How to return Ukrainian migrants back home

Interview with Andriy Gaidutskiy who is a key expert in the migration and remittances policy  

article by Yuliya Samayeva, ZN.UA Economics Editor

We are losing people - the most valuable asset the state has. Every month of our refugees spend abroad increases the risk that they will not return home. And the restoration of Ukraine without a sufficient number of workers, even if there is salaries for them, is impossible. About how threatening the current migration wave is, how to return Ukrainians who left home and whether we need to attract migrants from other countries, ZN.UA talked with Andriy Gaydutsky. Mr Gaidutsky is one of the most respected experts in the field of migration and remittances policy. At one time, he studied the world's best experience of the Philippines, India, Pakistan, Sri Lanka, Bangladesh in developing return programs for emigrants, as well as the experience of the UAE, South Korea, Australia in attracting foreign migrants, advised the International Organization for Migration and the National Bank of Moldova to develop programs to stimulate the attraction of remittances and the return of migrants themselves.

— Mr Gaidutskiy, the problem with migration, primarily labor, existed in Ukraine long before the war. How tangible was it for the state and the economy? How many people annually went to work in neighboring countries?

— Migration of the population mainly benefits to society, not problems, since this is the same objective and natural process as the migration of capital. But for Ukraine, this turned out to be a problem, as the authorities do not implement a policy of balancing the outflow of emigrants by the the influx of immigrants. Back in 2019, the Ukrainian government estimated that the net outflow of Ukrainians abroad was about 400,000 people a year. And recently, the OpenDataBot data system reported that in 2021, 581,000 Ukrainians did not return to their homeland. At the same time, the influx of immigrants remains at an extremely low level - depending on the year, it is only 30-60 thousand people (including those who were given temporary residence permits). And this is really a problem for everyone: for employers it is harder to find workers, for business – fewer consumers of their goods and services, for the economy – fewer entrepreneurs and investors, for the authorities – fewer taxpayers.

— Perhaps it is necessary to take measures to limit migration so that people find jobs in their homeland?

— The democratic world is built on a policy of stimulation, and not on restriction, especially of rights and freedoms. The introduction of a visa-free regime with the EU in 2017, as well as the opening of the aviation market for low-cost airlines in 2018, greatly simplified the job search and reduced the cost of flights to work abroad tenfold. Experts warned back in 2014 that over 3 million people would leave Ukraine because of these steps. So did the authorities do the right thing then? Of course. But immediately, with the liberalization of the conditions for the departure of the population, it was necessary to develop appropriate programs to simplify the attraction of immigrants from other countries and the return of Ukrainians. Usually all governments in other countries focus on attraction of immigrants.

For example, 50-100 thousand emigrate from Canada every year. But the authorities do not raise a panic about this, instead they plan to attract immigrants and develop appropriate motivational programs. In particular, for 2022, the Government of Canada has set a plan to attract about 430,000 people.

— Why is Ukraine still losing to other countries in the fight to attract for labor resources?

— Because Ukraine does not conduct an annual or at least periodic assessment of the needs of the economy in the labor force. Unfortunately, we do not know how much and what kind of labor resources the economy needs. Many other countries are doing this assessment, which means they understand the scale of the labor shortage and launch programs to attract immigrants. Let me give you an example from Canada, where a system has long been established to assess the needs of the labor force, including migrants. In Canada, all those who are interested in additional labor (business, social services, municipalities, etc.) submit their applications to the state territorial districts, those to the provinces, and the provinces to the Ministry of Immigration, Refugees and Citizenship, which forms three-year plan to attract immigrants. For 2022, this plan is approximately 430 thousand people. In Ukraine, for 2022, the plan (the so-called immigration quota approved by the government) provides for only 8.4 thousand people, that is, approximately 50 times less. This is despite the fact that the population in Canada and Ukraine is almost the same.

— Most often, our refugees are now being accepted by the same countries in which programs to attract labor resources have been operating for many years. Is it risky? Are these countries changing their attraction programs under the current conditions and how?

— For the host countries, in particular for Germany and Poland, it is no longer risky. Due to the fact that they have a significant experience of large-scale influx of migrants over a short period of time, their economies already “know how” to quickly accept and absorb foreigners. The main thing here is the readiness of the relevant services (border, migration, social) to conduct a quick and, as marketing specialists say, client-oriented allocation of migrants. And then the population and business will “distribute” all migrants among themselves. This is exactly the case when the “invisible hand” of the market will do everything through employment centers, corporate recruiting channels, or simply through relatives and friends. After all, the shortage of labor is growing every year. According to German Economy Minister Robert Habek, in 2022 alone, the country's need for workers is 300 thousand, and by 2030 - 5 million people (cumulatively). In Poland, the situation is similar: according to PwC, by 2025, an additional need for labor will amount to 1.5 million people.

