Kyrgyzstan’s Accession to the Eurasian Economic Union: Labor migrants Case
KYRGYZSTAN’S ACCESSION TO THE EURASIAN ECONOMIC UNION: LABOR MIGRANTS CASE The ceremony of signing documents on Kyrgyzstan’s accession to the Eur- asian Economic Union (EAEU)
Agreement took place after the EAEU Summit in Moscow on May 8, 2015. Leaders of the EAEU and Kyrgyzstan were in the process of negotiations on accession issue since Presidents of Russia, Belarus and Kazakhstan signed the protocol on amendments to the EAEU Agreement of May 29, 2014.
After joining the EAEU, Kyrgyzstan could enter the common market of 176 million people with total GDP over $4 trillion (PPP), which allows free movement of goods, services, capital and labor. Accession to the EAEU would mean that more than 500,000 Kyrgyz labor migrants would have both easy access to the labor markets of the EAEU member-states and exemption from obtaining obligatory work permit, gaining the right to simplify registration procedures, and provide social security and health care. Due to the heavy dependence of Kyrgyzstan’s economy on remittance coming from Russia and to certain extent Kazakhstan the issue of getting benefits for labor migrants has become one of the most critical points for the Kyrgyz government. According to the World Bank’s statistical data, the total amount of remittances sent by the Kyrgyz labor migrants in 2013 was over $2.240 billion, which equals to 31% of Kyrgyzstan’s GDP in total. Therefore, Kyrgyzstan’s accession to the EAEU could reduce the sharp drop in remittances to Kyrgyzstan caused by the depreciation of the ruble and several laws in the Russian migration legislation.
Kyrgyz authorities clearly understand that joining the EAEU carries both economic risks and benefits. On the one hand, Russia and Kazakhstan are the first and third biggest trade partners of Kyrgyzstan. Consequently, further strengthening of economic partnership with these countries should undoubtedly be viewed as a right step. In addition, Kyrgyz agricultural sector is optimistic about possible economic benefits, especially, after removing the trade barriers for farmers who export their products to neighboring Kazakhstan and may grant new opportunities for business in the Russian market. On the other hand, entering the EAEU could harm the retail sector of Kyrgyzstan based on the re-export of the imported goods from China, the second biggest trade partner of the country. Within the EEU, higher tariff rates would be placed on imports from nonmember states, so it would become problematic to resale the cheap Chinese merchandise. There is also a great concern about the stability of the Kyrgyz currency. According to the Asian Development Bank, the Kyrgyz currency’s depreciation of 19% has already pushed inflation to 7.5% and there is possibility that it would reach or exceed 10%. This would cause further decline of Kyrgyzstan’s GDP, which is expected to be at the level of 1.7% in 2015. Therefore, in order to reduce the negative impact of transition period for Kyrgyzstan, Russia and Kazakhstan would provide relief aid in the amount of $300 million.
Looking at the accession from the migrants’ perspective it should be admit- ted that the majority of the Kyrgyz labor migrants supports joining the EAEU. Even before signing any accession documents there was a slight increase of 3.8 % in the number of the Kyrgyz labor migrants to Russia compared with the same period of 2014. One of the reasons explaining the high level of accession support is the possibility to participate in the joint pension system of the EAEU member-states. From the beginning of next year, migrant workers from the EAEU countries will be able to deduct pension contributions to the Unified Accumulative Pension Fund (UAPF). Creation of the UAPF become possible after the Eurasian Economic Commission has approved “A draft concept of the international agreement on cooperation in the field of pensions”. Alt- hough, there is still a number of unsolved issues related to the implementation of the joint pension system caused by the differences in the pension legislations over the EAEU member-states (retirement age, calculation scheme, amount of pension and living standards), the establishment of the UAPF could reduce vulnerability of labor migrants in terms of pension rights.
In conclusion, Kyrgyz labor migrants could benefit from the accession of Kyrgyzstan to the EAEU more than any other group in the country. Therefore, there is expected to be a reduction of the illegal migrants from Kyrgyzstan because of the benefits provided by the EAEU legislation. of major European energy companies to bring Turkmen gas to Europe.
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Prepared by Lidiya Parkhomchik, Hayal Ayca Simsek, Zhuldyz Kanapiyanova, Chengizkhan Canaltay. Meiramgul Issayeva
