Europe's poorest send less money home

June 30, 2010 7:55:48 AM PDT
Many of Europe's poorest migrant workers are sending less money home - another blow delivered to the continent's poorer east by global economic and financial turmoil.

Probably worst off is Moldova, Europe's poorest country according to the World Bank. There, money sent by people who left to find work made up an astonishing 30 percent of the economy of $6.6 billion (euro5.41 billion) just two years ago but fell last year to 22 percent.

The Chicus are a case in point. Like many Moldovans, they realized that they could hardly afford to raise a family from local salaries.

Mihai Chicu, an engineer in a shoe factory that went bust after Moldova declared independence from the Soviet Union in 1991, left his wife Nina and sons Alexandru and Adrian in 1995. He ended up in Greece, where until recently he earned euro1,300 (US$1,600) a month as a laborer until this spring. Each month he sent home about euro800 (US$975).

Nina, who made just $175 (euro145) as a nurse, also left in 2006 as the sons were finishing high school. Despite the economic meltdown in Greece, her host country, she still earns about euro1,000 ($1,220) picking lemons, sending home half of that, or euro500 ($610).

"Now that my father is out of work, we can barely cover utilities, food and basic costs with my mother's income," said Alexandru Chicu, 23, in an interview at three-room family apartment. "The money our parents send us is our only income."

The sons live in the family's apartment in downtown Chisinau, purchased in 2007 for euro62,000 (US$75,650) - a feat enabled by the remittances from Greece.

The elder son, Alexandru, is studying engineering and mechanics management at the Chisinau polytechnic while younger brother Adrian is studying telecommuncations there. Neither of them work.

Comfortable by Moldovan standards, the apartment sports a washing machine, computer and refrigerator - luxury items for anyone on the average Moldovan salary of $250 (euro202).

It's a story that is playing out all over the region. For decades, workers in Eastern and Southeastern Europe have been a source of cheap labor for Spain, Portugal, Greece and Italy. They picked fruit, washed dishes and got their hands generally dirty in jobs the locals shunned.

Now, as the EU's southern members tighten their belt to avoid bankruptcy, the foreign worker is often the first to be let go - and the flow of cash, or remittances as economists call the practice, are dwindling in regions that badly need it.

Migrants' troubles worsened starting with the financial and housing market plunges of 2007-9, followed by this year's debt crisis and resulting cutbacks in government spending. World Bank figures show Moldovan remittances dropped from $1.66 billion in 2008 to $1.18 billion in 2009, with construction workers in Greece, Russia and Spain the hardest hit.

As Moldovan workers returned home, unemployment soared from 3.9 percent in 2008 to 9.1 percent in 2010.

In neighboring Romania, remittances fell by about a quarter, to euro1.1 billion (US$1.35 billion) for the first four months of 2010 compared to the same period last year. Romania's unemployment rate rose to 8 percent this year, nearly double that of two years ago. While it is impossible to pinpoint how many were returnees, there is little doubt that they contributed to the growing number of jobless, which the International Monetary Fund says could rise to 11 percent in the coming months.

In Bosnia-Herzegovina, remittances decreased by more than 17 percent from 2008 to 2009 when they were 2.1 billion convertible marks, or around $1.2 billion). Bosnia's central bank said this has contributed to higher levels of poverty, less spending and less investment.

A survey by the International Organization for Migration indicated some 353,000 Moldovans were working abroad but still belonged to a household in Moldova as of March, 2009. The IOM says that considering other estimates, probably around 600,000 Moldovans are living outside the country under various status, or about 15 percent of the entire population of 4 million.

The World Bank's Dilip Ratha warns it might get worse.

"If the crisis deepens further in Europe, you will see more of an impact of these flows, more workers will come back and fewer will go abroad," said Ratha, a senior economist and manager of the Migration and Remittances Team.

For now, some of those forced back home by the EU economic downturn are biding their time, waiting for better economic conditions before trying their luck abroad again.

But with their incomes a lifeline for whole families, others are trying their luck again, just weeks after being laid off. Romanian air conditioner technician Relu Ciui is looking beyond Spain, from where he had sent home money for the past eight years.

"I left Romania because I had no chance here," said Ciui. "In Spain I found a job that allowed me to dream that I could live a better life and that's the way it was. I was earning euro1,500 a month, like a Romanian government minister earns."

And Mihai Chicu, the unemployed shoe factory engineer, decided to return to Greece - looking to join his wife harvesting lemons.