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Report Based on the Study of Remittances and Living Standard

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Report Based on the Study of Remittances and Living Standard Report Based on the Study of Remittances and Living Standard Measurement Survey (TLSMS conducted in August 2008) ECONOMIC DYNAMICS OF LABOUR MIGRANTS’ REMITTANCES IN TAJIKISTAN KHAKIMOV Parviz Sh. MAHMADBEKOV Moensho Sh. [APRIL 2009] IOM/TAJIKISTAN CONTENT Foreword……………………………………………………………………….……...... 7 Acknowledgements………………………………………………………….………….. 8 List of Tables………………………………………………………………..…………... 9 List of Figures………………………………………………………………..………….. 12 List of Abbreviations……………………………………………………………………. 14 EXECUTIVE SUMMARY………………………………………………….………….. 16 MAIN FINDINGS………………………………………………….…………………… 20 CHAPTER I. STATE OF THE ART OF MIGRATION PROCESSES AND PREREQUISITE OF LABOUR MIGRATION IN TAJIKISTAN…... 23 1.1 Historical Background of Labour Migration……………………..……………... 23 1.2 Demographic and Socio-economic Factors of the Population Migration Activity ………………………………………………………………………………..… 24 1.3 Political and Ethnic Factors of Migration Activity……………………………... 26 1.4 Urbanization Processes and International Migration…………………………... 28 1.5 Labour Potential and Labour Market - Internal versus International Labour Market………………………………………………………………………….. 30 CHAPTER II. MACRO AND MICRO ECONOMIC CONSEQUENCES OF LABOUR MIGRATION AND MIGRANT REMITTANCES….......... 33 2.1 Migrant Remittances and Economic Development………………………………... 33 2.2 Macro-economic Consequences of Labour Migration and Remittances…...………. 38 2.2.1 Migrant Remittances Impact on the Consumer’s Market………………….. 39 2.2.2 Impact of Labour Migration on the Development of the Transportation Sector……………………………………………………………………… 41 2.2.3 Impact of Migrant Remittances on the Industrial Sector………………..… 41 2.2.4 Impact of Migrant Remittances on the Agricultural Sector…...…………… 44 2.3 Impact of Migrant Remittances on the Micro Level……………………...………… 44 2.4 Decent Living Standard and its Linkage with Migrant Remittances………...…....... 46 2 CHAPTER III. METHODOLOGY OF THE STUDY………………………………… 47 3.1 Justification of the Study…………………………………………………….......... 47 3.2 Necessity of Nationwide Survey on Labour Migration and Migrant Remittances.............................................................................................................. 48 3.3 Overall Objective of the Study…………………………………………………… 48 3.4 Methodology of the Study………………………………………………………... 49 3.5 Terms and Definitions used in the Study…………………………………………. 50 3.6 Data Collection Methods ………………………………………….……………… 50 3.7 Limitations of the Study…………………………………………………………... 50 CHAPTER IV. ANALYSIS OF DATA OBTAINED AND DISCUSSIONS…..……... 51 4.1 Aggregate Income of Population and Structure of the Household Consumer Disbursement …………………………………………………..…………………. 51 4.2 Tajik Labour Migrants Median Income before and during Labour Migration……………............................................................................................... 54 4.2.1 Labour Migrants’ Income before Migration................................................. 54 4.2.2 Income of Tajik Labour Migrants’…………………………………….…... 54 4.2.3 Discussion on Labour Migrants Income and their Remittances…………… 57 4.3 Structure for Using Labour Migrant Remittances – Nutrition, Investment and Saving……………………………………………………………………………... 60 4.4 Socio-Economic and Demographic Characteristics of Labour Migrants and Reasons for Migration…………………………………………………………….. 61 4.4.1 Socio-Economic Characteristics of Labour Migrants……………………… 61 4.4.2 Demographic Characteristics of Labour Migrants…………………………. 63 4.5 Environmental Factors for the Population Migration Activity …………………… 65 4.6 Regional Dimension of Labour Migration and Duration of the Stay…………….. 68 4.7 Formal and Informal Channels to Transfer Remittances…………………………. 72 4.8 Economic Status of Individuals Before and During Labour Migration, and Area of Activities……………………………………………………………………….. 73 3 4.9 Positive and Negative Aspects of Labour Migration and Labour Migrants’ Reasons for Returning …………………………………………………………….. 75 4.10 Economic Activity of Returned Labour Migrants………………………………. 76 CHAPTER V. IOM PROJECT: “ENHANCING DEVELOPMENT IMPACT OF REMITTANCES AND PROMOTING LEGAL MIGRATION”………... 78 5.1 Background, Objectives and Project Activities………………..………………... 78 5.2 Borrower Households…………………………………………..………………. 79 CONCLUDING REMARKS……………………………………………..…………….. 82 RECOMMENDATIONS……………………………………………………………....... 86 POSSIBLE EXTENSION AND FURTHER RESEARCH…………………..…………. 87 BIBLIOGRAPHY………………………………………………………………………. 88 USEFUL LINKS………………………………………………………………….…….. 92 ANNEXES…………………………………………………………………………..….. 93 Annex 1. Details of the Survey Methodology…………………………………... 93 Annex 2. Organizations Working on Remittances…………………………….. 