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Migration and Remittances in Macedonia: a Review

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Migration and Remittances in Macedonia: a Review Arbeiten aus dem OSTEUROPA-INSTITUT REGENSBURG Wirtschaftswissenschaftliche Abteilung Working Papers Nr. 281 Februar 2010 Migration and Remittances in Macedonia: A Review Barbara DIETZ OSTEUROPA-INSTITUT REGENSBURG Landshuter Str. 4 93047 Regensburg Telefon: 0941 943 5410 Telefax: 0941 943 5427 E-Mail: [email protected] Internet: www.osteuropa-institut.de ISBN 978-3-938980-30-9 Contents Abstract ................................................................................................................................. v Introduction ................................................................................................................. 1 1 The impact of migration on the economy and society of sending countries: general considerations............................................................................................................. 2 1.1 Labour market and brain drain.............................................................................. 2 1.2 The impact of remittances..................................................................................... 3 1.3 Social impacts of migration ................................................................................... 4 2 The EU migration experience after enlargements in 2004 and 2007 ................................ 6 2.1. Post-enlargement migration: the experience of receiving EU countries.............. 6 2.2 Post-enlargement migration: the experience of sending EU countries ............... 8 2.2.1 Labour market aspects ............................................................................ 8 2.2.2 Brain drain, educational impacts and return migration............................ 9 2.2.3 Remittances............................................................................................. 10 2.2.4 Social impacts.......................................................................................... 11 3 Migration and remittances in Macedonia: experience and perspectives ........................... 12 3.1 Macedonia’s migration history .............................................................................. 12 3.2 The Macedonian diaspora .................................................................................... 13 3.3 Migration in Macedonia since independence ....................................................... 15 3.3.1 Aspects of brain drain.............................................................................. 16 3.3.2 Characteristics of transit movements ...................................................... 17 3.3.3 Migration perspectives............................................................................. 17 3.3.4 The impact of remittances ....................................................................... 18 4 Conclusion and policy recommendations .......................................................................... 22 References ............................................................................................................................ 24 List of Tables Table 1: Population of Macedonia by ethnic affiliation (2002)........................ 12 Table 2: Macedonian population living abroad............................................... 14 Table 3: Remittance flows towards and from Macedonia (in millions of US dollars).................................................................. 19 List of Figures Figure 1: Immigration, emigration and net migration in Macedonia (1992-2005)...................................................................................... 15 Figure 2: Remittances and foreign direct investments in Macedonia 2001-2006 (in millions of US dollars)................................................ 20 Abstract This paper explores migration movements and remittances patterns in Macedonia since independence and studies the migration policy challenges Macedonia will be likely to face after its entry into the EU. Concerning recent migration movements, considerable outflows from Macedonia are found as well as indications for a serious brain drain. Re- mittances to Macedonia–which are quite big–seem to constitute a relevant support for a number of households and can be expected to diminish the incidence of poverty. In the light of the EU accession process, the Macedonian government will have to introduce policies which enhance the opportunities of migration and remittances and reduce their risks. JEL-Classification: F22, F24 Keywords: Macedonia, migration, remittances* *This paper was prepared as part of a multifaceted study of Macedonia’s European Union accession process that was produced by a team of outside scholars and policy makers, headed by Professor Josef C. Brada in the course of 2008 and 2009. I am indebted to the United Nations Development Programme and to the Ministry of Finance of the Republic of Macedonia for financial support for the completion of this study. Thank goes to my fellow team members and Macedonian economists and government officials for many helpful suggestions and comments. v Migration and Remittances in Macedonia Introduction The free movement of people and its impact on sending and receiving countries has been a controversially discussed issue in the context of European Union’s Eastern enlargements. Because of high differences in income and living standards between new and old EU member states, politicians and the public in EU-15 countries expected an increasing East-West labour migration after the accession of 8 Eastern European coun- tries in May 2004 and two further in January 2007. Worries evolved that migrants from the new EU member states would take away jobs from native workers in the EU-15, lower their wages or immigrate in search of state benefits. Furthermore, social tensions were anticipated as a result of likely growing population diversity. In contrast it was argued that East-West labour movements would assist the European economy in the longer term, helping to enhance welfare and economic growth of European Union mem- ber states. Nevertheless, while labour mobility can be expected to stabilize economic growth across the EU as a whole, gains may not be distributed equally and it may put pressure on local labour markets of receiving economies and on the social cohesion at the local level. Labour migration after enlargements was not only assumed to affect EU-15 states, but likewise the new Eastern European members of the EU. These countries anticipated a part of their young and well-educated labour force to leave for the West, thus reducing economic growth and welfare at home. On the other hand, positive impacts on the econ- omy, for example in form of remittances and human capital increases as a result of re- turned migrants were expected. This paper explores migration movements and remittances patterns in Macedonia since independence and studies the migration policy challenges Macedonia will be likely to face after its entry into the European Union. Because of its economic situation, Macedonia is expected to primarily function as a migrant sending region in the Euro- pean Union context, although return, transit, refugee and asylum migration may like- wise play a role.1 The following section explores the impact of migration on the econ- omy and society of sending countries in general terms, while the migration experience of transition countries that have joined the EU in 2004 and 2007 will be addressed in the second section. The third section looks at the Macedonian migration experience since independence, studies the migration potential in Macedonia in the light of EU acces- sion, examines the impact of remittances and evaluates the salience of new EU coun- tries’ migration experiences for Macedonia. The final section formulates policy recom- mendations following from this analysis. 1 The analysis of refugee and asylum movements as well as the implications of these migrations for Ma- cedonian governmental policies in the context of European Union accession is beyond the scope of this report. A number of recent papers have delt with these issues (IOM 2007, CRPM 2007, van Selm 2007, IOM 2009). 1 OSTEUROPA-INSTITUT REGENSBURG Working Paper Nr.281 1 The impact of migration on the economy and society of send- ing countries: general considerations As international migration has expanded considerably in recent years, including more and more transition and developing countries into the international migration system, increasing attention has been devoted to the evaluation of migration impacts on sending economies and societies.2 Migration influences the home countries of labour migrants through various channels, most importantly through changes in labour supply, brain drain and remittances. Furthermore, migration may also impact on the social situation in sending regions. 1.1 Labour market and brain drain While the emigration of labour leads to a decrease in the labour supply in sending coun- tries, the further impacts of migration depend on a number of factors, for example on the age structure and skills of emigrants as well as on the labour market situation in sending regions. If people leave to work abroad, output in the home country tends to decline if emigrated work force can not easily be replaced because of tight labour mar- kets. However, labour emigration is not expected to have a negative effect on output and productivity in sending regions if unemployment in the respective skill group is high and a large supply of persons exists which can substitute the leaving labour force. This situation stimulates an increasing
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