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I. MIGRATION FROM UKRAINE FOR EMPLOYMENT WITHIN THE CONTEXT OF GLOBAL MIGRATION PROCESSES

4. FINANCIAL AND POLITICAL CONSEQUENCES OF MIGRATION OF LABOR FROM UKRAINE

The main positive result of migration for employment is that it generates additional earnings that flow back into the country of a migrant worker’s origin, because he wants to earn as much as possible and send the money to the family he left in his homeland. This makes him save as much of his earnings as he can and spend them only for such essentials as food, accommodation and clothing. The earnings reach his family through both official and unofficial channels, i.e. by money transfers or direct upon his return. It has been observed worldwide that what a migrant transfers officially practically equals what he himself brings home.

According to the official estimates of the International Monetary Fund, the money migrant workers transferred in 1999 to Eastern Europe, Asia, Africa, the Middle East, Latin America and the Caribbean countries amounted to US $65 billion. If we take into account what had reached these countries through unofficial channels, the sum would be over US $100 billion. Table 1.5 presents data about such transfers and their share of GDP.

Table 1.5. Ten countries that received the largest money transfers in 1999

As far as Ukraine is concerned, there are no such estimates at the government level. Therefore it is extremely difficult to say what amount of money migrant workers bring into the country.

The Commissioner monitored the transfers our citizens made through banks from the countries of employment.

Bank transfers of individuals are governed by the Law On Payment Systems and Money Transfer in Ukraine of April 5, 2001. This law sets out the principles of operation of payment systems, defines the terms used in it, and establishes the procedure for remitting money within the country as well as the liabilities of subjects of money transfers. Under operative Ukrainian legislation and the regulations of the National Bank of Ukraine the banks are entitled to open and keep current accounts of clients and correspondent banks (residents and non-residents) in foreign currency, remit money from these accounts and place funds on them on the basis of a bank license, provided they have a NBU permission in writing to effect the said transactions. The right to effect such transactions is enjoyed by 150 Ukrainian banks.

The effective regulations do not provide for the NBU receiving information from banks about the amount of money the clients remit and the number of respondents and countries from which the money is received.

As the bank managers informed the Commissioner, the international money transfers for the benefit of individuals do not state the citizenship of the persons who remit the money. The funds are credited to the current accounts of individuals and also upon statement of passport particulars without opening current accounts. Transfer operations of individuals via the system of correspondent accounts are effected to the opened current accounts of individuals and as subagents of the Money Gram, Western Union and SWIFT payment systems without opening accounts.

Money Gram and Western Union make it possible to provide remittance services through applied software based on the “person-to-person” system. But the system does not record on the remittance receipt information about the country of the remitter.

In view of the circumstances described above, it is also impossible to determine how much Ukrainian migrant workers transfer money through official channels.

In response to the inquiries of the Commissioner, the following data was received from some of the banks: Polikobank (Chernihiv) disbursed money transfers through the Money Gram system to 826 persons in the amount of US $287,653 in 2000-2003; JSB Prykarpattia (Ivano-Frankivsk) paid through Western Union US $3,016,741.64 in 2000, US $4,453,504.2 in 2001, and US $2,678,032.5 in 10 months of 2001; Privat-Bank (Dnipropetrovsk) paid to 11,840 persons through Money Gram US $4,683,950.03; and JSB Elektron-Bank (Lviv) disbursed to 253 individuals through Money Gram a total of US $671,384 – US $109,595 in 2001 and US $561,789 in 2002. In these cases as well the banks did not have any information about the remitters.

O.Lohoshniak, Chairman of the Pravex Bank Board of Directors, informed the Commissioner about the following: “Since the Instruction On the Procedure for Opening and Using Accounts in National and Foreign Currency approved by NBU Board of Directors Resolution No.527 of December 18, 1998 does not regulate the verification of information about senders of payments in favor of individuals, the bank cannot provide information about the cash Ukrain­ian citizens transferred from abroad. Not a single payment system, specifically SWIFT or Western Union, has such payment requisites as citizenship of remitters.”

A survey conducted in Ternopil oblast in 2001 by the Ministry of Labor and Social Policy, the oblast state administration and the oblast employment center (at January 1, 2001 the oblast had 1,151,100 residents, i.e., 2.3% of the country’s population) revealed some interesting figures. The village radas polled 994 villagers as to the local residents who went abroad for work. At October 1, 2001 there were 20,095 such persons, or 6.33% of the oblast residents of employable age, including 11,925 men and 8,170 women. Judging from conservative estimates, the migrant workers of Ternopil oblast were remitting about US $100 million annually, i.e. over half a billion hryvnias or an average of US $4,000-6,000 per person. Under the program of investment in the economic development of Ternopil oblast for 2002-2005 official foreign investments amounted to UAH 12.4 million, i.e. approximately 2% of what the migrant workers send back home as their personal earnings. These facts show what a great potential remains untapped for using these earnings as investment in the economy for the welfare of the migrant workers’ families.

The information the Commissioner for Human Rights received from the Dnipropetrovsk oblast state administration can serve as an example of how much money is remitted to this region (see Table 1.6).

In all, US $9,070,441 and 431,293 were remitted within three years.

Table 1.7 presents data on how much money in foreign currency from abroad the banks of Ivano-Frankivsk oblast disbursed as remittances to Ukraine’s residents and non-residents in 2000–2001.

