[LINK] "Migrants: From Remittance to Pittance"

[rfmcdonald]

S. Adam Cardais' "Migrants: From Remittance to Pittance" at Transitions Online takes a look at the effect of the global economic downturn on economically essential labour migration in the poorer countries of post-Communist Europe.

The former Soviet Union and post-communist Eastern Europe are filled with immature economies rife with poverty, corruption, and unemployment and lacking any comparative advantage to attract investment. Many have seen large-scale emigration in recent years as workers left for opportunity in Russia or Western Europe. This work force has subsequently become a geographically distant yet vital economic foundation for their home countries – places like Moldova, Tajikistan, or Albania – through the money they send home every year, money that, for their families, can mean the difference between falling below or hovering barely above the poverty line.

[. . .]

In Eastern Europe and Central Asia, Moldova and Tajikistan are most at risk. Both have large emigrant populations in Russia (many Moldovans also go to Italy, which is in recession and not expected to be back in the black until 2010, according to a European Commission forecast) and remittances account for more than 35 percent of GDP in each country, making them the world's most remittance-dependence economies, according to the World Bank's Migration and Remittances Factbook 2008. And neither has much to fall back on.

"If you look at places like … Moldova, it's tougher because [remittances] are a large percentage of the economy, but also because there's nothing going on there," said Jon Levy, an analyst at the Eurasia Group global consultancy in New York. "The countries that have these competitive issues should be extremely worried."

Albania is also vulnerable, with money sent home from its emigrant populations in Greece and Italy comprising a hefty percentage of GDP. Likewise in Romania. Around 1.5 million Romanians work in Spain, whose economy will contract next year, according to the EC, and Italy. Many of those jobs are in construction, an especially vulnerable trade in hard times. Banks are already seeing a downward trend in the money they send home.

For further detailed reading on the subject, you might want to check out Ali Mansoor and Bryce Quillin's January 2007 World Bank study Migration and Remittances: Eastern Europe and the Former Soviet Union.