Labor migrants transfer almost $ 10 billion a year to Ukraine

Author : Serhiy Zvihlyanych

Source : 112 Ukraine

Migrant workers transferred to Ukraine three times more currency than the IMF, the European Union, and the United States combined
09:10, 2 August 2018

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Picking berries in Finland or building houses in Poland – the decision is not that simple. The work is not easy, the conditions of work are inhuman, the risk of remaining without money is high, and this is not the worst thing that can happen to a guest worker. Nevertheless, in recent years, Ukrainians massively become labor migrants, mainly they go to the West, searching for the better life.

Related: In 2017, over 60 percent of migrant workers from Ukraine got their jobs abroad illegally, - media

The main reason that causes people to leave the country is the inability to obtain a decent wage in their home country. The average salary in Ukraine is only 342 dollars. Moreover, most vacancies provide almost half of the earnings. At the same time, in Poland, popular among the Ukrainian migrants, one can earn about 1000 euros a month. This difference pushes hundreds of thousands of Ukrainians to leave for work.

In some countries, for example, in Turkmenistan, the authorities in every possible way hinder labor migration, although the economic situation in the economy is deplorable, as well as the standard of living of the population. Ukraine’s state leadership realizes all the benefits of the migrant workers. "You can argue and even quarrel, but now the migrant laborers have become the main source of currency in Ukraine, and this trend will be further strengthened in the coming decades... If there were no guest workers’ money, the dollar exchange rate in Ukraine would be more than 50 UAH for one US dollar. Ukraine could not boast of GDP growth of 3.1% for the first quarter of 2018, and it would be impossible to pay back almost one billion dollars of the previous IMF loans, avoiding hryvnia revaluation and devaluation. This is our economy," says economist Olexandr Okhrymenko.

Related: Ukraine's labor migrants: A circle of salvation or an anchor?

The benefit is clear - last year, $ 9.3 billion came to Ukraine only via the payment systems. Another 4-5 billion, probably, were brought in cash. "The most popular unofficial money flow channels are personal cash transfer, transfer through friends, relatives, drivers of the delivery vehicles," says Natalia Chepurnova, head of the statistics department of the National Bank (NBU) external sector.

Ukrainians earn and transfer money home more than anyone else. However, they also have better-paid jobs. Russia is no longer the main market for our labor migrants because in Poland salaries are 40-50% higher. One-third of all transfers to Ukraine come from Poland. There are more Ukrainian labor migrants in Russia than in Poland. But the income from Russia to Ukraine is much larger than from the western countries - last year, 1.4 billion dollars came from Russia. This speaks not only of the difference in salaries but also of some restrictions on the money transfer. Many just carry cash through the border. At the same time, Russia's statistics show that the number of Ukrainian labor migrants in the Russian Federation is declining - in 2017, 48% less Ukrainians arrived there than a year earlier.

After the devaluation of the ruble, labor migrants from Central Asia are even in a worse situation. Russia remains their main employer, but in recent years there has been a steady decline in labor migration in Russia.

Related: How to stop mass labor migration from Ukraine?

For example, Moldovans used to go to earn money in the Russian Federation, now only a third of them work in Russia, the rest just go to Europe and Israel. Many Ukrainians are also changing Russia to Poland.

Ukraine is a big country with a large population, Kyrgyzstan is small, and there are eight times less people in this country. Then how to compare the extent of labor migration in such different countries? Let us recount the income from the migrant workers for each resident of the country. Ukraine with its 220 dollars per person is lagging behind, but the Kirghiz actually earn a lot if we take into account the country's population (about 6 million people).

It is also worth looking at the ratio of remittances from the labor migrants to the GDP of countries. For Kyrgyzstan and Tajikistan, this is about 40% of the gross domestic product. It's not just a lot, it's a lot. Note that the revenues of Tajikistan's state budget in 2017 amounted to only 2.1 billion dollars, Kyrgyzstan - 1.8 billion dollars. That is, migrants transfer significantly more money to these countries than their states earn.

For these countries, as well as for Moldova with its 15%, this is the main "engine" of consumption and economic growth. Without the money of migrants, these countries would face a complete collapse. Ukraine is at the end of the list again, because, despite the impressive $ 9.3 billion in remittances, Ukrainian economy is too large in comparison with other post-Soviet countries, even taking into account the recent catastrophe.

Related: Being guest worker: How dangerous is labor migration for Ukraine?

Therefore, we must admit that we have not yet overtaken the Central Asian countries, but the trend is alarming. If the forecasts of economists on the growth of the scale of labor migration in the near future prove to be correct, most likely, we will approach Moldova in this respect. By the way, in the first half of the year, migrants have already transferred to Ukraine $ 5.3 billion, which is more by 31% than in the six months of last year.

And yet, do these 9.3 billion dollars that come to Ukraine from labor migrants mean a lot? Let us compare it with some Ukrainian figures. They are closer to us and more understandable.


Related: Ukraine's population decreases due to labour migration, - survey

For example, labor migrants earn a third of all revenues from the state budget of Ukraine (a paradox, but the same Uzbeks transfer only about a quarter of the state budget revenues to the country). And this is only what comes to the country through the money transfers. A total figure can reach half of our budget revenues. This is almost the same as the customs for the country earns. The money of labor migrants would be enough to pay pensions in Ukraine almost a year. Ukraine spends on defense two times less than the labor migrants send to their families. Money earned by migrants is enough to pay off all 2018-2019 debts to the IMF – these are the peak periods of payments. In addition, migrant workers transferred to Ukraine three times more currency than the IMF, the European Union, and the United States combined.

Even the National Bank of Ukraine admits that money transfers by labor migrants "have a much greater effect on the stability of the national currency than foreign direct investment." Thanks to them the rate is still 27 UAH / USD and not higher. While there is no hope for foreign investors, the financial front is successfully kept by the labor migrants.

Related: Poland welcomes Ukrainian migrants, they willingly accept Polish values, - politician

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