Of course, governments of different countries compete for migrants. For Poland, the number one competitor for Ukrainian migrants is Germany, so the Polish government continues to liberalize the conditions for employment of Ukrainians. In Poland, starting January 2022, documents confirming the presence of residence and source of income are no longer needed to obtain a permanent residence permit. Instead, a document confirming that the foreigner receives an income not lower than the minimum wage (about 660 euros per month) will be enough. Also, foreigners can already work in Poland without a special work permit, but only on the basis of an employer's statement of intent to entrust the performance of work or services to a foreigner. Poland even liberalized the conditions for employment of foreigners in the country's strategic state enterprises.

— Many Ukrainians, who had temporarily worked in other countries before the start of the war, have now received long-term “migrant” visas there and the opportunity not to return to their homeland after 90 days period, but to continue working. Do you see the risks in this?

— Now, during martial law, it is important that as many people as possible earn money and support themselves. Indeed, in the first month after the start of the war, about half of the population was left without work. Migration is a great opportunity to temporarily remove the burden from the state budget on the maintenance of the unemployed and the fight against its consequences, and to concentrate financial resources on military spending for the sake of victory. What if migration didn't exist? Can you imagine the scale of unemployment, poverty and crime? Migration is such a smooth factor that levels out, smooths out the problems that appear in the economy. Migration successfully fulfilled this role both in the era of poverty in the 1990s and in the financial crisis of 2009.

As of now Ukrainian migrants are beneficial for the economy, and the main one is the stability of the national currency. After all, investments in Ukraine are small, and imports significantly exceed foreign exchange earnings from exports. For example, in 2019–2021 alone, thanks to migrants’ remittances, the balance of payments was is surplus of $8 billion. Without this money, the balance sheet would be negative and equal to minus $30 billion. Migration also helps reduce poverty and reduce the number of unemployed. It's just that the so-called “invisible hand” of the market is doing this in our country, helping the authorities to reduce the burden on the budget. In many other countries the authorities themselves do this because they understand what problems temporary emigration can solve. In some countries, the government arrange sending of groups of its citizens to work abroad in order to increase their income and increase remittances to their homeland.

— You mean that the authorities in other countries are interested in the emigration of their population?

— The authorities are interested in solving problems with unemployment and poverty of people. And migration is only a mechanism for solving this problem. After all, if the problem is solved in this way, then the government exempt colossal resources for the development of infrastructure, assistance to other groups of the population etc… and in the case of Ukraine, to finance military operations against the aggressor.

Dozens of countries around the world, in particular India, Pakistan, the Philippines, Indonesia, Mexico, Sri Lanka, have created a special infrastructure for the training and temporary departure for work of people who have a need or desire for this. At the same time, the authorities “arm” the departing migrants with legal, banking, insurance, mortgage instruments in order to keep in touch with them throughout their migration cycle and then stimulate their return to their homeland. In these countries, the authorities have information about 99% of its migrants, so they can offer them appropriate return programs. In Ukraine over 90% of its emigrants are "illegal" for the Ukrainian authorities - in 2020, out of more than 5 million Ukrainians abroad, only about 450 thousand people were registered with consular offices in the countries of employment. In other words, we know almost nothing about millions of Ukrainians who are abroad.

— But after the war, we will really need more manpower. What resources should Ukraine attract in order to return its refugees? What would be the ideal return program?

— The central government should work in three areas: with local authorities, business and migrants. Let's not just focus on refugees, as everyone has their own migration cycle and return plans.

First of all, the central government should offer cities and united territorial communities financial and regulatory instruments that will stimulate them to develop and implement such programs. Believe me, the local authorities know the situation and their residents much better, so let it be their responsibility. Moreover, each local government is interested in the development of its community - there will still be competition between communities to develop, as you say, an “ideal return program”.

Second, the work should be carried out with business, since business, not the government, creates jobs and pays most of the taxes. We need motivational programs for employment of those who are ready to return. As for programs with migrants themselves, they should motivate them to transfer most of their income and form savings in Ukraine with the further acquisition of any assets or the development of entrepreneurship. And this is the way to the return of the migrants themselves. Because if the refugee has no job here, no savings, no asset, then where and why to return?

