Guest Workers Send Less Home

MTForeign laborers like these two at the Moskva City construction site in July have since seen their work and pay dry up.
Azim Abdullu sent $150 home to Dushanbe, Tajikistan, in April. Since then, the 34-year-old day laborer has not been able to provide money to his wife and four children.

Remittances from foreign workers in Russia, a major source of cash for poor Central Asian countries, showed signs of considerable growth through the third quarter of this year. But with the country's ailing construction sector cutting jobs and the ruble weakening, remittances have begun to slow significantly -- in some cases by as much as 10 percent, month on month.

Many firms do not even pay the money they have promised, and foreign workers have little recourse because they often cannot or do not seek help from authorities. And with a worsening job market across the board, immigrants living in Russia, estimated at 12.1 million by the World Bank, face rising hostility and even violence.

"They say they don't have any money because of the crisis and don't pay," Abdullu said while waiting for work in the rain near a bus stop on Yaroslavskoye Shosse, near the Moscow Ring Road.

"I don't have any money," he said, looking down at his jeans and sneakers. "I can't even buy proper winter clothes."

Responding to a call by Prime Minister Vladimir Putin, the government last week cut quotas for foreign workers by 50 percent in an effort to stem increasing discontent with growing unemployment.

Regional leaders, too, have been pushing for stricter quotas. On Wednesday, Mayor Yury Luzhkov told the Federal Migration Service's branch in Moscow that more needed to be done to cut quotas for foreign workers and to protect jobs for Muscovites, following similar calls by the governors of the Krasnodar and Sverdlovsk regions.

But despite the hardships, working in Russia is still a lucrative prospect for citizens of several former Soviet states.

"You have to understand that in their countries, the possibilities to earn a good wage are minimal," said Yevgeny Sidorov, national secretary of the Federation of Independent Trade Unions of Russia. "That is why they are leaving their homes and coming to Russia to do the jobs that sometimes Russians would like to do."

In 2007, Kyrgyzstan received remittances worth the equivalent of 20 percent of its gross domestic product, which does not include money transfers from abroad. The World Bank projects that Tajikistan will receive remittances worth a whopping 50 percent of its GDP in 2008.

"These countries are heavily dependent on the ability of their workers to obtain jobs abroad," said World Bank economist Bryce Quillin, who recently wrote a report on global remittances and migration. "Remittances have been one of the key drivers of economic growth and poverty reduction in the last few years."

A construction boom throughout the first half of this year raised the amount of the average money transfer to post-Soviet republics in the second quarter from $531 in 2007 to $656 this year, according to the Central Bank.

The ruble has since plummeted against the dollar and the financial crisis has expanded into construction and other industrial sectors, slowing the flow of money.

"In October through November our turnovers decreased about 10 percent each month," said Souren Hayriyan, CEO for UNIStream money transfer service.

The average UNIStream transaction decreased from about $1,000 in August to $800 in November, he said.

And while the ruble has fallen 19 percent from a high against the dollar in July, Central Asian currencies have held more of their value -- eating into the amount of funds that make it back home.

In the past six months, for example, the value of the ruble has fallen 17 percent from around 6.8 per Tajik somoni to 8 per somoni in December.

Hayriyan said UNIStream still expected 10 percent growth this year, but that is far less than the 25 percent to 35 percent the company has seen in recent years.

"The reason for the decrease was the mix of both rapid slowdown in the construction sector and the U.S. dollar becoming stronger against the Russian ruble," Hayriyan said.

For the year ending this past summer, Hayriyan said, the ruble was the currency of choice for people sending money from Russia to Central Asia. Since then, they have started using the dollar more.

The World Bank is predicting a decline in remittance growth to Central Asian countries for the first time. For Tajikistan, the bank expects only a 4 percent increase in remittances this year compared with last year, versus a 66 percent increase from 2006 to 2007.

During past economic downturns, migrant workers would travel to new destinations to work. Now, Quillin said, there is no place for workers to go.

"You are going to have more unemployed people in these countries. Migrants will return home," he said. "We could see an increase in poverty levels."