Dorin Dusciac si Olga Coptu: Reversed Migration Flows and Reduction of Remittances as Direct Consequences of the COVID-19 Pandemics in Romania and the Republic of Moldova

In the contemporary world developing countries are often a source of large migrant communities. From the country of origin’s standpoint, large numbers of citizens moving out of the country in search of employment and better material conditions – are often viewed as a human capital loss. There are a numbers of ways in which this human capital loss might be categorized, described and quantified according to a set of criteria. At the same time, migration and development scholars have defined a set of adjacent phenomena that play the role of “compensation mechanisms” in the process of human capital loss accompanying the migration. Remittances are one of these mechanisms [1]. The importance of remittances in compensating the human capital loss of developing countries and their potential in boosting economic growth, can be seen differently at various stages of the migration phenomenon, in Romania as well as in other countries. „At a first stage, remittances are assumed to be the repayment of an informal and implicit loan contracted by the migrant for investment in education and migration costs. In a second stage, they are loans made by migrants to young relatives to finance their education, until they are themselves ready to migrate. In this phase, the amounts remitted are expected to diminish in aggregated numbers because not all migrants are expected to give a loan to family members. Then, in the third stage, before returning to their original country, migrants invest accumulated capital at home, therefore the amount of remittances increases. Later, the next generation of emigrants repay the loan to the former emigrant lenders, who may have retired in the home country”. [2].

The concept of remittances usually refers to “financial or in-kind transfers made by migrants to friends and relatives back in communities of origin” [3]. According to the International Monetary Fund’s [4] interpretation, remittances are recorded in three different sections of the balance of payments:

• Compensations of employees are the gross earnings of workers residing abroad for less than 12 months, including the value of in-kind benefits (in the current account, subcategory “income”, item code 2310).
• Workers’ remittances are the value of monetary transfers sent home from workers residing abroad for more than one year (in the current account, subcategory “current transfers”, item code 2391).
• Migrants’ transfers represent the net wealth of migrants who move from one country of employment to another (in the capital account, subcategory “capital transfers”, item code 2431).

While the IMF categories are well defined, there are several problems associated with their implementation worldwide that can affect their comparability.

In countries with lower levels of GDP per capita there is a clear need to provide for policies and initiatives that create an enabling environment to maximize diaspora’s contributions to development. Such an environment will engage diaspora in a virtuous financial-development circle, focused on policies designed to increase emigrated communities’ participation in activities related to entrepreneurship, trade, remittances, and innovation in home countries.

The COVID-19 pandemics has deeply impacted the remittances fluxes towards countries of origin of migrants, including and especially towards developing countries depending heavily on them. The subsequent economic crisis is expected to last longer than the period of pandemics itself and its consequences are yet to be predicted and evaluated by governments. How will Romania and Republic of Moldova respond to these new challenges, and what immediate actions should be implemented in the near future? These are amongst the main topics that are to be addressed by public institutions in both countries over the next several months.

According to several official and officious sources, several hundred thousand migrants have returned since March of 2020 to Romania [5] and Republic of Moldova [6] as a consequence of harsh economic and social conditions generated by the COVID-19 pandemics. As most of the circulation restrictions are expected to be lifted by the end of 2020, the number of migrants returning to their countries of origin is expected to grow even more. The economic and social crisis in destination countries will underpin even more this phenomenon, leading to massive ‘return migration’ trends. Neither the social characteristics nor the mid-term or long-term intentions of returning migrant groups are known at the moment. Despite some preliminary quantitative research it is still too early at this stage to state whether the majority of returnees are economic long-term or seasonal migrants, or should they intend to spend in their home countries relatively short period of time, or would their return be permanent. However, in recent years approximately 350,000 Moldovan nationals have been involved in short-term labour migration, among whom 20% with a precarious legal status [7]. We cannot estimate how many short term migrants manage to return in Moldova and Romania before the declaration of national emergency on 15 March, but they keep coming back.