There are also programs in which all participants jointly could participate. For example, in Mexico, in small towns, the “Tres per Uno” (3x1) social program is successfully implemented, aimed at restoring or building roads, schools, and hospitals. For every dollar from a migrant, the government, state, and municipality also add a dollar. This program is periodically expanded to 4x1 or 5x1. The fourth dollar can be given by a donor (for example, USAID), and the fifth, for example, by a financial institution (in Mexico, such support is regularly provided by Western Union).

Of course, the initiative to choose the objects that need to be rebuilt lies with the migrants or their representatives at home. They come with a ready-made project draft to the local authorities. In the implementation of all three areas, banks must necessarily take part as project partners (and not just as settlement institutions), since we are talking about both clients and financial resources. Unfortunately, none of the four state-owned banks in Ukraine specialize in banking services for migrants. Although, as I already noted, thanks to the migrants remittances we had a stable exchange rate before the war.

— During the post-war reconstruction Ukraine will need an extremely large number of manpower with working specialties, and these are precisely the specialists who easily found work in Poland, Slovakia or the Czech Republic. Should there be separate programs for the return of such specialists? Should our internal attitude towards vocational education change to make it easier for graduates with vocational education to find work in Ukraine?

— Imagine, you and I decide that only those who left the country (Ukrainian migrants abroad) should get a job to restore the country. But in this case, restoration will be long and expensive for us. Firstly, those who left a few years ago are already working somewhere and probably have a stable job, and secondly, the level of salaries, for example, in the Czech Republic, is many times higher than in Ukraine.

In fact, the authorities should only provide a vision and parameters for the restoration of the country, and business will work out the options for performing the work. Let the business solve the issue of finding a workforce. Government should be just a charterer and controller. Of course, some of the migrants will return. But I am sure that business will come to the government with proposals to attract foreign labor, because it should be inexpensive and ready to perform work in a short time. And it may be necessary to sign relevant intergovernmental agreements. The post-war German government also attracted Turks and even Koreans to rebuild the country. In particular, between Germany and South Korea there was an intergovernmental agreement on attracting 20,000 Koreans for a period of three years.

And the attitude towards vocational education has long been changing, because the income of ordinary technical specialists is often much higher than that of middle-level office managers. There is a big shortage in the market of technical professions, so the infrastructure for vocational education will also be improved - private capital is already coming here. I am committed to ensuring that all educational institutions should be private or on self-supporting basis. Only then they will respond more quickly to business needs and will be motivated to better teach new specialists.

— What was the number of migrants Ukraine need to be attracted from third countries before the war? How much can it grow in the period of post-war reconstruction?

— If we take as a basis that the primary cause of economic growth is consumption that is happening when a person is buying something (goods and services produced by business for him), then the need for migrants is the sum of the difference between immigrants and emigrants, on the one hand, and born and dead, on the other. Accordingly, at the beginning of 2022, the annual need for immigrants exceeded one million people, since the net outflow of Ukrainians in 2021 accounted for 581 thousand, and the net increase in deaths - 441 thousand people.

There is also the approach of the Canadian analytical company CBoC, which recommends countries to attract the number of migrants equal to 1% of the existing population to support economic growth. For Ukraine, this is about 400 thousand people a year. Thus, depending on the method of counting, in 2021 we attracted only 3-15% of the number of migrants we really need. That is why we have such low rates of economic development. Most of the economies in 2021 restored real GDP growth rates after the “covid” decline in 2020 but Ukraine was unable to do this.

— What are the programs for attracting labor migrants in Ukraine?

— All programs can be divided into two groups: for Ukrainians (including the diaspora) and for foreigners. The fundamental difference lies in the focus of attention: when working with Ukrainians, the focus should be on developing programs to attract their money, while working with foreigners – on programs to attract them themselves.

Let me explain why it works like that. Most Ukrainians left to earn money or start-up capital, so it will be extremely difficult to attract them with any state (budget) instruments: they will simply “eat up” any offers in the form of “helicopter money” from the authorities and go back abroad to work. Therefore, all programs in the world for their ethnic migrants abroad are based on a motivational principle: for example, transfer more money to your homeland - pay less taxes or get a better mortgage rate, etc.

In other words, the government should encourage the financial and banking sector to create “magnet programs” to attract their funds in Ukraine. Accordingly, when (while still abroad) they accumulate a certain amount of money and assets in Ukraine – they achieve their goals. It will give a signal that they are ready to return to Ukraine. As for foreign migrants, on the contrary, programs should be built with a focus on the migrants themselves, because they do not know anything about Ukraine. You will not transfer your money, for example, to Nigeria or Vietnam? Because there is no trust in an unfamiliar state. The same is true for foreign migrants: they must first come to Ukraine and see its advantages, and then they will bring their money. Work with foreigners should be based on the service approach of all regulatory services. The authorities should work to ensure that the immigrant goes through all the stages: first he is a tourist, then a merchant, after that an entrepreneur and, finally, an investor. Programs for them should built accordingly.

