K-News - Sergey Shatalov: Money Remittances of Kyrgyz Labour Migrants will Go down

02 December 2013

The risk of a massive return of Kyrgyz labour migrants from the Russian Federation is not high. That is the opinion shared with K-News by Deputy Chairman of the EDB Management Board Sergey Shatalov.

“First, the demographic situation in the Russian Federation is well-known: Russia is currently at the stage of quite rapid population aging and faces an acute deficit of labour. Its economic growth largely depends on the important contribution of labour migrants to the economy. Secondly, the strategic choice of Kyrgyzstan to join the Customs Union (CU) creates quite a privileged access regime for the Kyrgyz labour migrants to the Russian labour market. The Republic’s accession to the CU envisages the signing of the Single Economic Space (SES) agreements, one of which says that labour migrants from all SES member states will enjoy the national regime of registration in the labour market within the SES area,” says Sergey Shatalov.

At the same time, labour remittances of migrants working in Russia are still likely to decline, notes the Deputy Chairman of the EDB Management Board. The reason is the deceleration of growth observed in the Russian economy over the past year.

“Projections of the Russian Ministry of Economy are not optimistic. The deceleration of economic growth in Russia would affect Kyrgyzstan as well – the volume of labour migrants’ remittances would decline. We observed such an effect in 2008-2009 and it was noticeable. I would say that this risk is real,” notes Sergey Shatalov.

He added, however, that there are ways to reduce such negative effects resulting from the influence of a country faced with a deficit of labour on a country exporting its labour resources. The key way, according to Sergey Shatalov, is further deepening of integration between the CIS countries and the consequent elimination of all barriers for the movement of labour between these countries.

 “The equally important ways to mitigate this risk involve implementation of responsible macroeconomic policies, investment regime improvement, and raising the economy’s appeal for businesses. That concerns the Kyrgyz economy as well – turning it more attractive for investors from absolutely all the countries, including the three Customs Union member states. For the last few years, Kyrgyzstan has implemented responsible macroeconomic policies, in particular aimed at a significant reduction of the budget deficit and ensuring the debt sustainability over the coming 2-3 years. These responsible macroeconomic policies should continue as they are the key to mitigating economic risks and shocks. As to the world markets, they are, unfortunately, volatile: the gold price will fluctuate, and so will the oil price. One should simply be better prepared for these shocks. And sound macroeconomic policies keep the economy alert and prepared to fight these shocks,” summarised the Deputy Chairman of the EDB Management Board.

To remind, significant economic growth was registered in Kyrgyzstan in 2011. According to analysts and experts, one of its drivers was an increased flow of remittances from the people of Kyrgyzstani descent, who have migrated to work abroad. The volume of money remittances grew then by 33.6 % compared to 2010.