Table 1.6. Receipt of bank transfers for individuals
in Dnipropetrovsk oblast (oblast state administration data)

Table 1.7. Disbursement of foreign currency transfers from abroad to Ivano-Frankivsk oblast in 2000-2001 (US $ thousand)

Some experts estimate that Ukrainian migrant workers earn over UAH 2 billion a month, i.e. about US $400 million.

The largest part of this money returns to Ukraine. This benefits not only the families of migrant workers, but also the whole country, since unemployment rates go down, aggregate demand increases, and the market capacity enlarges, thereby positively affecting the economic situation, especially the development of production. The money migrant workers make abroad exceeds by a dozen times the average wages of Ukrainian citizens and offer ample opportunities for building houses, buying cars, durable goods, products of the light and food industries, and financing education of children in prestigious educational establishments.

Besides, upon their return from abroad the migrant workers use a large share of the earnings to set up their own businesses, providing work for themselves and their relatives as well as creating jobs for others.

The work of Ukrainian migrants under conditions of a real economy enriches them both with a positive and negative experience. Above all, they acquire additional skills in their trades and professions, as they are introduced to the latest in technologies, expand their vision of the world and gain confidence in their own powers. Among the negative consequences of the inflow of additional money into the country are the growing prices for goods and services on the domestic market without a corresponding rise in the purchasing power of the bulk of the population.

As the families of the migrant workers keep receiving the money transfers from abroad, they frequently tend to gain a distorted understanding of the real situation within the country when it comes to identifying poverty and providing social assistance to those who really need it.

In the opinion of the Commissioner, the migrant workers’ money transferred through the banking system should be registered in order to have an accurate estimation of the income of families and to determine the subsistence minimum in the country.

In studying how the problems of migrant workers are dealt with in the world, the Commissioner arrived at the conclusion that the government should create preferential conditions for legalizing the money transfers and legislatively establish a simplified system of transfers that would reduce the cost of services the banks provide for this purpose.

Such a conclusion is confirmed by international practice. Migration for employment is among the most acute social problems in Mexico. According to an approximate estimate, there are about eight million Mexicans working legally and illegally in the US and their number is growing with each passing year. Mexico accumulated unique experience in government regulation of migration processes and this issue is in the focus of attention of the country’s parliament and government. The issue was the main point of discussion during the meeting of the Ukrainian Parliament Commissioner for Human Rights with Gustav Mareno, Foreign Relations Commission Chairman of Mexico’s National Congress. He informed his guest that Parliament was seeking ways and means to reduce the cost of transferring the money Mexico’s migrant workers earn in the US. For this purpose the government intended to introduce special plastic cards for the families of migrant workers. By conservative estimates Mexico’s migrant workers remit to their homeland about US $10 billion, which accounts for one-third of the country’s budget revenues.

The government’s concern over this problem is compounded by the refusal of the US government to sign a bilateral Agreement with Mexico on the protection of the migrant workers’ rights in connection with the events of September 11, 2001, after which the US substantially limited the entry of migrant workers into its country.

In the opinion of the Commissioner for Human Rights, the study of Mexico’s experience as well as of other countries in the protection of the migrant workers’ rights will be of benefit for formulating a corresponding government policy in Ukraine.

The large number of Ukrainian migrant workers abroad, which has not been decreasing over a long period of time, proves that for all the difficulties they experience in an alien environment the advantages of work abroad exceed by far the inevitable inconveniences.

According to the information of the Ministry of Labor and Social Policy, the majority of migrant workers are satisfied with their employment in other countries. About 73% of them are prepared to go there again if such an opportunity presents itself, and 84% expressed this desire, provided they have the support, assistance and relevant social protection guarantees of government institutions.

Besides, there is a stable trend of employment abroad becoming a principal practice and not something sporadic. The above-mentioned poll of the Ministry of Labor and Social Policy revealed that 81% of the migrant workers did not hold a permanent job in 2000 in their homeland. Therefore, a large part of the population sees migration for employment not as an alternative way of pursuing their economic activity, but as the only possibility of earning wages and realizing their labor potential.

Political implications of migration of labor from Ukraine. Ukrainians are distinguished for their industriousness, tolerance, and ability to quickly adapt to a new environment. Small wonder that in a lot of countries they have earned the reputation of welcome workers, which strengthens the positive image of Ukraine.

As a well-known Ukrainian diplomat pointed out during a conversation with the Commissioner, “Ukrainian migrant workers are doing much more for popularizing and raising the image of Ukraine abroad than all our diplomats taken together.” Exaggerated as this opinion might be, many countries began seeing Ukraine not only through the prism of the Chornobyl tragedy or yet another political scandal, but also through the eyes of millions of Ukrainians who sincerely love their country and promote a positive attitude to it abroad.

Regrettably, not all of our countrymen deserve such an opinion. Some of them are part of international organized criminal groups. Operating in the countries of Western, Central and Easter Europe, they are involved in racketeering and trafficking in persons, specifically in Poland, the Czech Republic and Portugal, and now and then prey on Ukrainian citizens.

However, those of the Ukrainians who by their conscientious work introduce the world to their country are in the overwhelming majority. It is much to be regretted that this aspect of the life of Ukrainian migrant workers is almost never reflected and commented on in the national mass media.

In the opinion of the Commissioner, our society should understand more deeply and justly appreciate the contribution of Ukrainian migrant workers to the assertion of a positive opinion about Ukrainians and the Ukrainian state in the world.

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