Why Russia Should Change Its Immigration Policy

Today, there is a consensus among Russian economists that the country’s government should encourage labor migration from the former Soviet Union. Such respected experts as Sergey Guriev, the rector of the New Economic School in Moscow, and Aleh Tsyvinski, a professor of economics at Yale University, strongly oppose the establishment of barriers to migration from the Central Asian states. However, there are some arguments that undermine this view.

First, Russia’s labor productivity is far lower than that of the advanced countries. According to the Organization for Economic Cooperation and Development (OECD), in 2011, the GDP per hour worked in Russia was $21.5, while in Japan and Germany it was $41.6 and $55.6, respectively.  Russia’s labor productivity is 35.7% of the US level. It’s sufficiently lower than in the former socialist countries of Central and Eastern Europe such as Czech Republic (49.5%), Hungary (44.2%), and Estonia (43%). Therefore, the growth of labor productivity is a potential driver of the Russian economy.

Second, the demand for unskilled labor has decreased during the last decade. According to the Federal State Statistics Service, between the years 2000 and 2002, the number of unskilled workers has fallen from 8.7 to 7.5 million. In the eight following years, this rate has stayed stable. The major reason for the stagnation in numbers lies in the mass influx of immigrants that has discouraged the restructuring of the economy. However, at the same time period, the total number of the labor force has risen from 65.2 to 69.8 million. Only skilled workers have contributed to this growth. It means that the economy lacks qualified workers. And immigrants from the Central Asian countries cannot fulfill this demand. In this situation, it would be appropriate to abolish visas for the EU citizens, as Armenia did in 2013. But the Russian government continues to maintain a tight visa regime for the citizens of developed countries and refuses to establish borders with the former Soviet South. The latter prevents the EU from abolishing visas for the Russians. The Europeans fear that it would trigger an influx of Central Asian immigrants to the continent.

Third, Central Asia is a transit route for drug trafficking from Afghanistan. According to the United Nations Office on Drugs and Crime, in 2010, nearly 90 tons of heroin manufactured in Afghanistan was trafficked through the Central Asian countries to Russia. This horrific situation is made worse by the fact that Tajikistan doesn’t have a functioning border with Afghanistan. In 2005, the Russian military servicemen that had defended the border for a long time were forced to leave the country. But the Tajik government is not able to exert control over the frontier zone. The evidence is a reduction in heroin seizures between 2004 (4794 kilograms) and 2009 (1132 kilograms). The free movement of people with Tajikistan means, in fact, that Russia doesn’t have borders with Afghanistan.

Fourth, an immigrant’s salary is only a part of the labor cost. The whole society pays a huge price for illegal immigration. The country’s health care system is burdened by providing free assistance to foreigners. Thus, in 2011, pregnant women from Central Asia constituted one-third of the clients of Moscow’s maternity hospitals. Another problem is that infectious diseases are widespread in Central Asia. According to the World Health Organization, in 2011, the number of newly diagnosed HIV infections in the region was 14 times higher than in the year 2000. The five Central Asian countries have the highest rates of multidrug resistant tuberculosis in the world. As a result of the influx of immigrants, the epidemiological situation has deteriorated in Russia’s capitals. In 2011 and 2012 there were 11 and 8 cases of typhoid fever in Saint-Petersburg, respectively.

It is also necessary to mention the fact that immigrants’ children have a free access to the country’s educational facilities. In Moscow, the share of foreign pupils in secondary schools is 10%. Virtually all of them have difficulties with language and communication. Therefore, school teachers are burdened by additional non-paid responsibilities. Some secondary institutions of the capital, such as the 157th school in the Northern District, have already introduced courses of Russian as a foreign language. Immigrants’ children had grown up in kishlaks. That’s why their social culture differs from that of Moscow’s boys and girls. It negatively affects the atmosphere in the classes. It would not be pointless to ask the following question: Why do immigrants and their children have a free access to the country’s educational and health care systems? There is no doubt that the quality of medical and educational services is higher in Russia than in the Central Asian republics. But citizens of the former imperial metropolis should not take care of the peoples of the ex-Soviet colonies.

Fifth, uncontrolled immigration leads to the emergence of cultural enclaves in the country. An immigrant has incentives to be assimilated into a new society, if he or she works with native citizens of a country. These incentives disappear, if an immigrant lives with his/her fellow citizens. There is a well-known example of the Paris suburban area where Arab immigrants live. The 2005 riots in France is an example of how dangerous the emergence of such enclaves can be. Unfortunately, the Russian government is repeating mistakes of the French immigration policy. During the last few years, the Apraksin Yard has become an enclave of Central Asians in Saint-Petersburg. Peter the Great founded the city in the early 18th century in order to open a window to Europe. Today, there is an open door to the less developed part of Asia in the center of the Northern Russian capital. The Yard has become a birthplace for a radical Islamist group called the “Petersburg Jamaat”. In February 2013, the Russian security agencies carried out a special operation intended to disrupt the group. As a result, some 300 of its members were arrested. An overwhelming majority of them are citizens of the “Stan” countries. A tight visa regime with these states could make their trip to Russia impossible.

