Money Transfers of Labor Migrants as on of the Income

Sources and Poverty Reduction in Kyrgyz Republic

Choro DoolotalievResearch and Study GroupEconomic DepartmentNational Bank of Kyrgyz Republic

Contents1. Overview of living standard indicators of Kyrgyz population

2. Money transfers from labor migrants to Kyrgyz Republic

№Living standard indicators, Kyrgyz Republic, 2004-2008* 2004 2005 2006 2007

2008

1 Average nominal monthly salaries per 1 employee, som 2240 2613 3270 3970 5378

2 Average nominal monthly salaries per 1 employee, US$**

52,5 63,7 81,4 106,4 147,1

3 Minimum consumer basket (per capita), soms per month1725,9 1836,6 2377,2 2795,9 3571,0

4 Minimum consumer basket (per capita), US$**

40,5 44,8 59,2 74,9 97,7

5 Ratio of average nominal monthly salaries to minimum consumer basket, % 111,5 122,8 124,8 128,8 136,8

6 Money incomes of population, sом 827,4 955,9 1111,5 1417,3 2028,6

7 Inflation-adjusted Money incomes of population, sом 804,6 908,9 1055,1 1132,4 1622,9

8 Money income of population, US$** 19,4 23,3 27,7 38,0 55,5

9 Overall poverty incidence, % 45,9 43,1 39,9 35,0 31,7

10 Urban poverty, % 28,3 29,8 26,7 23,2 22,6

11 Rural poverty, % 55,5 50,8 47,7 41,7 36,8

12 GDP per capita, som 18526 19617 21918 27107 35619

13 GDP per capita, US$** 434,2 478,3 545,7 726,6 974,0

14 Number of unepmloyed, thousands 185,7 183,5 188,9 191,1 195,6

*Source: National Statistics Committee, KR**Own calculations of Research and Study

Group

Years

Average Nominal Monthly Salaries per 1 employee, US$ PPP-adjusted GDP, US$

Kyrgyz Republic

(KR)

Russian Federation

(RF)

Republic of Kazakhstan

(RK)

Kyrgyz Republic

(KR)

Russian Federation

(RF)

Republic of Kazakhstan

(RK)

12004 52,5 233,8 208,0 1698,1 10740,1 7734,6

22005 63,7 291,0 256,0 1729,0 11832,0 8732,0

32006 81,4 368,0 324,0 1818,9 13173 9961,6

42007 106,4 464,3 428,0 1998,6 14692,4 11086,1

52008 147,1 595,8 505,0 2156,7 16085,4 11862,4

Comparative Table of average nominal salaries and PPP-adjusted per capita GDP, Kyrgyzstan, Russia, Kazakhstan, 2004-2008, US$*.

*Source: Own calculations of the Group, based on NSC, NB of KR, Statistics agencies of Russian Federation and Kazakhstan.

2004 2005 2006 2007 2008

1 Total employed, of which 1991,2 2077,1 2096,1 2152,7 2184,3

2 Agriculture, hunting and forestry 773,9 799,0 760,0 742,1 742,9

3 Ratio of agricultural employment to total employment, % 38,9 38,5 36,3 34,5 34,0

Average annual employment in the economy and agriculture2004-2008, thousands*.

2004 2005 2006 2007 2008

1 Total poverty 45,9 43,1 39,9 35,0 31,7

2 Urban poverty 28,3 29,8 26,7 23,2 22,6

3 Rural poverty 55,5 50,8 47,7 41,7 36,8

* Source: NSC of Kyrgyz Republic

Poverty in Kyrgyz Republic, 2004-2008, %*.

* Source: NSC of Kyrgyz Republic

Dynamics (left axis) and growth rates (right axis) of migration flows from Kyrgyz Republic

Bars: Migration in absolute numbers, Line: Growth rates of migration

* Source: NSC of Kyrgyz Republic

Распределение общего объема денежных доходов населения.

2004

2005 2006 2007 2008

1 Total Money Income, % 100 100 100 100 100

2 Including in each income quintile:Quintile 1 (poorest) 5,4 4,9 5,1 5,2 6,8

3 Quintile 2 10,1

9,5 10,0 9,7 11,5

4 Quintile 3 15,2

14,5 15,4 14,7 16,3

5 Quintile 4 23,2

22,3 24,1 22,6 23,1

6 Quintile 5 (richest) 46,2

48,8 45,4 47,8 42,3

7 Ratio Quintile5/Quintile1 (Income devaiation coefficient), times

8,6 9,9 8,9 9,2 6,2

8 Gini coefficient (income concentration coefficient)[1] 0,422

0,433

0,446

0,422

0,363

[1] Gini coefficient – indicator that shows the level of actual deviation of income from absolute equality or absolute inequality. If incomes of all are equal, Gini coefficient equals 0, meanwhile, if it is assumed that entire income is concentrated by one individual, it equals 1. Thus, coefficient values fall within range of 0 to 1. The colser to 1, the more unequal is distribution of income among the population.

Money transfers through Money Transfer Operation systems as share of GDP of Kyrgyzstan

Left Axis, Bars: Absolute values in US$ mln, Right axis, Line, % in GDP of KR

Remittances of individuals, made via transfer systems1

(million USD)

2005 2006 2007 2008 2009balance 270,8 430,3 625,5 1 138,2 893,2

inflow 297,7 470,0 688,2 1 205,5 966,7CIS countries 262,8 436,7 648,8 1 141,4 894,4 Kazakhstan 0,2 0,0 7,0 27,9 31,4 Russia 262,6 436,6 641,8 1 113,5 862,9 Other 0,0 0,0 0,0 0,1 0,0

Countries of far abroad 34,9 33,4 39,4 64,1 72,3Belgium 0,0 0,0 0,1 0,5 0,5Great Britain 0,9 0,9 0,9 1,8 1,4Germany 0,0 0,0 0,1 0,2 0,7USA 33,9 32,2 38,3 61,4 69,5Others 0,0 0,1 0,0 0,2 0,3

outflow 26,9 39,7 62,7 67,3 73,6CIS countries 25,2 38,5 60,2 65,0 71,8 Kazakhstan 0,0 0,0 0,2 2,5 0,7 Russia 25,2 38,4 60,0 62,5 71,1 Other 0,0 0,0 0,0 0,0 0,0

Countries of far abroad 1,7 1,2 2,5 2,3 1,8Belgium 0,0 0,0 0,1 0,1 0,2Germany 0,0 0,0 0,2 0,4 0,4USA 1,1 1,1 2,1 1,7 1,1Others 0,5 0,1 0,1 0,1 0,1

1 Anelik, Blizko, Contact, Migom, MoneyGram, Western Union, Unistream, Zolotaya Korona, Leader, Sibcontact, Bistraya Pochta, Allur and other systems of transfers and transfers via SP“Kyrgyzpochtasi”

Recommendations

1. Improved statistical recording and measuring in the country will allow improving calculation of incomes, including those of the poor.

2. Implementing studies of the impact of money transfers from labor migrants on the income level of population and poverty reduction (broken down per regions of Kyrgyzstan).

3. Increasing educational levels of the population, including of the poor, which gives them opportunities for the employment abroad.

4. Legalization of labor migrants will protect their rights against illegal actions of recipients and employers, thus ensuring uninterrupted flow of money transfers from labor migrants to the country.

Thank You