Sunday, July 15, 2007

Uzbekistan Fertility and Migration

As should be evident from the last post, Claus and I have really been pretty shocked by the rapidity with which labour market tightening has been emerging in Eastern Europe recently. As Claus noted, this recognition lead me to take the Economist quite sharply to task on Afoe, and at least I managed to sting a response from their Central European correspondent Edward Lucas, who, as Claus would tell us, is far from being a worst case example of benign neglect here, in fact, in general terms, au contraire.

Ultimately this labour shortage situation is rooted in the longer term consequences of an ongoing combination of low fertility and outward migration towards Western Europe and beyond. The arrival of the "running on empty" situation is proving to be very rapid due to the extremely high rates of economic "catch-up" growth which these countries economies are now experiencing. And the problem is really starting to hit them now precisely because the annual number of children born in many of the countries concerned halved in or around 1990, and thus it is very hard to see how they are collectively going to have an adequate number of labour market entrants in the younger age groups in the coming years. And this, as we are already seeing in the Latvian case, is surely going to present a major inflation problem, if nothing worse.

When I say shocked, I really mean it. It is evident that both Claus and I consider demography to be far more important to economic processes than most economists accept, and we have been thinking hard and long about the implications of changing demography, so if all of this is taking even us by surprise you can imagine where that may leave everyone else.

Now in order to try and pin things down a bit more clearly, we are digging around trying to get some sort of measure of what is actually happening in each of the countries concerned. As Claus pointed out in this post on the World Bank remittances report last year, Russia is now totally dependent on inward migration from the CIS states, to the tune of possibly over a million people a year. This is needed simply to sustain ongoing growth there, given their own out-migration and the rate of economic growth that is being driven by the surge in oil prices. So we need to check and look at just how long Russia can expect to be receiving migrants at this sort of rate.

One of the obvious source countries is Uzbekistan (current population approximately 28 million). Now in 2006, according to Moscow News, a total of 500,000 Uzbek migrants went to work in Russia. And according to the same article, Uzebekistan only came in at third place as a migrant supplier:

Konstantin Romodanovsky the head of Russia's migration service said Uzbekistan is the third-largest source of migrant labor to Russia (sharing third place with Tajikistan), after Ukraine and Kazakhstan, with a total of 500,000 Uzbek workers coming to Russia in 2006.

So Uzbekistan is losing workers rapidly, too rapidly for a country of only 28 million.

And what about the replacement labour supply, ie fertility. Well this is now declining fast, and, according to this useful ppt, rapidly reaching the critical replacement level, below which it will doubtless then inevitably plunge. The data presented by David Clifford in the presentation go as follows:

Total Fertility Rate:

5.7 mid-1970s (Karimov et al. 1997)
4.07 in 1990 (UNICEF TransMONEE)
3.3 in 1994-1996 (Kuzibaeva 2001)
2.9 in 2000-2002 (Kamilov et al. 2004)
2.36 in 2003 (UNICEF TransMONEE)

It should be pointed out that this is "grouped" data, coming from a variety of different sources. So it is not a precise indicator, but it does show the clear trend.

It is also important to note that this fall is all occuring as part of the first stage of the demographic transition - ie before the progression from ‘stopping sooner’ to ‘starting later’ as the mechanism of decline - since this fall infertility in Uzbekistan has been achieved without any significant upward movement in first birth ages. Thus postponement is still to come. Bottom line, fertility in Uzbekistan is about to fall into the lowest-low category, and is likely to stay there for many years to come. Which means that 10 years from now Uzbekistan is going to have problems supplying its own labour market needs, let alone supplying extensive and ongoing immigration to anyone.

Update

Well the Uzbek economy was growing at a 9% annual rate in Q1 2007, according to this link. The IMF is apparently happy with them. Remittances are now running at a rate of about bout $500 million annually, which will speed up internal development no end. Now none of this means that emigration will dry up tomorrow, but it does put an outer limit to the process, and that outer limit will evidently be hit a lot sooner than the World Banks and others imagine.

