Ukrainians abroad are the biggest investors in Ukraine’s economy, IOM-commissioned survey reveals

Kyiv, 16 February 2016

The money transferred back home by Ukrainians working abroad is higher than all funds foreign companies invest in the country and international donors contribute to development combined, a new study by the International Organization for Migration (IOM) reveals.

According to the Canada-funded survey*, Ukrainian migrant workers transferred almost 2.8 billion USD in 2014 through formal and informal channels. In addition, about 100 million US dollars was received in goods as in-kind remittances.

 “Migrant workers are the biggest investors in the economy of Ukraine,” says IOM Ukraine’s Chief of Mission Manfred Profazi. “As survey results prove, private monetary transfers of Ukrainian migrant workers to Ukraine became a larger percentage of GDP than Foreign Direct Investment and Official Development Assistance combined. Migrant communities have links that span boundaries, and possess knowledge and resources that are invaluable to their home country. The study confirms that if properly managed, labour migration and its capital can facilitate humanitarian, intellectual, economic and cultural development in countries of origin and contribute to their social and economic growth.”   

The results show that in 2014 the Russian Federation remained the main country of destination for Ukrainian migrant workers (30%). As for long-term migrant workers, the most important directions are increasingly Poland (21%), as well as the Czech Republic (15%) and Italy (11%)

The average long-term migrant worker household received about 4,348 US dollars in 2014. For the majority of migrant households, remittances represent the main source of income. Unlike in many other countries, consumption represents only 40 per cent, while another 42 per cent go into savings in Ukraine, according to the study results.

For the first time in Ukraine, the IOM study also surveyed the usage of the formal and informal transfer channels. Ukrainian migrant workers show a steady preference for using informal channels when sending remittances. More than half, or 53 per cent, of the total volume is sent through informal channels, which constitutes a significantly higher percentage than expected.

Even higher in volume than remittances are the savings generated and kept abroad by long-term migrant workers, estimated at around 4 billion US dollars. The intention to purchase property or durable goods and education of children are among the most important savings objectives, named by respondents. Another important savings objective, emergencies and risks management, undoubtedly reflects the ongoing insecurity in Ukraine, and the economic deterioration associated with that.

The study revealed a high interest among migrant workers to invest in local infrastructure projects (22%) in Ukraine. In addition, almost every fifth long-term migrant worker expressed investment intentions, with preference towards investing in their local communities in Ukraine. Construction, tourism and retail trade are the top three sectors of interest for potential investors.

With this study, IOM aimed at raising awareness among relevant stakeholders of the enormous impact Ukrainian migrants have on the economy, and building the scientific base for an informed policy dialogue on the potential migrant remittances and savings have in this respect.  Members of the Project Steering Committee, which included representatives of key line ministries, the private sector and academics, developed a set of policy recommendations and identified relevant areas for intervention, which IOM hopes will serve as a base and guidance for developing more efficient migrant-oriented policies, aimed at better harnessing the development impact of labour migration and engaging its capital in Ukraine’s development policies.

Recommendations include building the capacity of the Ukrainian government to manage labour migration through coordinated action at international, national and local levels, as well as promoting civil society and public-private sector cooperation; mainstreaming migration in development planning, continuous public consultations and migrant-inclusive approaches; systematically adapting international experiences and best practices to Ukrainian context, testing new financial instruments and services related to whole-of-migration cycle, and developing joint actions; more research on migration goals and migration-related financial flows to Ukraine to name a few examples.

For more information, please contact Varvara Zhluktenko, IOM Ukraine, vzhluktenko@iom.int, +38 044 568 5015, +38 067 447 97 92

* The survey took place during 2014-2015. The methodology applied a three-stage approach in order to provide a broad range of information, as well as the ability to validate the results of each stage, namely i) nationally representative household survey of 20,951 households in Ukraine; ii) socio-economic survey of 1,890 long-term migrant workers interviewed at the main border crossing points in Ukraine; iii) focus group discussions both, in Ukraine and in three selected destination countries (Canada, Italy and the Russian Federation).

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