A Political Economic Myth

Ioseb Archvadze

Recent tense relationships between Georgia and Russia have been accompanied by exploiting such a specific issue at Russian media as number of Georgian migrant workers to Russia and repatriation of eared amount by them to their homeland.

Certain representatives of Russian authority remind Georgian people form time to time that millions of Georgians found their shelter in Russia and they annually transfer USD 1 billion to Georgia.
Its worth noting, that the above mentioned tone has significantly risen by the end of 1999, the time when Mr. V. Putin became head of the state.
There is no doubt that Georgian Diaspora consisting of thousand of people exist in Russia. Majority of them have pure economic perspectives. They earn a living and send their incomes to Georgia to support their families. The amount repatriated by them have
e a significant role in our country’s economic growth as well as in overcoming poverty.
Accounting to our estimation, during 1996-2007 1/5 of Georgia’s economic growth was the amount repatriated by migrant labor. Amount repatriation by migrant labor is a serious ‘competitor’ to foreign direct investment, trying not to stay behind the latter’s growth rates1.
Unfortunately various sources point at different numbers of Georgians (citizen of Georgia) to Russia. Even 2002 population census in Georgia and Russia (January; October) couldn’t give a precise answer to it.
Population of Georgia by the beginning of 1991 was 5465.0 thousand. By the beginning of 2007 it was only 4394.7 that mean that number of population decreased with about 1.1 million people.
In a reality, more precise analyses show that Georgian population is even fewer – by 2007 its volume should not increase 4.0 million people2. Accordingly, in comparison with 1990’s, number of Georgian population decreased with 1.5 million people (1464 thousands). The number also includes people living on the territory not controlled by Georgian central authorities (Its about 0.2 millions of people living in Abkhazia and on party of former South-Ossetian autonomous region), former USSR membership leaving Georgia ( about 0.08 million people) representatives of different ethnic diasporas in Georgia (firth of all Russians, Ukrainians, Greek and Jewish, partly – Ossetians, Armenians and Azerbaijan) ethnic migration to their historical homelands (0. 38 million people). According to research maintained by the department of Statistics in 1998-2002 ¾ of the rest (770 thousand people) was labor migrants with its 60 % to Russian federation. 4. Unemployment level among labor migrants is about 15%. Therefore, in my opinion, there are no more than 350 000 thousand migrants from Georgia to Russian, including 300 thousand – employed labor migrants. It significantly exceeds the number provided by some Russian sources on Georgian labor migrants.
How much do Georgian migrants (migrant workers) send to their homeland?
Before giving an answer to the question, we should consider that official money transfer data will not be suitable for defining figures. The reason of it lies in a fact, that transfers are made not only by migrant workers, but country residents too, as well as individuals and legal persons. Repatriation of amount is implemented not only by transfer, but also be mans of traditional methods – pocket. It is not a secret that significant part of recent transfers from Russia to Georgia was implemented by representatives of so called ‘Dark world’3 . Therefore we should agree on several principal methodology issues:
1. In spite of the fact that people leaving a country for not more than 1 year are considered to be Labor migrants (migrant workers) by National reports formation methodology, still we use this term in relation to people who go to Russia to find a job no matter the term of their stay in the country. Therefore the following three categories: a) Who migrates within Russia for more than a year; b) Who migrates within Russia temporarily for a seasonal work, c) those who take monetary sources or monetary equivalents of assets to Georgia while returning back;
2. Proceeding from the fact that migrant workers are lower paid than the citizens, average earning of the one from Georgia can not be more than 50% of the employed person in Russia.5
3. Georgian migrant workers living in Russia manage to send not more than ½ 3/5 of their current incomes to their homeland.
As it has been mentioned above, about 300 thousand of Georgians work in Russia. Average salary in the country was about 500 USD in 2007. Accordingly, taking th above mentioned approaches into consideration, total volume of amount sent by Georgian migrant workers in 2007 (by means of transfers and pocket) should be as follows:
300.0 (thousand people) * 500 (USD) * 50 (%) * 50.60(%) * 12 (months) = 450.0/540 (million USD)
It turns out that our migrant workers sent 450-540 million USD in 2007, well taking an average – 500 million USD.
The truth of the above mentioned data has been proved by other sources as well.
According to Russian migration federation service, migrant workers create not less than USD 50 billion GDP and earn USD 20 billion 5 (salary share in created added value is about 40%).
According to National Bank of Georgia, volume of quick money transfers implemented from Russia to Georgia in 2007 is USD 544.6 million. Although this amount couldn’t have been implemented by only migrant workers – Russian citizens, legal persons, Russian companies participating in privatizing economic units transferred the amount together with them.
Migrant works’ share in transfers from Russia to ‘working force exporter’ countries is 55%, Although its worth noting, that due to specific and limited relationships between the two countries the indicator for Georgia is 90%.
Taking the above mentioned into consideration, volume of transferred amount from Russia in 2007 should be about USD 490 million ( = 545*90%).
As for correlation between cash and clearing from Russia to Georgia, this time average Russian indicators (proportions – 74/25) will not be suitable due to several reasons: first of all, Georgian banking sector is quite well developed, even more than in the countries that have even bigger diasporas in Russia (Tajikistan, Moldova, Uzbekistan), than direct transport connection from Russia to Georgia is limited ( actually blocked for the last 1.5 years) and money transfer is safe. Total volume of transfers to Georgia from abroad increased 13 times in 2007 n comparison with 2000 – 35 times with Russia and 6,5 times with other states. Accordingly, only about 5-10% of repatriated amounts from Russia should be delivered in cash to Georgia. The rest (90-95%) – by sending electronically. Therefore, USD 10-30 million cash and total amount not more that USD 500-520 million.
The second, different methodic also proves that transferred amount from Russia by Georgian migrant workers did not exceed USD 520 million in 2007 – the amount that is a bit more than 5% of Georgia’s GDP. It is not 20 – 30 % of GDP as it has been constantly stated by representatives of Russian authority and press.
The above mentioned data finally puts an end to Russian propagandistic myth that began in 1999, on repatriating USD 1 billion to Georgia.
In 2007 when transferred amount reached USD 520 millions, salaries in the country increased at least six times in comparison with 1999. In spite of tensed relationships number of Georgian migrant workers to Russia is much more in 2007 than it was in 1999. Therefore it should not be suspicious that repatriated amount to Georgia in 1999 would be at least six times less than in 2007. its about USD 90 million. Well, this is at least 11 times less than the above mentioned USD 1 billion.
In order to transfer USD 1 billion, Georgian migrants should have earned USD 2 billions and create USD 5 billion added value. Although according to Russian sources, migrant workers totally create USD 50 billion added value. Well, ‘Russian version’ believes Georgians share of Russian GDP to be 10% (?!) Chinese, Ukrainians, Azerbaijani, Armenians, Uzbeks, Moldavians have bigger diasporas in Russia than we do. According to the latest data, more than 100 000 citizens of Israel live in Russia. On the other hand, Russia’s official structures declare that there are 15 millions of migrant workers in the country and number of Ukrainians, Chinese and Azerbaijan greatly exceed one million. As for Georgian migrate workers, their number does not exceed 2.3 % of Gastarbaiters5.
So, the issue of repatriating USD 1 billion from Russia by our migrant workers, still ‘remains unachieved’. New wave of Georgian migrants does not threaten Russia due to well known reasons. Therefore, the whole hope lies on the ’hard work’ of our citizens living there and on Russia’s state Bank – so that Ruble becomes strong against USD and Georgian migrants are able to repatriate not only one, but two billion US dollars to their homeland.