The vague of returning migrants as a consequence of the COVID-19 pandemics will certainly have deep social, economic and political implications for home countries. Given the specific context related to economic downfalls of the COVID-19 pandemics in destination countries, economic migrants[i] are expected to be among the most important categories of returning migrants. From a certain stand-point, returning migrants are by definition always good news for home countries: their demographic situation improves as the number of young people in the country increases. Families are reunited, elderly and vulnerable persons can rely on their younger returning relatives, local economy can find easier qualified and available workforce which has been steadily diminishing over the past several decades. On the other hand, families benefiting from the return of their younger siblings may no longer rely on supplementary revenues generated by remittances. Returning economic migrants’ qualifications may not necessarily match the needs of the local labor market. Also, their readiness to accept jobs paid significantly lower than in their destination country may be very low. What is seemingly a human capital gain generated by large numbers of returning migrants can rapidly turn into a social and economic burden for the countries of origin. In this situation, home countries need to be assisted in the design and implementation of social and economic programs aiming to integrate large numbers of returning migrants. Both Romania and Republic of Moldova have large economic diasporas that have emerged as a consequence of the economic and social crisis of the 1990’s. After only three decades of intense emigration the Romanian-speaking communities worldwide are still strongly connected to their countries of origin: Romania and the Republic of Moldova. Therefore, both fall under the category of countries of origin with a relatively large probability of readiness to return of economic migrants. Managing the reverse migration flow generated by the COVID-19 pandemics will undoubtedly figure amongst the major challenges of national governments in these two countries.

Recently IOM (International Organization for Migration) launched the web portal iDiaspora [8] aiming to bring together entrepreneurial, philanthropic and innovative efforts of migrant communities and diaspora and to orient them better towards their countries of destination, as well as for the home countries. As a matter of fact, iDiaspora is a communication platform, specially designed to raise awareness of the global community on issues related to diaspora and to the migration phenomenon. In April 2020 iDiaspora organized its first Global Diaspora Virtual Exchange event, followed by an on-line meeting on the topic of the Global Diaspora Coalition on Combating COVID-19. Both on-line events underpinned the importance to identify rapid and efficient responses to the large fluxes of returning migrants and diminishing flows of remittances.

International work on topics related to the effects of the COVID-19 pandemics on diasporas, the migration phenomenon and remittances has been recently completed by a series of reports and recommendations of the World Bank [9]. According to these, a reduction of remittances is to be expected over the entire year 2020, and, possibly, in 2021.  The World Bank estimates that the evolution of indicators that foster the achievement of Sustainable Development Goals (SDG’s) will follow a decreasing trend in 2020. Generally, consumption based on remittances will remain under the initial targets indicated in the SDG’s [10], this indicator may augment only in countries that observe rapidly growing sectors such as digital services, competitive business, or in countries that have adapted in a timely manner their governmental policies to the new realities of the COVID-19 pandemics. It has been mentioned, that the cost of transfer of remittances has been slightly reduced, from 6.9% of their value to 6.8% of their value, but this indicator is still very much different from the objective value of 3%, projected for 2030 [11].

With regards to returning economic migrants, the World Bank has formulated a series of short-term, middle-term and long-term recommendations for government measures [12]. Other states like UK and Switzerland call for countries to work together to make sure people can continue sending money to relatives in other countries during coronavirus outbreak [13].

Short-term measures:

• Granting access to health services and education for returning migrants;
• Granting access to the labor market for returning migrants;
• Reducing the costs of transfer of remittances, for example by the exemption of the local banking taxes on remittances;
• Extension of the range of social services for returning migrants in their countries of origin;
• Facilitating on-line mentoring sessions by medical specialists from diaspora and organized temporary return of medical staff to countries of origin;
• Including returning migrants as beneficiaries in local and national programs aimed to freeze credit debts in countries of origin;
• Identifying, reducing and excluding the barriers on the way to use digital instruments in order to reduce the costs of transfer of remittances. Extending possibilities for transferring funds by electronic means will also reduce risks related to the circulation of the SARS-CoV-2 virus.

Middle-term measures:

• Revising and adapting the ways to benefit from medical insurance fir returning migrants in their countries of origin;
• Applying the portability of health insurance benefits from the country of destination to the country of origin;
• Extending unemployment aid to returning migrants in countries of origin;
• Facilitating the recognition of professional qualifications in the country of origin, promoting these opportunities among returning migrants;
• Sustaining international-based solutions aimed at reducing the costs of transfer of remittances by the large-scale use of electronic payments and of the “ID solutions” identification system.