— And from which countries could we attract foreign labor resources?

— First, we need to determine the positioning of Ukraine, with which we will address to potential migrant groups we want to attract. In other words, why are we attractive to those who want to leave their own or from a third country? Why is Ukraine unique at least in its region?

The UK experience is interesting here. In the 21st century, it has remained unique in only one thing - English law. This is the only service that it continues to export almost exclusively to the whole world: 80% of all international agreements are drawn up under English law. Therefore, this country attracts the richest migrants in the world, their capital, including the opening of offices of their corporations.

As for Ukraine, the only thing that makes us unique in our region is freedom. Freedom of choice, freedom of doing business, freedom of speech on the Internet, etc. I think that the absolute majority of the post-Soviet countries in CIS countries can envy us in this. For 30 years, Ukraine has the sixth president, and in many of them - only the second. Russia is a sponsor of many authoritarian regimes that still exist in the former post-Soviet countries. And after the events with the suppression of freedoms in Belarus in 2020 and Kazakhstan in January 2022, the level of authoritarianism and power monopoly in the countries of this region will only increase. Millions of people want to leave these countries. Ukraine must become their destination: we must position ourselves as a country of free and equal opportunities. Speaking in the language of venture investors, Ukraine needs to learn how to monetize its regional uniqueness.

— How do migrants generally affect the economy of their host country?

— Generally positive. There is a direct correlation between the share of migrants in the structure of the population and the level of development of the country. On average, in developed countries, the share of migrants is about 27% of the total population, and in the top 10 countries of the world - 37%. In Ukraine, this figure is approximately ten times less. But if we talk about the impact of migrants on GDP growth, then the contribution of migrants will be much greater, since they are more productive in its creation than the indigenous population. In 2020, the National Bank of Poland conducted a study on the impact of Ukrainian migrants on Poland's GDP growth. Ukrainians occupy only about 5% in the structure of the population of Poland but in 2018 they provided 13% of the total GDP growth, which was 5.4%. In Ukraine, in 2018, GDP grew by only 3.4%. In other words, Ukraine lost at least 0.5% of its GDP growth due to the fact that about 2 million Ukrainians live and work in Poland.

This once again eloquently indicates that it is necessary to implement programs to attract migrants to the economy of Ukraine. As we know, back in March 2021, the government approved the National Economic Strategy until 2030, which provides for the realization of the economic potential of Ukraine for $1 trillion. But who will carry it out? After all, almost 60% of this potential falls on natural resources, primarily on the subsoil. This is actually a job in the so-called harmful 3D industries (dirty, difficult, dangerous). Ukrainians will not want to work here en masse, but we see their large-scale conversion to trade, services and IT. Up to 80% of these jobs could be filled by immigrants. This was also the case in post-war Germany, when almost all Koreans were recruited to work in the coal industry, because the Germans did not want to work there.

— Why despite the significant number of benefits from attracting migrants they are often treated with hostility in society?

— I would say that the hostile attitude towards migrants exists mainly among the authorities, and not on the part of society as a whole. After all, migrants are already benefiting in Ukraine in those areas where there are many of them: delivery services, taxis, catering, trade in the markets. And the authorities are afraid of a large-scale attraction of migrants only because they are afraid of losing control over their behavior. This is the result of periodical cases taking place in all countries of the world, as well as the subjective picture that we see on TV or on the Internet. Let's remember the situation on the border of Poland and Belarus in 2021, where Lukashenko brought several thousand migrants. We have seen it as the following: illegal immigrants were about to cross the border and start riots. But in fact, that were the legal migrants who arrived in Belarus by plane, because they were sold, in their opinion, legal transfer to the EU. According to the Atlantic Council, these migrants, while still in their homeland, purchased special travel packages worth up to $15,000 from the Belarusian state tour operator “CenterKurort”. It means these migrants paid significant funds for the relevant services, but, unfortunately, they were deceived by the Belarusian authorities, and they had no choice but to storm the border, because people with weapons stood behind them and threatened them.

In fact, from an economic point of view, only one conclusion should be drawn from this situation: migration is about money, which means that those who migrate have money. And if there is money, therefore, it is possible to build a scheme that will guarantee or insure each of the parties against undesirable developments. Migration process must be safe both for the population of the host country and for the newcomers.