97 4 FOREWORD Tajikistan’s political and economic transition, its recent history, low wages, and demographic changes have impacted negatively, almost destructively, the internal labour market and have motivated significant labour migration. This environment works against the development of the Tajikistan’s economic sector which is unable to supply adequate employment. It is estimated that more than 600,000 migrants leave the country each year for seasonal work, mostly to Russia, to provide for their families back home. In 2008, remittances from these migrants channelled through official banking systems comprised an estimated half of the national GDP, but the real percentage could be even much higher. On the positive side, remittances have alleviated poverty (where GDP per capita in Tajikistan between 1995 and 2005 grew almost three times) and provided better lives for those who receive them in good quantities and consistently. However, remittances have also had a negative impact on the development of national production because the influx of foreign currency remitted strengthens the national currency making production less competitive. While during the first five months of 2009 remittances of Tajik labour migrants decreased by 30-35% compared to the same period of the previous year, labour migration and remittances still remain strong social and economic elements in Tajikistan and will remain so in the longer term. Therefore, the study on “The Economic Dynamics of Labour Migrants’ Remittances in Tajikistan” that IOM has undergone in 2008 analyzes a contemporary problem that will remain real for the foreseeable future. This study does not include an in-depth analysis of the impact of the global financial crisis on remittances. However, it does provide an outlook on its possible impacts that are already being seen and trends in remittances that will be useful in developing related research. This study is based on a survey of migrant households from a representative sampling of the country’s households in rural areas. It is important not only because it estimates the positive and negative aspects of labour migration and remittances, the impact on the macro and micro levels, but also because it highlights the demographic impact on labour migration, the internal labour market, and environmental degradation. Consequently, labour migration will continue to be one of the main priorities of the Tajik government and other concerned stake holders involved in the regulation of labour migration processes and developmental issues. It is also a key policy issue since labour migration can contribute to positive development by incorporating labour migration into the national development strategy. The objective of this study is to establish the degree of labour migrant remittances’ impact at the individual, micro and macro levels, and on environmental degradation in Tajikistan’s rural areas. It will serve as a useful, subject matter source of information for the Government of Tajikistan, international organizations, and all concerned in designing new policies and economic development. I thank the authors of this study, Moensho Mahmadbekov and Parviz Kakhimov from the Academy of Science, Institute of Demography of the Republic of Tajikistan, for their hard work through several months of field work and analysis, for their recommendations and results, and all those involved in supporting them. Zeynal Hajiyev Chief of Mission International Organization for Migration (IOM) Mission Tajikistan 5 ACKNOWLEDGEMENTS The authors are very thankful to Sultanov Z., Khorkashev S., Bobojanov R., Hasanov M. for their valuable comments on the draft. Special thanks to IOM Tajikistan staff members, who diligently worked on the project, thoroughly guided the survey process, and ensured quality of data collection. Also, thanks to Radik Nabiullin – Remittances for Development Project Manager, Ozar Saidov, Kurbon Nazarov, Sino – Project Assistants for their valuable comments on the draft report. Thanks to Shafqat Etimov, Finance Admin/Assistant, Murod and Mahmadsaid, drivers and all other staff members of IOM Tajikistan who participated in this project. Finally, we are grateful to Zeynal Hajiyev, Chief of Mission and Abdussattor Esoev, National Programme Coordinator of IOM Tajikistan, for their support and tolerance, and for giving us the opportunity to work on this very important subject. Parviz Khakimov – [email protected] Moensho Mahmadbekov - [email protected] April, 2009 6 LIST OF TABLES Table 1.3.1: Migration Outflow from Tajikistan Related to Ethnicity, 1989- 1999 (intercensal period)………………………………………….. 26 Table 1.3.2: Population by Age group, Tajikistan, 1989-2007 …………...………… 27 Table 2.1.1: Workers' Remittances, Compensation of Employees, Migrant Transfers, Credit (USD Million)…………………..……………… 34 Table 2.1.2: Workers’ Remittances, Compensation of Employees, and Migrant Transfers, Debit
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