Long-term measures:

• Sustaining circular migration by means of international bilateral treaties;
• Instituting mentoring/tutoring circuits for medics and medical staff from diaspora and from countries of origin;
• Implementing measures to reduce employment costs;
• Instituting universal health insurance programs, accessible for returning migrants and for members of diaspora.

The COVID-19 pandemics and subsequent restrictions on labor, travel and circulation of goods have impacted in a significant way revenues of working migrants. Large numbers of economic migrants originating from Romania and Republic of Moldova were employed before the pandemics in sectors that are particularly affected by the economic turmoil: home care for seniors, HORECA services and tourism, constructions and transportation, etc. Therefore, the number of migrants returning to these countries who will find themselves in a difficult economic situation is expected to increase in the following months. At the time of the writing of this article neither the Romanian nor the Moldovan governments have adopted a national strategy for adaptation of returning economic migrants. Despite several actions undertaken by local missions of the IOM, by other international organizations active in the Diaspora, Migration and Development sector, and by civil society organizations, a national response to the reversed migration flow may not be foreseen in the near future.

Bibliography

1. https://www.worldbank.org/en/topic/labormarkets/brief/migration-and-remittances accessed on August 21, 2020
2. International Migrant Remittances and their Role in Development, International Migration Outlook, SOPEMI 2006 Edition, p. 147. https://www.oecd.org/els/mig/38840502.pdf
3. https://migrationdataportal.org/themes/remittances#:~:text=Remittances%20are%20usually%20understood%20as,back%20in%20communities%20of%20origin.&text=These%20are%20called%20internal%20remittances accessed on August 20, 2020
4. Balance of Payments and International Investment Position Manual, 6th edition (BPM6), IMF, Washington, D.C. p. 272
5. https://www.mae.ro/node/51847 accessed on August 22, 2020
6. „IOM rapid field assessment of the impact of COVID-19 on the wellbeing of the Moldovan diaspora: an evidence base regarding migrants’ coping strategies and contributions” IOM, Chisinau 2020.
7. „IOM rapid field assessment of the impact of COVID-19 on the wellbeing of the Moldovan diaspora: an evidence base regarding migrants’ coping strategies and contributions” IOM, Chisinau 2020, p. 6.
8. https://idiaspora.org/ accessed on August 22, 2020
9. https://blogs.worldbank.org/peoplemove/data-release-remittances-low-and-middle-income-countries-track-reach-551-billion-2019 accessed on August 25, 2020
10. https://migrationdataportal.org/global-compact-for-migration accessed on August 25, 2020
11. https://www.worldbank.org/en/news/press-release/2020/04/22/world-bank-predicts-sharpest-decline-of-remittances-in-recent-history accessed on August 27, 2020
12. https://reliefweb.int/report/world/global-remittances-suffer-blow-covid-19 accessed on August 27, 2020
13. https://www.gov.uk/government/news/uk-calls-for-global-action-to-protect-vital-money-transfers accessed on August 25, 2020

[i] Economic migrant – person that has left the country of birth and/or the country of residence for a destination country for employment purposes; person who is at least 18 years of age, resides in the country of destination and is in possession of a working permit or visa valid for at least one year, with a possibility of extension. This category of migrants does not include: students, seasonal workers, or persons traveling for purposes of short-term employment.

Scurtă biografie:

Dorin Dusciac – Founder and president of the Association for Integration of Migrants (AIM) in Paris, France. Diaspora activist and expert in short-term assignments with the International Organization for Migration Mission to Moldova. Former vice-minister of Environment in the Republic of Moldova (2014 – 2015). Editorialist of “Gazeta Basarabiei”, periodical publication for migrants.

Olga Coptu – Former Chief of the Bureau for Relations with Diaspora (BRD) of the State Chancellery of the Government of the Republic of Moldova (2016-2018). Head of International Relations, European Integration and Diaspora Department at the Bureau for Interethnic Relations, Government of the Republic of Moldova (2014 – 2015). Executive editor of “Gazeta Basarabiei”, periodical publication for migrants.

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