Transcript ВЛИЯНИЕ НА ПАРИЧНИТЕ ТРАНСФЕРИ НА БЪЛГА

“Impact of Remittances on Bulgarian
economy”
От проф. д-р Искра Христова-Балканска
Институт за икономически изследвания БАН
18-19.10.2012
A few historical facts regarding
Bulgarian migration
 The first period (1990-2000) is
characterized by the start of the transition
and the economic downturn resulting from
a number of radical economic and social
reforms.
 During this period, the lack of jobs and
poverty stimulated emigration. According to
some sources, the number of Bulgarian
migrants amounted to 691 000 people.
 In this period the main directions of
Bulgarian migrants were Germany, Czech
Republic, Austria, Hungary, and USA.
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A few historical facts regarding
Bulgarian migration
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The second period (2000-2007) is characterized by a certain
improvement in the economic and social environment, an increase
of economic growth, job opportunities, income levels in Bulgaria.
These factors contributed to a certain decrease in emigration
flows.
Data are showing that after 2003 there has been a tendency
towards seasonal, rather than permanent, migration and this is
related to the temporary mobility of the low-skilled labor force.
Low qualified people mostly has the intention to move abroad for a
short-time, for seasonal labour. The preferred destinations being
Greece, Spain, Italy etc
The level of highly qualified emigrants has dropped from 17% to
9%, but the number of low-qualified workers has increased.
The Bulgarian case is rather comparable to the other countries of
Southeastern Europe (Romania, Albania, countries of the former
Yugoslavia, Turkey and Greece before 1981.
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A few historical facts regarding
Bulgarian migration
 The third period of Emigration wave starts with the
country became EU member. Its new status changed
the structure of Bulgarian emigration to other
developed EU countries.
 There is a trend of increased seasonal (circulating)
migration, instead of the permanent migration.
 This is due to the enhanced temporary mobility of low
qualified labor force as a result of Bulgaria’s exclusion
from the List of Schengen Countries.
 The growth rate of the labor force with lower
education degree from Bulgaria accounts for 5,8% of
the total number of emigrants.
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Main incentives for migration
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The greatest factor in choosing a country to settle and live abroad
are said to be the language, the availability of friends or relatives
there, as well as the pay for unskilled labor.
The same data indicates that about two-thirds of those leaving
Bulgaria as migrant laborers are ethnic Roma, rather than ethnic
Bulgarians, who made the bulk of the migrants until recently.
The considerable brain drain from Bulgaria is mainly due to
economic factors, such as the lack of prospects for the young
people for career in Bulgaria.
The main incentive is that Bulgaria is continuing to be the poorer
state amongst EU member states.
GDP per capita in Bulgaria is about 40% of the average value of
the EU member countries.
The remuneration in Bulgaria is low and is lagging behind the
remuneration in the other EU member states.
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Remittances by Bulgarian emigrants
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It is widely considered that Bulgarian migrants’ remittances,
defined as cash or in kind transfers from migrants to
relatives and others in their countries of origin play a role in
maintaining basic living standards for many households in
home countries.
Over the last 12 years migrant remittances have assumed
increased significance for many people in Southeastern
Europe, Moldova and Bulgaria
Pursuant to the estimates of the World Bank, over 10% of
the remittances of the emigrants are utilized for education
and savings.
However most of these remittances are spent on food and
garments by the households, obtaining considerable
support by these funds.
About 5% are used for investments or support to private
businesses.
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Remittances
 Remittances appear in Bulgarian BOP after
2000. Since 2004 to 2012 Q1Q2,
Bulgarians living abroad have transferred
nearly EUR 3740,6 billions.
 According to some unofficial estimates,
emigrants’ remittances are between 30% 40 % higher than officially recorded data.
 In Moldova, Albania, Romania remittances
make up about 40 % of GDP.
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Remittances from Bulgarian migrants
Data from BOP (BNB)
Years
Remittances
Mlns EUR
Remittances
(% оf GDP)
2008
663,8
1,97
2009
693,4
2,07
2010
695
4.3
2011
770.1
2012 Q1/Q2
407.9
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 Actually the volume of remittances is much more
higher because the banking statistics only account for
the official money transfers. Bulgarians abroad usually
wire their relatives largest sums.
 Remittances in Bulgaria are used mainly to purchase
real estates, accounted as FDI.
 They are a higher financial opportunity for a part of
the Bulgarian population,
 Enhance the opportunities for education and
investments.
 In the years before the crisis FDI and remittances
were considerable financial flows, being of benefit on
macro level, contributing to the economic growth and
to the higher employment and incomes of the part of
the population.
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Remittances from Bulgarian migrants in Spain –
(„Българската диаспора в Западна Европа:
трансгранична мобилност, национална идентичност и
развитие”, Фонд „Научни изследвания, Програма „Идеи”)
 According to data from the above survey,
Bulgarian migrants in Spain receive cash:
an average of 400 to 800 euros, which
indicates that&
 - they are not engaged in the performance
of complex manufacturing operations]
 - work in agriculture and construction.
