Bulgarian Migration: Incentives and Constellations Svetla Kostadinova Martin Dimitrov George Angelov Stefan Cankov (in Belgium) Dimitar Chobanov Katya Dimitrova (in Germany) Galina Karamalakova (in Italy) Dr. Eugenia Markova (in UK, University of Sussex) Dr. Krassen Stanchev (editor) 1 © 2005 Open Society Institute – Sofia. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Open Society Institute – Sofia. Please direct inquiries to: Open Society Institute – Sofia Solunska Str. 56 1000 Sofia, Bulgaria www.osf.bg 2 Contents: 1) Introduction - page 4 2) Methodology – page 5 3) Chapter 1 Bulgarian Migrants: Statistical and Demographic Profile – page 7 a. Bulgarian Emigrants in Greece b. Bulgarian Emigrants in Spain 4) Chapter 2 Macroeconomic Comparisons and Provisional Impacts of Macroeconomic Developments – page 40 5) Chapter 3 Benefits for the Home Country: Remittances, Their Impacts and Uses – page 48 6) Chapter 4 Overall EU Migration Constellations – page 62 a. EU Policies on Labor Migration b. The Case of Italy c. The Case of Germany d. Irish Migration Policy and other practices from EU member states for management of Economic Migration 7) Conclusions – page 86 8) Attachments – page 91 a. Migrants’ “Business Environment” in Major Emigration Destinations: Greece, Spain, Italy and Germany b. Policy – assessment Toolkit c. Demographic Data for Bulgaria 3 Acknowledgements The research team has been honored to work with the following representatives of Bulgarian government agencies: Mrs. Galina Aleksandrova, Employment agency, Directorate Pre-accession Funds and International Activities, Mrs. Stefka Blazheva, Head of Migration Statistics Sector, Population Statistics Department, National Statistical Institute, Mrs. Snejanka Georgieva, Director, General Directorate, "Civic Registration and Administrative Service". They helped us collect information, devoted their time and morally supported our research efforts for a period of four months. Mr. Stefan Stoyanov, Bulgarian ambassador to Greece and Yany Milackov – Ambassador to Serbia and Montenegro helped us elaborate research hypotheses and the public servants in the Bulgarian Consulates and Embassies in Germany, Italy and Spain assisted us when we needed additional information and feedback. We owe a special acknowledgement to Dr. Evgenia Markova from the University of Sussex. She helped us develop the research methodology and her suggestions on how to reflect emigration from the key destination countries resulted as a major part of this report. Also, her field work results in Greece and Spain, updated in 2003 and 2004, gave us the opportunity to draw an abstract profile of a Bulgarian Emigrant. Doctors Vesselin Vukotic (from the University of Podgorica, Monte Negro), Vesselin Minchev (from the Institute of Economics, Bulgarian Academy of Sciences), Genc Ruli (from the University of Tirana and the Center for Strategic Studies in Albania) and Friedrich Bauersax (from the University of Bonn and IME International Advisory Board) shared with us their previous surveys and related materials, and gave us valuable comments and advice. Introduction This report presents the findings of a research conducted by researchers from the Institute for Market Economics, Sofia, in the period February 2004 – October 2004 upon commission by the Open Society Institute - Sofia. The main purpose of the study was identification of current migration trends observed in Bulgaria and analysis of the incentives and impact that motivate migration and migration-related policies. These incentives and impacts are analytically isolated to different constellations: incentives are reflected as they emerge (or exist) in international context while impacts are evaluated as those that appear in the local society and societal situation in Bulgaria. The original idea was to launch a multi-country report and compare migration constellations in a number of Balkan countries. This plan still has to cast additional support in other countries. Our research is based on review of the literature, documentation and statistical data as well as on in-depth interviews with experts, academics, and policy-makers and has attempted to present the views of migrants themselves and organizations that facilitate international labor flows. Some of these attempts failed, and thus we had to use existing recent reports on different Diaspora spots. Each of these steps represented a challenge. For instance, the literature has all characteristics of an avalanche. The most recent and comprehensive background paper of Bulgaria remains the one prepared by Guentcheva, Kabakchieva & Kolarski (2003) for IOM. At the same time, the public attention and public demand for additional reflection is rising and is far from being satisfied. The central peculiarity of our approach to the issues of migration is outlined in the title. We dealt mostly with the incentives to emigrate and tried to view them as a result of rational but individual choice and this understanding is reflected by the methodology. 4 Methodology The concrete parts of this report require specification of sources and adjustment of the methodologies applied. However, there are general principles and assumptions that allow for a systemic approach to our subject of interest. Principles The fundamentals of the economic understanding of labor migration are the following: 1. Labor is both resource and capital, i.e. resource that allows for production and prosperity in the future; 2. As such, it is an attribute and property of the individual, non-alienable and usable at its own discretion; 3. For these reasons, incentives matter; they – or rather the difference between income and other tangible and intangible benefits between the sending - and recipient country - motivate international labor flows; 4. The factors to influence the above choices are the frameworks that regulate international and domestic labor flows. Assumptions The peculiar nature of migration, related to research hypotheses and objectives, is the following: 1. It is an individual and a family matter as well as a challenge; 2. It takes place upon individual choice and utilizes family and ethnicity-related support networks and sources of information and other services; 3. Provisional benefits and losses (costs) are first of all individual and family ones; 4. Some benefits and losses (costs) are “socialized” later on; Sources and benchmark (case) countries These assumptions are difficult if not impossible to check via direct interviews. We attempted a survey of Bulgarian emigrants via an organization that unites them but it was canceled. Without an opportunity to apply a direct approach we used national statistics of Bulgaria (including that of the central bank) and EU Members States, available sources on Internet, recent publications and literature, interviews with Bulgarian government officials and country case studies. At the same time, the already mentioned field work of Dr. Markova gave us sufficient material to sketch an abstract portrait of those who emigrate from Bulgaria. These cases were the following countries: Germany (mostly for macro comparisons), Greece, Italy and Spain. The selection of countries was based on the following criteria: the countries should represent an opportunity to capture seasonal and non-seasonal labor/migration flows (Greece); we needed also EU-high-middle-and-low income levels that allow for comparisons of incentives (i.e. Germany, Italy and Spain); and, also, we believed it makes sense to have countries with recent changes of policies and regulations (Germany, Greece and Spain). Germany, however, is also singled out for the study of the “business” constellations that motivate migration – due to the traditional differences in income, taxes, social welfare contributions and the like. 5 Structure The Structure of the report is the following. It starts with an attempt to draw a statistical and demographic portrait of Bulgarian migrants based on a review of the available sources of information and world trends in migration, including European Union migration flows, and on destination countries (mostly Spain and Greece) case studying. The second chapter of the report deals with macro-constellations that are usually highlighted in the literature as prime motivation for migrations: income, wage and productivity differentials, differences in economic stability and predictability. This background helps us better understand the incentives to migrate and to focus on the only available objective and statistical information on the impact of migration on the sending country – the remittances, which are dealt with in the third chapter. The fourth chapter pulls the information together for the EU emigration policy constellation and from the available sources and surveys on Bulgarian migrants’ situation in Greece, Italy and Spain. The final part of the report deals with conclusions from the previous analysis. They are divided into several categories: the total number of migrants, the structure of incentives, the impact on the economy of a sending country (i.e. Bulgaria); summary of provisional impacts on the recipient countries and provisional policy mixes that allow dealing with migration challenges. In attachment we provide information about the micro (business-like) constellations for migrants in the above mentioned benchmark countries, with special emphasis on income and social welfare taxes and contributions, on other