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Labor Migrants' Pension Mobility as a Symbol of Efficient Functioning of the Emerging Eurasian Economic Union

July 21, 2014



WASHINGTON, July 21 -- World Bank issued the following news release:

The introduction of pension mobility within the emerging Eurasian Economic Union is an essential step towards regional economic integration, according to the "Pension Mobility within the Eurasian Economic Union and the CIS" report, launched today in Russia.

Initiated by the Centre for Integration Studies of the Eurasian Development Bank (EDB Centre) and the World Bank (MIRPAL regional migration program), the report introduces the concept of labor pension mobility between labor recipient countries (Russia, Kazakhstan, and Belarus) and labor donor countries (Kyrgyzstan, Tajikistan, and Armenia).

Pension mobility is a process of inter-state reciprocal recognition of labor migrants' pension rights. According to the report, introduction of pension mobility in the context of labor migration processes within the emerging Eurasian Economic Union can build on the EU countries' best practice experience.

"Providing the free movement of labor is one of the fundamental functioning principles of any economic union. However, lifting registration barriers and simplifying regulatory approvals for labor force migration between countries of the Common Economic Space and the Eurasian Economic Union could not be effective unless social guarantees are to be provided," says Stepan Titov, World Bank senior economist and MIRPAL program head.

International best practice proves that if donor and recipient countries use different social security systems, the issue of pensionary payments could be resolved through coordination of pension assignment rules. This coordination provides that pensionary assignments and payments are to be made by the pension fund of the country where the labor worker resides and applies for pensionary support. The pension fund of that country will then receive transfers (compensation) from the pension fund of the other country, where a labor migrant has worked. Compensation payments / transfers can be pro-rated based on the number of years that have been worked abroad.

Today, overall coordination between countries and their pension funds has not yet been developed in the CIS countries, nor within the framework of the Common Economic Space. However, there is a necessity to improve living standards and provide a decent life for labor migrants as they get older. From the macroeconomics point of view, an efficient pension mobility system could help improve the mobility, flexibility, and efficiency of the labor force as a production factor, as well as help raise the global competitiveness of the Eurasian Economic Union.

"Pension mobility should become part and parcel of the free movement of workers, as should concerted social policies within the emerging labor market of the Common Economic Space," says Yevgeny Vinokurov, Director of the EDB Centre for Integration Studies. "In the long-term, formation of a common pension space in the countries of the Common Economic Space and the Eurasian Economic Union can mark a step forward to reducing the scope of illegal labor migration and to developing labor relations of a higher quality."

Introduction of labor migrants' pension mobility is an important item on the agendas of the Common Economic Space and the Eurasian Economic Union. The proposed pension mobility mechanisms could help resolve problems related to labor migrants' pension payments that are of vital importance to tens of millions of people.

The full text of the study is available here. http://eabr.org/e/research/centreCIS/projectsandreportsCIS/

Background

The Eurasian Development Bank (EDB) is an international financial institution set up by Russia and Kazakhstan in January 2006 to facilitate the development of the market economies of the participating countries, their stable economic growth, and the expansion of their mutual trade and economic relations. The EDB charter capital is over USD 1.5 billion. The EDB participating countries are Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan.

More detailed information about the EDB is available at http://eabr.org/e/.

The Centre for Integration Studies is a specialized analytical center of the Eurasian Development Bank with responsibility for organizing research and preparing reports and recommendations on problems of regional economic integration. Details of the Center's projects and publications are available at http://eabr.org/e/research/centreCIS/aboutCIS/

MIRPAL (Migration and Remittance Peer-Assisted Learning Network) is a community of migration and remittance practitioners and experts representing governmental and non-governmental organizations from nine CIS countries: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Uzbekistan, and Ukraine. The project, initiated by the World Bank in 2009, is widely recognized as a forum for successful cross-country collaboration in the area of labor migration policy.

The World Bank Group plays a key role in the global effort to end extreme poverty and boost shared prosperity. It consists of five institutions: the World Bank, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Working together in more than 100 countries, these institutions provide financing, advice, and other solutions that enable countries to address the most urgent challenges of development. For more information, please visit www.worldbank.org, www.miga.org, and www.ifc.org

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