Also I found this link from the Institute for War and Peace which gives some indication of the extent of the problems which are arising. You can already find statements like "“The country has villages where there is no one left to carry the coffin when someone dies. Old men and women have to do it because there are no young men there – they’ve all left.”, which is very reminiscent of the sorts of comments we have seen coming from rural Latvia in recent years. How big is the outflow problem in Uzebekistan? As I say above, this is very hard to get to grips with since so many migrants are either "illegals" or "seasonal workers". Huge discrepencies exist in the numbers, but looking at what we have seen in the East-west European flows we might well conclude that though the numbers are well below the most exagerrated figures being bandied about, they are nonetheless large and significant:

The authorities in Uzbekistan are trying to gather more information about the hundreds of thousands of people who work as migrant labour abroad. Officially, a new registration system is intended to make it easier to help migrants if they get into trouble, but many believe the government is concerned about the exodus of its adult workforce and wants to stem the flow. Other reasons for keeping tabs on Uzbek citizens abroad are to exert the same kind of political control as they are subject to at home, and also to recover some of the taxes they would have paid if they stayed in Uzbekistan. A government order dated May 15 has two stated aims – to streamline the registration procedures that would-be migrant workers must go through, and to ensure they are protected once they are out of the country.


Under the new rules, Uzbek nationals planning to leave the country have to fill in a form stating details of their future job and whereabouts. This is a revised version of a document already in existence, although IWPR understands that most people who went through the procedure before the change were travelling to countries outside the former Soviet Union......Low salaries and scant job opportunities force many in Uzbekistan to leave the country in search of work. Information from various official sources indicate that around 800,000 people work outside the country – a massive 10 per cent of the total working population. Other estimates put the figure at three million, while some regime insiders say it could be up to five or six million. The discrepancy is partly attributable to the difficulty of counting migrants, not least because many are “illegals”, and because of seasonal variations in the numbers. Another factor is that for a government which claims economic successes year after year, it is somewhat embarrassing if a major part of the workforce is voting with its feet.To get a better idea of the figures involved, the government’s statistical agency and the customs committee have been instructed to produce quarterly reports on the number of people moving abroad and their reasons for leaving. Uzbek consulates abroad are also to monitor people’s movements.

On another front, as has emerged in the comments section the Russophone stock in countries like Uzbekistan is being rapidly depleted, with the consequence that the ethnic composition of the flows is changing. This is predictably provoking a sharp change in reactions back home in "Mother Russia". One illustration would be the recent demands coming from the Moscow municipal authorities to restrict inward migration, or another would be this piece in the St Petersburg Times about the demographic future and "ethnic composition" of the city.


References

Stopping sooner or starting late? Fertility decline in Uzbekistan
Presentation by David Clifford
Social Statistics, University of Southampton

Kuzibaeva, G. (2001) Fertility transition in Uzbekistan: demographic trends and reproductive health policy, Central Asia Monitor 2001(2).

Karimov, S I, Akhror B Yarkulov and Asadov D A (1997) Fertility, in Institute of Obstetrics and Gynaecology [Uzbekistan] and Macro International Inc. Uzbekistan Demographic and Health Survey, 1996. Calverton, Maryland: Institute of Obstetrics and Gynaecology and Macro International Inc, pp.35-45.

Kamilov A I, Sullivan J and Mutalova Z D (2004) Fertility, Chapter 4 in Uzbekistan Health Examination Survey 2002. Calverton, Maryland, USA: Analytical and Information Center, State Department of Statistics, and ORC Macro.

UNICEF (2005) TransMONEE Database, UNICEF IRC, Florence.

6 comments:

Anonymous said...

Edward,

I think you're missing an important point here. Much of the current migration from other CIS states to Russia consists of ethnic Russians who wound up living in the non-Russian republics as a result of Soviet-era policy. What share of total migration from each country they constitute I don't know, but I would think it would be finite.

Gavin McEwan
London, UK

Edward Hugh said...

Hi Gavin,

Thanks for this. You are right, and I need to check around for some data on proportions here. But these migrants would still be coming out of the total population stock of 28 million, wouldn't they? So this issue would seem to be more a cultural than a labour supply one.

I am also aware that the number given by Konstantin Romodanovsky will include both temporary and permanent migrants, and it is probably important to distinguish here.

This seems doubly true since the idea that Uzbekistan is in joint third place with Tajikistan, and behind the Ukraine and Kazakhstan would seem to suggest a figure of over 2 million annual migrants into Russia, and that is surely too high, certainly in terms of the widely accepted idea of around one million.

