The quarantine and economic recession in Russia can become a time bomb for Central Asia, according to experts.
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The native of Tajikistan, Shabdan Dakharov, was a waiter at one of Moscow restaurants until recently. He paid apartment rent and education fee for his brother and himself out of the money he earned. However, a week ago the young man was dismissed due to the quarantine. Now he is seeking a job, but in vain.
“They say our restaurant is going to be closed for two months. All of us were dismissed in a day. So far, I have money, but at the end of the month I will have to pay the rent. Now I don’t know what to do. The managers don’t give any promises, although I was in good standing. It makes no sense to go to public catering facilities because they all are going to be closed soon. I cannot drive a car. Now I am trying to find a job as a guard. My parents told me to get back home. I hope I can buy the tickets,” Dakharov said.
In two of four scenarios, according to the Bloomberg Economics forecasts, Russia will go into recession.
According to the Federal Service for State Statistics, over 4.5 million migrants entered Russia in 2019 to work, study or reside permanently. Out of this number, Central Asia has about 3.4 million migrants.
Migrants work almost in all spheres but state service and security. According to director of Trans-boundary Research Network of Central Eurasia and political analyst Denis Berdakov, the two-month quarantine or longer announced in large cities of Russia will become a distress for the socioeconomic and even political security of at least two Central Asian states – Tajikistan and Kyrgyzstan.
“It’s important to look at the population to migrant workers ratio. If the population of Kyrgyzstan is 6.5 million, Uzbekistan – 33 million, Tajikistan – 9.5 million, the impact of money remittances on the economy of these countries is different. For Tajikistan and Kyrgyzstan, remittances from migrants is the key support of socioeconomic and even political life,” Berdakov said.
As a rule, one migrant maintains 2-3 people at home, so the significant number of people will be affected. The remittances of migrants have indirect impact on the budget, but markedly affect the number of bank tills, foodstuffs, purchase of new apartments, cars. This grassroots demand is already declining and will continue to decline, according to expert forecasts.
Gulya together with husband and son moved to Russia three years ago from Kyrgyzstan and managed to buy an apartment in Osh region for this period.
“I worked almost without days off. I earned 2,000 roubles (about 30 dollars at the previous rate) a day plus bonuses. There were many guests in our hostel before, sometimes we didn’t have enough rooms. Now, we have only three staff members and the owner said he is going to close the hostel. We don’t want to go back to Osh because we have loans. I am going to look for another job here. I could be a cook,” Gulya said.
The citizens of Kyrgyzstan are the most privileged part of the labour power in Russia due to the country’s membership in the EAEU. They have more rights, simplified employment requirements, they don’t have to leave the country in 90 days if they have long-term contracts. Therefore, they have fewer illegal workers. Also, they have strong knowledge of Russian and they can get higher paid jobs.
According to Berdakov, the citizens of Kyrgyzstan earn more than migrants from Tajikistan or Uzbekistan. They work in the service sector, as taxi drivers, managers in stores, in catering.
Nurbek is a taxi driver in Moscow. His net pay was up to 140 thousand roubles a month, which was nearly 2 thousand dollars at the previous rate. Thanks to this job, he managed to save money for the wedding.
“I have had few orders in the last two weeks; I could earn only 30 thousand roubles (383 dollars). I guess it happened because people work from homes and don’t go to their jobs, many night clubs don’t work either. I am going to take a leave during the quarantine and go to my village to build a house to my father. I know it’s a temporary situation, the coronavirus won’t be there for ever,” Nurbek said.
Yusuf Azimov came to Moscow from Uzbekistan two years ago. He delivers food. Before the spread of coronavirus, he used to earn 40 thousand roubles (597 dollars at the previous rate) a month, now he earns only 15 thousand roubles (191 dollars).
“When I worked 12 hours a day, I earned well. I used to have 10-15 orders a day, now I have only 4-5 orders a day. I received my salary every week, but now the managers don’t know what to do. They said they will transfer my salary till the end of month. I have two loans and look for an extra job, but in vain,” Azimov complained.
Such people as Nurbek and Yusuf, according to Denis Berdakov, could save some money for some time, but the quarantine could last for indefinite time.
Russian businessmen also suffer losses due to the uncertain situation. The media recommend people not to go outside, but they still will have to pay their loans and rent. The situation touched the businessmen of Central Asia.
Karim Urusov is a native of Uzbekistan and the owner of fruit sale network in Moscow. He signed a contract with suppliers early this year and transferred the money. Now his business has almost stopped.
