ECONOMICS OF LABOR MIGRATION FROM ARMENIA: A CONCEPTUAL STUDY

1. ECONOMICS OF LABOR MIGRATION FROM ARMENIA: A CONCEPTUAL STUDY Aleksandr V. Gevorkyan New School for Social Research and AIPRG Karina Mashuryan City University of New York Arkady Gevorkyan St. John’s University Prepared for the AIPRG Fourth Annual International Conference   Armenia: Public Sector’s Role in Influencing Economic Outcomes January 14-15, 2006 World Bank Washington, DC

2. Overview • Inspiration • Temporary Labor Migration • Armenian Migrant: Profile… • Legal Basis • Macroeconomic Framework • The Model • Conclusion • Q&A

3. International Regulated LM Schemes • The Philippines • Philippines Overseas Employment Administration • Sri Lanka • Sri Lanka Bureau of Foreign Employment • Pakistan • Bureau of Emigration & Overseas Employment

4. Population Outflow: General Picture • Waves of Migration • Population Movement in Numbers • Decrease by 2,000 persons a year; • Armenian nationals going to Russia: 2%-4.5% of both the total number of migrants into Russia and that of migrants from CIS, since 1997; • The unemployed: steady 5-8% of labor resources (two thirds of the total population in 2003); • Economically active population: down by 13.2% for the last decade - 61.4% of the number of labor resources in 2003.

5. Quis Est Labor Migrant? • According to Recent Surveys*… • Russian Federation as the primary destination: Moscow, St. Petersburg, Tumen, Rostov-na-Donu; • Employment status and professional backgrounds of future migrants: - half of labor migrants were involved in permanent or occasional activity before their first trip abroad; - majority of the employed migrants were skilled workers or white collars, 26.5% were self-employed; • To Russia: 40.3% degreed specialists, 23.1% workers and 35.3% have no profession; • Share of Armenian workers in Russia has remained at the same level in the last two years;** • The absolute number of Armenian nationals employed in Russia has grown almost twofold in the last two years;** • The total official number of labor migrants in Russia has grown in 2005, comprising 19,5 thousand persons or 8.3% of the total amount of labor from the CIS.** * AST, “Labor Migration from Armenia, 2002-2005” ** Federation Migration Service of Russian Federation

6. Looking for Income Elsewhere • Why Do They Migrate? • lack of vacancies • family reunion • unhealthy moral environment • lack of work by specialty • impossibility to earn enough funds to provide for their subsistence • inability to earn a decent living • geopolitically unstable situation • difficulties to carry out entrepreneurship • gender differences: while the number of females leaving the country for the lack of work is half as much as the same number of males, a roughly six-fold number of females tend to leave for the sake of reunification with their families.

7. Russia: Something to Consider • Russia’s declining population • Russia’s target of doubling its GDP over the next ten years • Migrant laboras a solution • Controversial effects • Controlled and legal

8. Law and Order: Is Foreign Labor Welcome in Russia? • 2002 Federal Law on Migration: system of quotas • Russian Government → Federal Migration Service • Regulations allowing of legal status? • From limitations to a guest-worker program: time for interstate cooperation?

9. RoA: Is Armenian Labor a Marketable Product? • Draft law on LM • Core instrument in need of adjustment • Licensing procedure • Limited span • Special case: foreign employers • Financial burden for labor migrant in legal status • Is Armenia ready to protect its labor migrants?

10. Bilateral Legal Mechanisms: the Given • LM agreements within CIS: different states, common goals • Certificates, social benefits and equal treatment • Base for new initiatives

11. How to Read Migration Effects? • Economic Growth? • Persistent Unemployment • Possible Macroeconomic Framework • Labor Market Effects • Wage Considerations • Remittances and… • Pan-Armenian Bank Need for Accurate Data

12. Labor Market • Does theory really work? • Ambiguous effects • Waiting out: Internal and International Labor Migration • Armenian Labor Force: Quality vs. Quantity • Skills transfer / Rising Professionalism • Side effects: healthcare, education…

13. Wage Considerations • Wage Differentials: driving force of migration? • Evidence from Germany • Are wages going up or down? • Speculation / need consistent and accurate data • Skills effect • Experience of others • Cross-sector implications

14. Remittances • Controversial Subject • Crucial financial flows into developing world • True contribution to growth? • $1 billion in 2003 in Armenia! • Worth only as long as there is a recipient in the country • Consider: Microfinance/Pan-Armenian Bank • To support local growth and utilize the capacity of returning labor migrants as well as attract people back to Armenia

15. Pan-Armenian Bank • Formal money transfer vehicle • Channel funds into • SMEs in Armenia • Infrastructure projects • Education • Provide credit to migrants’ families Will work in a regulated environment

16. Temporary Labor Migration Regime in Armenia: Concept Model • Policy Regimes – What can work in Armenia? • Laissez-faire • Regulated • State-managed • State monopoly • Government policy • Migrants’ benefits • Legal base

17. The Model [First Steps] • Recognize Diaspora’s pivotal role • Diverse and influential Russian Armenian Diaspora • Caveat: ongoing institutionalization  need of the Western Diaspora and GoA support

18. The Model and How it Works The main agents: • Labor Migrant • Government of Armenia • Government of Russian Federation • RoA: Foreign Employment Agency • RoA: Consulate Representation in Russia • RF: Armenian Community Group • RF: Employer in Russia

19. Proposed Temporary Labor Migration Model: Armenia and Russia

20. In the end… • Urgent need to address the issue and introduce regulation: • Outflow of Armenia’s economically active population • Analyze economic effects in the triad: • Labor Market / Wages / Remittances • Implement Pan-Armenian Bank: • Public sector expenditure • Need solid bilateral labor migration legal base • Institute a working LM Model to control and mitigate the negative effects of out-migration • Any labor migration scheme is inefficient and prone to conflict without accurate and consistent data and its analysis

21. Thank you!