Sixth, the absence of clear immigration laws is not beneficial for business owners. The number of criminal cases initiated by the Federal Migration Service has increased from 228 in 2006 to 385 in 2011. In January 2013, the highest sanction for the organizing of illegal migration was extended to 7 years of jail. In January 2013, the governor of Saint-Petersburg Georgy Poltavchenko said that the city’s government should punish severely those employers who hire illegal immigrants. Such a situation cannot be regarded as normal. The ultimate purpose of a business is to make money. A regulatory agency should implement comprehensible laws that will be advantageous to both employers and society as a whole.

The establishment of a visa regime with the former Soviet South states would become a compromise solution of the immigration problem. A visa stamp in the passport will be sufficient to determine the legality of an immigrant. To get a worker visa, an applicant will have to provide a contract with an employer. The latter will be obligated to demonstrate where an employee will live. Of course, it is a more complicated procedure than the current one. However, many developed countries such as Britain and Canada have such immigration rules. And it does not contradict free market principles. We will see how many unskilled workers from abroad are needed for the economy to grow.

The phrase “unskilled workers” doesn’t mean “cheap slaves”. Russia’s market of unskilled labor is nothing less than a slave market. There is a market of slaves at the 4th kilometer of the Yaroslavl highway in the Moscow region. Most immigrants from Central Asia live and work at the same place, and it often causes tragic incidents. For instance, in January 2013, a huge fire occurred in a new building at the south-west of Moscow. As a result of this, nine guest workers lost their lives. The other problem is that the crime situation has worsened in major cities of the country. In 2012, the street crime rate in Moscow rose by 23%. That same year, newcomers from the CIS countries were involved in every second rape, every third theft and every fifth murder in the city. During the same 12-months’ period, the number of crimes committed by immigrants in Saint-Petersburg has increased by 25%.

Recently, immigrants have begun settling in basements of multi-storey buildings of the major Russian citizens. Most of them work in the sector of public utilities. Today, there are some 250 thousand people in Moscow that live in such conditions. Nobody would question that it is profitable for the heads of utility companies to pay immigrants $300-400. But does it bring benefits to Muscovites? According to Vladimir Garnachuk, a deputy of the Troparevo-Nilulino district council, the official salary of a street cleaner in Moscow is $1700. Senior officials of the utility enterprises take the rest $1400. That small wage that a worker receives is usually sent to his/her motherland. The World Bank’s data shows that in 2011 Tajikistan (47%) and Kyrgyz Republic (29%) were among the top 10 recipients of migrant remittances as a share of their GDP. It means that millions of people in the post-Soviet space depend on the money that their relatives who work in Russia earn. Perhaps, those who empathize with the people of Tajikistan would appreciate it. But from the other hand, unskilled Russians lose an opportunity to get a job. As a result, the country’s citizens are becoming de-socialized.

A visa regime would form a barrier to drugs, infectious diseases and crime. It will make the country’s cities a safer place to live and work. However, unskilled sectors of the economy should be drastically reformed. First of all, it is necessary to de-monopolize and privatize all the public utilities, which are deeply corrupted. Second of all, the Labor Code should be reviewed. Today, the Russian labor market is over-regulated. In 2008, the OECD rated the protection of permanent workers as 2.77 within the 0-6 scale. Russia’s level is sufficiently higher than that of the United States (0.56) and the Great Britain (1.17). Finally, the government should promote internal migration. According to the Institute of Demography at the Higher School of Economics, from 1990 to 2010, the number of internal migrants has decreased from 4.3 million to 2.1 million people. The rate will decrease more if the residency registration law is tightened.

Russia’s mono-cities are a major potential source of labor for the economy. At the turn of the 2010s, 25 million people lived in mono-towns and produced up to 40% of the country’s GDP. The government has an experience in implementing relocation programs. Thus, in the late 1990s, the Cabinet launched a radical coal industry reform. Since then, 520 thousand miners have lost their jobs. Thanks to the World Bank’s support, the fired workers and their families have been resettled from small towns to regional centers. Today, there are a lot of resources in the federal budget that are used to finance state corporations rather than to implement structural reforms. In 2013, the Cabinet will spend more than $55 billion to support the national economy. It should not also be forgotten that Russia still has a conscription army. Therefore, thousands of young people are withdrawn from the labor market.

All these arguments underline the fact that there is an alternative to the current immigration policy of the Russian Federation. However, several factors impede the changes that are desperately needed. Firstly, the absence of borders between the former metropolis and the former colonies is a condition of the latters’ participation in the Eurasian Union. The mass emigration from Central Asia allows the region’s dictators to stabilize their regimes. Secondly, it is profitable for the heads of state enterprises to use a slave labor force. Thirdly and finally, the country’s leading economists strongly believe that the government should increase immigration to stimulate the economy. But the fact is that the influx of immigrants has not prevented stagnation of the Russian economy. In 2012, the growth slowed down to 3.4%. As a result of the increase of social contributions, 1.5 million entrepreneurs have closed their businesses during the last two years.

Will the government change its immigration policy? That remains to be seen.