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Remittances to Central Asia Surge But Fall Short of Historic Highs

Kyrgyzstan has had an especially good year, courtesy of its EEU membership status.

Fresh data from Russia’s Central Bank have shown a strong resurgence in remittances to Central Asia, although levels in Tajikistan and Uzbekistan fell far short of records set in 2013.

Kyrgyzstan has seen the best performance. Membership in the Moscow-led Eurasian Economic Union, or EEU, grants Kyrgyzstan’s labor force considerable advantage over peers in neighboring countries in the region, as the figures clearly demonstrate. In 2017, $2.21 billion was sent from Kyrgyzstan to Russia — a 27 percent annual increase and a little over the $2.1 billion record set four years previously. 

A combination of plunging oil prices and Western sanctions imposed on Russia in reprisal for the annexation of Crimea and armed incursion in eastern Ukraine in 2014 sent the value of the ruble tumbling and the salaries of migrant laborers along with it. Meanwhile, the EEU came into being in mid-2015, granting free movement of labor to member states.

With Russia’s economy gradually stabilizing, even citizens of non-EEU members are seeing some benefit. Around $3.9 billion were sent to Uzbekistan from Russia last year. That is a 42 percent increase on 2016, but far shy of the $6.7 billion registered in 2013.

It is similar story for Tajikistan, which received $2.54 billion in cash from Russia in 2017. That is a rise of 31 percent year-on-year, but well short of the $4.2 billion seen in 2013.

The talk of billions of dollars, however, can easily distract from the millions of individual stories. Not to speak of the individual strategies pursued by these three strongly remittance-reliant nations.

A well-timed story by RFE/RL’s Kyrgyz service illustrates, for example, how Kyrgyzstan’s membership in the EEU has not translated into improved conditions for migrant workers in Russia. 

Police in the city of Ryazan revealed this week that 13 Kyrgyz women were being employed in conditions tantamount to slavery in a textile sweatshop. A representative for Kyrgyzstan’s Interior Ministry, Bakyt Seitov, said that management at the sewing factory confiscated passports and prevented workers from leaving the premises.

“Employees worked through the night. They only got 40-minute breaks for lunch, and if they didn’t make it back in time, they were fined 5,000 rubles ($90),” Seitov was cited as saying.

While it has become simpler for Kyrgyz citizens to secure residency and jobs in Russia, many continue to be employed in the gray sector, with all the deprivations that entails.

“Employers avoid hiring workers in the legal way, which means a working day should not exceed eight hours, providing medical insurance, benefits and tax payments,” Tolkunbai Akmatov, the head of a migrants rights group in Moscow, told RFE/RL. “In these conditions, pay has fallen. So our compatriots want to work more and earn greater salaries.”

The rise of remittances also has implications for the balance within Kyrgyzstan’s economy. Gross domestic product last year totaled 493 billion som, or $7.2 billion. That means remittances accounted for the equivalent of a little over 30 percent of the economy. Last year’s GDP figure came in at $6.6 billion and remittances at $1.75 billion. The trend here shows cash transfers from abroad growing faster than the economy. 

This particular data point can be highly variable and its importance should perhaps not be overestimated, but it is a useful indicator of Kyrgyzstan’s deep reliance on Russia. The government in Bishkek speaks volubly about its ambitious multiyear economic development strategies, but for now, it is cheap labor that is keeping the country from sinking.

The trend and scale are even more pronounced in Tajikistan. Going by the most recent annual GDP and remittance figures, transfers from Russia account for the equivalent of almost 37 percent of Tajikistan’s economy. And although the government in Dushanbe likes to trumpet would-be glowing economic figures, the reality is that in dollar terms, the story since 2014 has been one of decline followed, more recently, by a period of stagnation. 

Uzbekistan is not quite as critically dependent on Russia. The emphasis there has been on systematizing the status of laborers traveling north — a stark contrast with the laissez-faire stance on the issue adopted by the late President Islam Karimov. A range of joint efforts by Russia and Uzbekistan are aimed at producing a more skilled and remunerative labor force and driving as many people as possible out of the gray economy.

Remittances to Central Asia Surge But Fall Short of Historic Highs

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