Armenian Labor a RoA: Is Armenian Labor a Marketable Product?Marketable Product?

Draft law on LMDraft law on LM

Core instrument in need of adjustmentCore instrument in need of adjustment Licensing procedure Licensing procedure Limited spanLimited span Special case: foreign employersSpecial case: foreign employers Financial burden for labor migrant in legal statusFinancial burden for labor migrant in legal status

Is Armenia ready to protect its labor migrants?Is Armenia ready to protect its labor migrants?

Bilateral Legal Bilateral Legal Mechanisms: the GivenMechanisms: the Given

LM agreements within CIS: different LM agreements within CIS: different states, common goalsstates, common goals

Certificates, social benefits and equal Certificates, social benefits and equal treatmenttreatment

Base for new initiatives Base for new initiatives

How to Read Migration Effects?How to Read Migration Effects?

Economic Growth?Economic Growth? Persistent UnemploymentPersistent Unemployment

Possible Macroeconomic FrameworkPossible Macroeconomic Framework Labor Market EffectsLabor Market Effects Wage ConsiderationsWage Considerations Remittances and…Remittances and… Pan-Armenian BankPan-Armenian Bank

Need for Accurate DataNeed for Accurate Data

Labor MarketLabor Market

Does theory really work?Does theory really work?

Ambiguous effectsAmbiguous effects

Waiting out: Waiting out: Internal and International Labor Internal and International Labor MigrationMigration

Armenian Labor Force: Armenian Labor Force: Quality vs. QuantityQuality vs. Quantity

Skills transfer / Rising ProfessionalismSkills transfer / Rising Professionalism

Side effects: healthcare, education…Side effects: healthcare, education…

Wage ConsiderationsWage Considerations

Wage Differentials: driving force of migration?Wage Differentials: driving force of migration? Evidence from GermanyEvidence from Germany

Are wages going up or down?Are wages going up or down? Speculation / need consistent and accurate dataSpeculation / need consistent and accurate data

Skills effectSkills effect Experience of othersExperience of others

Cross-sector implicationsCross-sector implications

RemittancesRemittances

Controversial SubjectControversial Subject Crucial financial flows into developing worldCrucial financial flows into developing world True contribution to growth?True contribution to growth?

$1 billion in 2003 in Armenia!$1 billion in 2003 in Armenia!

Worth only as long as there is a recipient in the Worth only as long as there is a recipient in the countrycountry

Consider: Microfinance/Pan-Armenian BankConsider: Microfinance/Pan-Armenian Bank To support local growth and utilize the capacity of To support local growth and utilize the capacity of

returning labor migrants as well as attract people back returning labor migrants as well as attract people back to Armeniato Armenia

Pan-Armenian Bank Pan-Armenian Bank

Formal money transfer vehicleFormal money transfer vehicle

Channel funds into Channel funds into SMEs in ArmeniaSMEs in Armenia Infrastructure projectsInfrastructure projects EducationEducation

Provide credit to migrants’ familiesProvide credit to migrants’ families

Will work in a regulated environmentWill work in a regulated environment

Temporary Labor Migration Regime in Temporary Labor Migration Regime in Armenia: Concept ModelArmenia: Concept Model

Policy Regimes – What can work in Armenia?Policy Regimes – What can work in Armenia? Laissez-faireLaissez-faire RegulatedRegulated State-managedState-managed State monopolyState monopoly

Government policyGovernment policy

Migrants’ benefitsMigrants’ benefits

Legal baseLegal base

The Model [First Steps]The Model [First Steps]

Recognize Diaspora’s pivotal roleRecognize Diaspora’s pivotal role

Diverse and influential Russian Armenian Diverse and influential Russian Armenian DiasporaDiaspora Caveat: ongoing institutionalization Caveat: ongoing institutionalization need of the need of the

Western Diaspora and GoA supportWestern Diaspora and GoA support

The Model and How it WorksThe Model and How it Works

The main agents:The main agents: Labor Migrant Labor Migrant Government of ArmeniaGovernment of Armenia Government of Russian FederationGovernment of Russian Federation RoA: Foreign Employment AgencyRoA: Foreign Employment Agency RoA: Consulate Representation in RussiaRoA: Consulate Representation in Russia RF: Armenian Community GroupRF: Armenian Community Group RF: Employer in RussiaRF: Employer in Russia

Proposed Temporary Labor Migration Model: Proposed Temporary Labor Migration Model: Armenia and RussiaArmenia and Russia

Foreign Employment Agency

Armenian Community Group in Russia

Local Consulate of the Republic of Armenia in Russia

Russian authorities [municipal, regional and federal levels]

Employer in Russia

Government of the Republic of Armenia

Migrant in Armenia

In the end…In the end…

Urgent need to address the issue and introduce Urgent need to address the issue and introduce regulation: regulation:

Outflow of Armenia’s economically active populationOutflow of Armenia’s economically active population

Analyze economic effects in the triad: Analyze economic effects in the triad: Labor Market / Wages / RemittancesLabor Market / Wages / Remittances

Implement Pan-Armenian Bank:Implement Pan-Armenian Bank: Public sector expenditurePublic sector expenditure

Need solid bilateral labor migration legal baseNeed solid bilateral labor migration legal baseInstitute a working LM Model to control and mitigate the Institute a working LM Model to control and mitigate the negative effects of out-migrationnegative effects of out-migrationAny labor migration scheme is inefficient and prone to Any labor migration scheme is inefficient and prone to conflict without accurate and consistent data and its conflict without accurate and consistent data and its analysisanalysis

Thank you!Thank you!