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Remittances and Migration – Impact of the COVID-19 Pandemic

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Remittances and Migration – Impact of the COVID-19 Pandemic P O L I C Y B R I E F I N G 0 6 | 2 0 2 1 M O L D O V A Remittances and migration – impact of the COVID-19 pandemic Prof Dr Matthias Lücke, Carolin Busch Berlin/Chisinau, June 2021 © Berlin Economics Motivation • When the COVID-19 pandemic started in the spring of 2020, there were wide- spread concerns among migrants as well as observers that migrants would send fewer remittances and return to Moldova in large numbers (IOM, 2020, released in June; UNDP, 2020, released in November). • As of mid-2021, we know that total migrant remittances to Moldova and other high-emigration countries have remained remarkably stable in 2020. In Moldova, we also see little sign of a lasting, large reduction in the number of labour migrants abroad. • In this draft policy briefing, we explore why remittances and migrants appear to have been remarkably resilient to the COVID-19 pandemic and the ensuing global economic crisis. © Berlin Economics 2 The evidence: remittances largely constant in 2020 • COVID-19 hit many migrant workers hard. The deep recession in many destination countries cut into labour demand; some service sectors Migrant remittances such as hospitality, where many migrants work, USD m were especially affected. International travel 500 450 was severely restricted. 400 350 • Nevertheless, migrant remittances to Moldova 300 have held up well: despite the dip in the 250 second quarter, total remittances in 2020 were 200 150 stable at USD 1.9 bn. 100 We explore three possible explanations for this, 50 0 which are not mutually exclusive: 1. Many migrants are essential workers with Personal transfers (received) relatively secure jobs, even during the crisis. Compensation of employees (received) 2. Some migrants transferred a larger share of Sources: National Bank of Moldova their incomes than before because of the dire situation of their household members. 3. Migrants that returned home for good transferred/took their savings with them, on top of remittances out of current income. © Berlin Economics 3 Growing useof formal channels to transfers remittances • While total remittances through all payment channels, including cash transfers, remained constant (previous slide), electronic money Money transfers to individuals transfers to individuals increased sharply in USD m 2020. 450 400 • Electronic money transfers, particularly 350 through money transfer operators (MTOs), 300 250 include a large share of migrant remittances, 200 but also various other transactions such as 150 100 remuneration for services rendered by 50 individuals (e.g. ICT services). 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • These trends are consistent with migrants 2019 2020 travelling home less frequently in 2020 because EU CIS Other of travel restrictions and using electronic transfers to send remittances instead of Sources: National Bank of Moldova personally carrying cash foreign exchange. • Electronic transfers have been widely used in CIS destination countries for many years, but have now become more popular in the EU and other countries, too. © Berlin Economics 4 Labour market effects • The impact of COVID-19 on the labour market through migrants (potentially returning home) and domestic workers (potentially losing jobs) Population aggregates (thousand) was dampened by the shrinking population over 2019 2020 15 years of age (-1.6% or 34,000 individuals from (January 1) 2019 to 2020). Usual resident population 2,686 2,640 Usual resident population > 15 years 2,156 2,122 • The labour force declined sharply (by -5.7% or (annual average) 52,000 individuals), while inactivity increased by Labour force 919 867 28,000 individuals (2.2%). employed 872 834 unemployed 47 33 • In the “inactive” group (i.e. not active on the "Inactive" population > 15 years 1,256 1,284 domestic labour market), the number of short- Working/ looking for work abroad for less than 12 term migrants declined by 16,000 and the months (reported by household member) 106 90 number of (potential) migrants temporarily at Preparing to go abroad for work or recently returned from work abroad 141 151 home increased by 10,000. Most of this change Inactive for other reasons (pensioner, student, occurred from the first to the second quarter of family, etc.) 986 1,027 2020, coinciding with the spread of COVID-19. Source: National Bureau of Statistics; note: we rely on annual data because published quarterly data are incomplete. • These changes are small in relation to the number of Moldovan migrants abroad who are still linked to a household in Moldova – approx. just over 400,000, not counting those who have left Moldova permanently (Luecke et al., 2015). © Berlin Economics 5 Sectors of employment of Moldovan migrants abroad • No recent data on sectors of employment is available. The data used is from the last Sectors of employment, Moldovan labour migrants, 2012 migration module, administered as part of the Moldovan Labour Force Survey in 2012; % 100 Construction based on a large sample of migrants still 90 linked to a household in Moldova. While Private households sectors of employment have probably 80 diversified, the broad picture is likely still 70 Wholesale and retail correct. trade 60 Hotels and restaurants • Of the sectors listed, only hotels and restaurants and, to a lesser extent, wholesale 50 Transport and storage and retail trade have been directly hit by 40 COVID-19. Other sectors were affected by the Agriculture and fishing 30 deep recession, but not subject to COVID- induced restrictions. 20 Manufacturing • It is therefore plausible that, overall, 10 All others Moldovan migrants abroad have not been 0 disproportionately affected by COVID-19. Relatively few migrants may have lost their Source: ILO (2017). jobs outright and, given the recession in Moldova, there was little reason to stop sending remittances. © Berlin Economics 6 Moldovan migrants in major destination countries Russia: migrant registration of Moldovan citizens • COVID-related restrictions have clearly affected 500 Thsd. all other travel between Moldova and Russia. However, 400 private in the absence of reliable data on work permits work 300 and “patents” for Moldovan migrants in Russia, it is difficult to say how this has affected the 200 stock of Moldovan migrants in Russia. 100 • The impact could be smaller than these graphs 0 2016 2017 2018 2019 2020 suggest, if many migrants have stayed put at Source: Ministry of Internal Affairs, Russia their destination, rather than travelling home during the year as usual. Entries of Moldovan citizens to Russia • Data on residence permits held by Moldovan 450 Thsd. Other 400 citizens in the EU during 2020 are expected to 350 Tourism and be released towards end-June 2021. Before 300 private Business and then, it is impossible to know how COVID-19 250 work 200 has affected the number of regular Moldovan 150 migrants in the EU. 100 50 0 Source: ROSSTAT © Berlin Economics 7 Conclusions • During the COVID-19 pandemic, migrant remittances have proven to be a resilient source of income for remittances-receiving households and a stable source of external finance for the Moldovan economy. • To a large extent, this is probably due to many migrants being “essential workers” during the pandemic, with relatively secure jobs (even though these same jobs and associated living and housing conditions may put migrants at above-average risk of infection). • Restrictions on international travel have limited the usual transnational activities of many migrants, such as regular travel home. While the number of short-term Moldovan migrants abroad has declined modestly, we have found no sign of large-scale return migration. • The geographic distribution of electronic money transfers to households (not the same as remittances) suggests that the weight of the EU as a destination country of migrants and source of remittances may have grown further in relation to Russia. © Berlin Economics 8 References International Labour Office (ILO). 2017. “Migrant Workers: The Case of Moldova.” Geneva, Switzerland. https://www.ilo.org/wcmsp5/groups/public/---ed_protect/---protrav/--- migrant/documents/publication/wcms_613508.pdf. International Organization for Migration (IOM). 2020. “IOM Rapid Field Assessment of the Impact of COVID-19 on the Wellbeing of the Moldovan Diaspora.” Chisinau: IOM Moldova. https://moldova.un.org/sites/default/files/2020-07/IOM%20Diaspora%20Survey%20Report-EN_FINAL_3.pdf. Luecke, Matthias, Vladimir Ganta, and Joerg Radeke. 2015. “Permanent Emigration from Moldova : Estimate and Implications for Diaspora Policy.” German Economic Team Moldova Policy Briefing Series PB/05/2015 (June). https://www.get-moldau.de/wordpress/wp-content/uploads/2014/11/PB_05_2015_en.pdf. Luecke, Matthias, and Woldemar Walter. 2020. “Demographic Transition and Access to Jobs in Uzbekistan: What Role for Labour Migration beyond the Covid-19 Pandemic?” Policy Study 01/2020. German Economic Team Uzbekistan. https://www.german-economic-team.com/usbekistan/wp-content/uploads/sites/6/GET_UZB_PS_01_2020_EN.pdf. Ministry of Internal Affairs, Russia, Statistics database: https://мвд.рф/Deljatelnost/statistics/migracionnaya/item/19365693/. United Nations Development Programme (UNDP). 2020. “Social and Economic Impact Assessment of the COVID-19 Pandemic on Vulnerable Groups and Economic Sectors in the Republic of Moldova. Impact Assessment Report.” https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwiQl66LgpzxAhXIg_0HHW1YD LkQFjAAegQIBhAD&url=https%3A%2F%2Fwww1.undp.org%2Fcontent%2Fdam%2Fmoldova%2Fdocs%2FSEIA%2FRe port_SEIA-UNDP%2520eng.pdf&usg=AOvVaw1xXnhMs9dNdssILmskm3Or.
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