Uzbekistan’s government has pledged to provide prospective migrant laborers with loans of up to $1,000 on favorable terms to cover the costs of travel and work permit registration fees.

Take-up of the initiative is likely to be focused mainly on Russia, where Uzbekistan’s Foreign Labor Migration Agency has representative offices.

The COVID-19 crisis has had a deleterious effect on the jobs market in Uzbekistan, but the problem of labor oversupply is longstanding.

As President Shavkat Mirziyoyev noted in a government video conference call on August 17, around 600-700,000 people enter the labor market every year. The economy can soak up 500,000 workers, meaning anywhere up to 200,000 people may be compelled to seek their chances overseas. 

Russia has historically been the main destination for expatriate laborers, although important if much smaller numbers find work in countries like Kazakhstan, Turkey, South Korea and the United Arab Emirates.   

According to official figures, there are around 2 million Uzbek nationals working outside the country, although the real number is likely far greater, as many dispense with the process of obtaining proper authorization, not least because of the expense entailed. 

Uzbek labor migrants in Russia have to pay a monthly fee for a work authorization document known as the patent. The cost of that paperwork is around $320 a month. Peers from Kazakhstan and Kyrgyzstan are not liable to pay those fees, however, since their nations are members of the Moscow-led Eurasian Economic Union trading bloc.

An Uzbek banking source familiar with the proposed loan initiative has told Eurasianet that the credit will be repayable within two years at an interest rate of 25 percent per annum. This means that workers will face having to pay back up to $1,500. Although onerous by Western standards, the terms are relatively forgiving in the Uzbek lending context.

Uzbekistan’s Central Bank has reported that remittances in the first seven months of this year amounted to $3 billion, which is around $217 million less than over the same period in 2019.