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Impact of COVID-19 crisis on Moldovan emigrants and remittances: is there room for optimism? Op-Ed


https://www.ipn.md/public/index.php/en/impact-of-covid-19-crisis-on-moldovan-emigrants-and-remittances-7978_1072583.html

The epidemiological crisis related to the new coronavirus brought a series of societal challenges for the Republic of Moldova. In addition to the problems related to the uncertain situation of the private sector employees, the sustainability of the small and medium-sized enterprises, but also the ability of the medical system to respond to the increasing number of infections with COVID-19, the government authorities must manage the repercussions of this crisis on the Moldovan emigrants. This aspect is of critical importance, both concerning the return of a considerable number of Moldovan emigrants to the country in the last month, as well as due to the worsening of economic indicators and rising unemployment in the resident countries in the coming months.
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The mobility regime under the COVID-19 “imprint”

In the last seven weeks, starting with February 9, 2020, the number of people entering the territory of the Republic of Moldova has not increased substantially from one week to the another, with a continuous decrease in the number of entries after March 2. (Fig. 1). Moreover, in the last three weeks before the restriction of the border crossing process, the number of entries in the country has decreased from about 146,000 to about 125,000. country compared to the periods preceding the onset of the crisis situation. Numerically speaking, this data does not show a greater interest on Moldovans to return to the country compared to the periods that preceded the onset of the crisis situation.

Fig.1. Number of people who entered the Republic of Moldova between February 10 and March 29. Source: Weekly reports published by the Border Police (www.border.gov.md)

However, to date, over 20% of existing infections with the new coronavirus (65 out of 298) are import cases. Starting with March 7, when the first case of infection with COVID-19 was confirmed in the Republic of Moldova and until March 15, the date of the approval of Decision no. 9 of the National Extraordinary Public Health Commission on the limitation of border traffic, 23 cases of COVID-19 illness were registered in Moldova, of which 14 were of import. Starting with this date, the number of cases with local transmission has increased steadily, one of the causes being the poor information of the citizens on the conditions of the self-isolation regime, once they have arrived in the country.

Although in recent times the authorities have made efforts to increase the awareness among citizens regarding the need to respect the conditions of quarantine and social distance, there are still objective premises for the increase of the import cases. Currently, the diplomatic missions of the Republic of Moldova have received more than 7,000 requests from Moldovan citizens established in different European states, to be processed and analyzed for the organization of charter flights. In this context, it is a priority for the government authorities to ensure the rapid screening of infected persons, after applying the tests for COVID-19 upon entering the country. This can be facilitated by an institutionalized quarantine regime for asymptomatic and symptomatic persons, until the results of the laboratory tests are processed. Not at least, all the necessary measures must be taken to communicate to the citizens of the Republic of Moldova returned from abroad about the conditions of the self-isolation regime and the sanctions that can be applied for its non-compliance.

Seasonal migration vulnerabilities

The epidemiological crisis has revealed the vulnerabilities related to the irregular status of Moldovan migrants in seasonal work (up to 3 months) in the EU countries based on the biometric passport. According to data from the International Organization for Migration (IOM), their number would now amount to about 20-22% of Moldovan citizens living in the EU, counting to over 80,000. This group of people are the most vulnerable in case of humanitarian crises, because they avoid interacting with the authorities of the host state and do not have health insurance, which would allow them free access to certain primary medical services. Moreover, there is a major risk that these people will lose their jobs in the coming months, without benefiting from unemployment benefits from the host state. Even though the European Commission has recommended EU member states to extend the temporary stay regime for foreign nationals in the Schenghen area, some of the seasonal migrants have returned or will return to Moldova in the coming days.

At present, it is a priority for the diplomatic missions and consular offices of the Republic of Moldova to facilitate the repatriation of these people, who are in a vulnerable situation. Further, in order to partially remedy the problem of illegal employment in EU territory based on biometric passports, institutional efforts by the Government are needed to negotiate bilateral agreements with EU Member States where the highest number of seasonal migration is registered (e.g. Czech Republic, Poland, Germany, Italy). These agreements would allow to legalize seasonal work on the basis of biometric passports, in full respect of the rights of the Moldovan workers in the host country, but also ensuring payments for social and health contributions by the employees.

Remittances: the unknown sea in the equation of the COVID-19 crisis

In the last two decades, remittances have been an important source of income for households. As a result, the dynamics of household consumption, but also of the entire economy, is strongly correlated with the evolution of remittances. The measures taken at global level against the spread of the COVID-19 virus, related to the restriction of human activity, will cause a worsening of the economic prospects. It is obvious that this will have a significant impact on emigration and remittances.

Nowadays, it is difficult to estimate the influence of prohibitive measures on emigration and remittances. However, previous experiences allow us to better understand the future situation.