“I have five outlets. I buy fruits from hothouse owners, and also from China. Now stores are empty, people buy mainly canned goods, cereals, flour. Early this year I ran into debt and paid for fruits in advance. I’ve lost almost ten thousand dollars, I think it’s going to be 50 thousand dollars in the end of the month,” Urusov said.
According to him, the state helps to Russian businessmen by exempting them from taxes. However, he, as a citizen of Uzbekistan, is not in this category. Now he sells fruits at cost, but it doesn’t help.
“I don’t know what to do and where to go because many businessmen have the same problem. My acquaintance, owner of a fitness centre, took a loan and pawned his house to keep his business running. This coronavirus has done great damage to me. I had to dismiss all the sellers because I do not have money to pay salaries,” the entrepreneur said.
According to experts, the quarantine and following problems of workers and businessmen will become a serious shock for Central Asian economies. According to Berdakov, migrants will have money only for one or two months, but they will stop sending money to their relatives, which will have a serious impact.
“Many migrant workers live in Moscow by 5-6, or even 20 people in one apartment. If they worked in catering, they spent less on food. Now they can live for 2-3 months in rigid economy mode and the majority of them will have no money to get home. At home, they won’t have jobs. They can plant seeds if they come earlier. This would save them some money,” Berdakov said.
Now it’s not easy to get back home. On March 20, Russia stopped regular flights to Kyrgyzstan and Tajikistan. Migrants that bought tickets with all the money they had had to live at the airport terminal. Some lived there with new-born babies, some were waiting for their ill relatives until the issue was solved by the governments of both countries.
It would be extremely difficult for migrants to leave. The authorities of Kyrgyzstan, Tajikistan or Uzbekistan won’t be able to get hundreds or even thousands of their citizens back home.
“Another problem is whether to accept these people or not. If there are ill migrants among them, their transportation will aggravate the spread of the virus. They won’t be taken at one time. This is a problem of a growing load on medical facilities. Kyrgyzstan, Uzbekistan and Tajikistan have no money to pay transportation of their citizens because their budgets are deficit-ridden,” Berdakov said.
There are fewer citizens of Kazakhstan working in Russia compared to other neighbouring states. So, their remittances will hardly affect the economy. However, Kazakhstan will face other difficulties.
Almas Aitakhov and Bekbolat Sultanov came to Russia from Kazakhstan and worked at the construction site. Now all works are suspended. But the men don’t want to get back. They live at the construction site now instead of the rented room and look for any kind of job.
“We have families, children, grandchildren in Kazakhstan. It’s a shame to get back because we earned well here. I think we’ll get back to work in a month. Our chief went to the country and granted an unpaid leave to us. We are not afraid of the coronavirus, we are afraid of dying of hunger,” Almas said.
The Kazakhstani Saltanat Raiymova has changed three jobs in the last month. At first, she worked as a babysitter, but due to the quarantine, the child’s parents started to work from home and did not need her services any more. Then she was a salesperson in a sportswear store.
“The owner bought goods for 10 thousand euro, but there were almost no customers. The store’s income didn’t cover the rent and the owner was hospitalised. I had to leave then. Now I work at a cake shop, but it will probably close soon. It makes no sense to go home and be under the quarantine for two weeks, I’ll be looking for a job here,” Raiymova said.
According to economist Yerlan Ibragim, doctor of business administration at AlmaU, the situation in the world and EAEU will have serious consequences. In March, Kazakhstan and Kyrgyzstan faced not only the quarantine due to the coronavirus, but also suffered from the devaluation of national currencies because of the declining oil prices.
Despite the assurances of the authorities, Kazakhstan is an importing country, and imports will now be 20-30 per cent more expensive. On March 22, the quarantine was declared in the two largest cities, almost all small and medium-sized businesses are not working, taxes are not imposed, and many people are left unemployed.
According to the economist, the situation is similar to the Russian crisis of the 90s. Back then, the situation was much more complicated and tragic, but all the assets belonged to the state, and the privatisation programme and reforms added some optimism.
“In general, businesses will decline and this will be another factor of economy decline. Many people were left unemployed. The middle class namely managers remained in a difficult situation. In Almaty, a very large segment of the people with low income and daily wages come from nearby towns. These people were left without any means of survival,” Ibragim said.
In his opinion, Kazakhstan did not have such a difficult situation during the independence period. The situation because of the coronavirus in Russia will certainly affect the economies of Kyrgyzstan, Tajikistan and Uzbekistan.
This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project.