Incidentally, I've been looking separately at the Ukraine situation, and the state of the Ukraine labour market. On paper they now have unemployment at under 3%, and the economy is growing reasonably rapidly, so they won't be able to act as a source for Russia for that much longer. If they get an agreement with the EU and can go to eg Ireland or the UK, then that obviously would be another matter. But then Ukraine itself will be hit by the Latvian problem (ie wage costs and producer prices spiraling upwards out of control). The key issue here is, it seems to me, the problem of remittances (yes problem, in economic terms) and the way these spike internal housing markets in the big recipient countries. More on this in another post sometime.

The big issue here is getting hold of data, so anything you can point me to would be welcome.

Scott said...

Edward,
Here is a link to a site maintained by the US Library of Congress which estimates the proportion of ethnic Russians in the population of Uzbekistan at 8% in 1995. The same site estimates the total population at about 23 million at that time, which gives us an estimate of about 1.8 million ethnic Russians in 1995.

Randy said...

Much immigration from Central Asia in the decade after independence was carried on by Russophones and others who were emigrating, mainly to Russia though the Germans went to Germany. By this point, migration to Russia is now being carried on mainly by members of the titular nationalities, especially in the countries of southern Central Asia which haven't enjoyed Kazakstan's recent economic boom.

Colin said...

By the sounds of it, Russia has essentially run out of ethnic Russian immigration - there are still a lot of ethnic Russians outside Russia of course, but most live in countries that are at least as prosperous as Russia, and if they had wanted to leave, they'd probably have done so already. There are still quite large numbers of Russophones who are not ethnic Russians, mostly in Ukraine. But they won't have the same affinity for Russia necessarily, and in any case it's not clear how much longer Russia can count on migrants from Europe, given how intense the market for migrant labour is there.

The result is that if Russia does continue to get large-scale immigration, it's likely to be increasingly of non-Russophone, non-Slavic people, a large proportion of whom will be Muslim. Is Russian society tolerant and inclusive enough to deal with this in a sensible manner?

Edward Hugh said...

Hi everyone

"By the sounds of it, Russia has essentially run out of ethnic Russian immigration"

Yep, well either run out, or in the process of running out it would seem.

"but I would think it would be finite".

I think I was slow of the mark here Gavin, and didn't quite get how you were using finite here, you also meant "ie one day it will run out"

"Much immigration from Central Asia in the decade after independence was carried on by Russophones and others who were emigrating, mainly to Russia though the Germans went to Germany."

Yep Randy, and I think you bring me to a comment I was warming up towards in any event, and that is the similarity between Germany and Russia in this matter, since while German statistics show a significant immigrant stock in Germany, a large chunk of this seems to be ethnic Germans who have migrated Westwards.

We are also seeing something similar with Moldovans moving into Romania.

Which brings us to Colin's other point:

"Is Russian society tolerant and inclusive enough to deal with this in a sensible manner?"

Again, we have the German experience to go by here, in that it has taken Germany a long time to accept that it will have to take as citizens (rather than gastarbeiters) people other than ethnic Germans. Progress has been slow, and indeed they are still struggling with the issue if you look at the reception the idea that members of the EU8 might be able to go and live and work in received, and these groups are at a relatively low-power-distance culturally, if you accept in any way at all Geert Hofstede's communicational taxonomy.

So can we expect Russia to be any different. Somehow I doubt it, but on the other hand there is always the attraction of money to be made, which can change some people's way of thinking pretty radically. If the oligarchs want them, who will dare complain?

Maybe the more pertient point, and it is this one that I am raising, is whether these much needed migrants will be interested in going at all in the mid term. Ethnically and culturally surely they are much nearer to the Turks (ie Low-power-distant), and Turkey's rapidly growing economy will be in need of them too. On top of which you need to remember that as people leave and send back remittances these economies will also start to grow more and need labour themselves, there are circularities everywhere here.

So, all in all, while I have no real idea about just how much longer the Asian Republics can continue to supply manpower to Russia, I would say a maximum of 5 to 10 years would be a pretty conservative estimate (ie one with a lot of downside risk attached).

Which is why I think we are not to far away from "here we go" time on all of this.