The Republic of Moldova experienced 2 episodes in which the emigration was reduced and the remittances decreased: in 2009 and in 2015-2016. In 2009, compared to 2008, in the context of the global economic crisis, the number of Moldovan workers working abroad decreased by 4.8%, and the volume of remittances decreased by 36.2%. The emigration was quickly restored. Already in 2010, the number of Moldovan workers working abroad was 0.4% higher than in 2008. Thus, if in 2008 amounts of USD 1.9 billion were transferred, it was only in 2013 that level was exceeded, when the volume of remittances constituted USD 2 billion.

Following the crisis of 2009, Russia benefited from rising oil prices and experienced relatively stable economic growth, and this led to increased emigration to this country. From 2011 to 2014 about 2/3 of Moldovan workers working abroad were based in the Russian Federation. The same evolution referred to the case of remittances. From 2012 to 2014, over 60% of remittances came from Russia. At the end of 2014, the worsening of the economic situation in Russia, in the context of introducing economic sanctions caused by the annexation of Crimea and the reduction of international oil prices, had a negative impact on Moldovan migrants working in this country, their number decreasing by 36.6% in 2018 compared to 2014. At the same time, emigration to other states increased. In 2018, compared to 2014, the number of migrant workers outside Russia doubled. Due to this fact, in 2018, the number of migrant workers increased by 3.2% compared to 2014. Also, in 2018 approximately 59% of the migrant workers were based predominantly in EU or North America.

Similar developments were also noted in the case of remittances. The volume of remittances decreased by 33% in 2016 compared to 2013, but increased gradually between 2017 and 2019 (fig. 2). Despite these increases, the volume of remittances did not reach the record level of 2 billion USD (2013). At the same time, there was a change in the geographical structure of the senders. In 2019, over 46% of remittances came from the EU, while the share of remittances from the CIS was below 30%. In 2019, the volume of remittances is estimated to be around $ 1.8 billion.


Fig.2. The volume of remittances between 2000 and 2019 (USD million). Source: National Bank of Moldova, author's estimates

Based on these findings, several conclusions can be drawn regarding the evolution of migration and remittances. The year 2020 will be marked by the reduction of emigration and remittances. Most likely, the decrease in the number of migrant workers will be much greater than in 2009 or as in 2014-2017. Measures to restrict the movement of population and economic activity have been taken in the states where the Moldovans emigrate. This fact has already led to a return of many emigrants. In the case of remittances, a decrease will also occur. At present, it is difficult to predict what the magnitude of the decrease will be. But it is not excluded that the decrease of remittances will exceed the reduction by 36.2% registered in 2009. Restoring the migration parameters will take several years and will depend on the speed of recovery of the world economy after the crisis caused by the spread of COVID-19 infection.

Most likely we will have a new change in the geographical structure of migration and remittances. Countries that were previously the main destinations for Moldovan migrants may lose their attractiveness. Thus, Russia, where in 2018 were over 40% of migrant workers and Italy, which hosted 17% of emigrants, will have more serious economic difficulties. In addition to the effects of COVID-19 propagation, Russia's economy will be adversely affected by the drastic drop in international oil prices. At the same time, Italy is most strongly affected by the spread of the virus. The negative effects of the restriction of the economic activity will add to the chronic problems that Italy has with the high level of the public debt. A possible attraction for future emigrants could be Germany - a country that resists better in the fight with the new type of Coronavirus.

At the same time, migration will remain a massive phenomenon. This fact will be determined by the relatively slow economic dynamics. After the crisis of 2015, the Republic of Moldova economy did not increase with more than 4.7% annually. Moreover, in the last 3 years, the economic growth has tempered: 4.7% in 2017, 4.3% in 2018 and 3.6% in 2019. In 2020, in the best case, we will have a minor growth - most likely the economy will grow at rates below 4%. In order to reach the level of incomes attained in the countries of Central and Eastern Europe, not mentioning the EU average, at least a double growth rate is needed in the next decade. As a result, in terms of revenues, the gap between Moldova and EU will remain at the same level. This will further lead to the emigration of Moldovans to the European countries in order to obtain higher incomes.

Alexandru Fala, Mihai Mogildea
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- Alexandru Fala is the "Monetary Sector and Economic Modeling" Program Director within the Independent Analytical Center "Expert-Grup"

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Mihai Mogildea works as a Team Leader, Europeanisation Programme, Institute for European Policies and Reforms (IPRE). He is a graduate of the European Political and Administrative Studies master program at the College of Europe (Bruges).
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This Op-Ed was published in the framework of the project ”We and Europe: Assessing EU – Moldova relations through innovative media and analytical products”, implemented by the Institute for European Policies and Reforms (IPRE), in cooperation with IPN and Radio Chisinau and with the support of Konrad Adenauer Foundation. Views expressed in the this Op-Ed do not necessarily correspond with the position of the donor.