 71.8% of the Bulgarian migrants
made transfers (remittances) to support
and enhance the welfare of their relatives
who remained in Bulgaria.
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Remittances from Bulgarian migrants in Spain –
(„Българската диаспора в Западна Европа:
трансгранична мобилност, национална идентичност и
развитие”, Фонд „Научни изследвания, Програма „Идеи”)
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Remittances are mainly used for consumption.
Many Bulgarian have gone to Spain to improve their
financial situation, to pay back debts towards banks or
other financial intermediairies, to increase savings
Others send part of their income to rebuild some properties.
Others invest in the education of family members, or they
are using remittances for health care.
According to BNB data for the period before the economic
crisis, the majority of remittances of migrants (regardless of
what country they are established) invested in real estate.
Unlike the "old" immigration waves of Greeks, Italians,
Spaniards, the Portuguese in Western European countries,
the new Bulgarian emigration does not seek to invest
income genereted abroad in some projects like starting a
business in Bulgaria, open a small factory, creating a new
activity in the home country.
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Remittances
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The remittances also have certain negative effects on the
economy. Probably the flow of fresh money from the
emigrants has reduced the incentives for job search.
It could be supposed, that the increased remittances by the
emigrants have probably reduced the pressure on the labor
market and decrease the unemployment.
The increased incomes of a part of the Bulgarian population
result in more consumption costs, exerting pressure on the
balance of trade for import of consumer goods.
It results in the total level of the domestic prices and a rise
in inflation.
The pegged course of the Bulgarian Lev to the Euro
prevents taking into consideration the inherent trends of
the probable increase in the exchange rate of the national
currency and thus assessing the lower competitiveness of
the domestic goods and services.
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Despite the economic crisis of 2007-2008 and the increase in
unemployment in Western Europe, Bulgarian labor migration
probably retained jobs and was able to remain in the labor market
of the host country.
Furthermore, the Bulgarian immigrants are flexible, because if they
are getting fired or the enterprise close, they seek immediatelly for
another job, even if it requires less training and lower wage.
Bulgarian labor migration continues to send money back home and
there was no significant reduction in the volume of remittances in
the period to 2011, even when most of the member states of the
EU and the U.S. are experiencing a decline in economic activity
and employment, monthly net transfers temporary fall and again
begin to rise.
This assertion is supported by money transfers from migrants
compensation from employers and current transfers, as well as
their salaries to evaluate the proportion of the income which is
send back in the country.
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Remittances and compensation of employees by
employers (% of GDP) of Bulgaria 2006-2009
Source: Estimates by the World Bank, the OECD
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5
4
3
2
1
0
2005
2006
2007
2008
2009
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Remittances, FDI
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Remittances reveal to be relatively more constant flow of
funding than volumes FDI in Bulgaria.
In 2008-2009, remittances were a main source of financing
for households and a tool support to stuck consumption.
From early 2011 to early 2012, FDI amounted per months
faster than remittances.
However FDI show much greater volatility and by the end of
2011 are shrinking to the volume of remittances.
Over the year remittances show that in the post-crisis
period, the Bulgarian migrants continue to send
remittances, which are a additional funding not only for
specific individuals, but also for the economy as a whole.
Since 2008 FDI volumes are half of those in 2007, and
remittances increased.
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Remittances (current transfers net) and FDI as% of
GDP, 2002 - 2011 years
Source: BNB
35,0
30,0
25,0
20,0
15,0
10,0
5,0
0,0
2002
2003
2004
2005
2006
2007
Remittances % of GDP
2008
2009
2010
2011
FDI % of GDP
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Remittances net, FDI net expressed in
EUR February 2011. - January 2012
ПРЕКИ ЧУЖДЕСТРАННИ ИНВЕСТИЦИИ И ТЕКУЩИ ТРАНСФЕРИ НЕТО В БЪЛГАРИЯ В ЕВРО
МЕСЕЧНИ ДАННИ февруари 2011 г. - януари 2012 г.
600,0
500,0
400,0
300,0
200,0
100,0
0,0
2011-02
2011-03
2011-04
2011-05
2011-06
2011-07
2011-08
2011-09
2011-10
2011-11
2011-12
2012-01
-100,0
-200,0
-300,0
Текуща сметка, Текущи трансфери; Нето
Финансова сметка, Преки инвестиции в страната; Нето
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Conclusions
 Remittances have become a major cash income
for many households.
 Remittances can cover only temporary financial
shortfall, but can not compensate the income
that could be realized if the Bulgarian economy
was operating and generating jobs for skilled
workers and the leakage of highly qualified
personnel
 Differences in wages between Bulgaria and
other EU member states will continue to "push"
professionally trained workers outside from
Bulgaria.
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