Introduction

The most common definition of remittances is the transfer of sums of money by foreign workers to individuals, friends, and family in their home country. The propensity of immigrants to send a specific amount of funds basing on the following characteristics. These characteristics include background, time spent in the U.S.A, family structure, age, income, sex, a region of origin. Remittances are playing a significant role in the development of immigrant economies working in the U.S.A while also leading to the overall support of migrant families. Broadly remittance is broadly categorised into two perspectives that are the capital flow which is macro scale and the microscale perspective. This research will focus on Ukraine’s immigrant workers in the USA make their remittances, how the recipients of these remittances spend their money, the positive and negative effects of payments and a comparison of Ukraine’s GDP to the remittance received.

The macro scale perspective of remittances in the global market is due to the unprecedented rise in population of labour migrants amidst the international demand for labour. Ukraine has been under an economic downturn that has led to many of its labour sectors to seek employment terms as migrants. The Russian escalation invasion in Ukraine has majorly contributed to the financial crisis in Ukraine as Eastern part is war tone displacing millions of Ukrainians(Center., 2019).Likewise, this waste of human capital which resulted in labour migration in search better employment terms has led to the deterioration of local labour markets in Ukraine. The decline in the employment sector is due to the economicdownturn in Ukraine is the reason forthe rise in remittances by Ukrainian immigrants in U.S.A The estimate of Ukrainian population working abroad is 8% of their working population that is approximately 3.2 million people. According to KIEV (Reuters), the central bank indicates anestimation of  $ 9 billion remittances from abroad are which is equivalent to 6% of Ukraine’s gross domestic product GDP in 2018.

Impact of remittances to the community

Investment

Ukrainian immigrants are the largest investors in their country with over amidst the crisis due to the Russian invasion in Ukraine. The immigrants have been the primary source for liquidity in their country. It is essential to note that the remittances have been responsible for the stability of the exchange rate and its Hryvnia dollar. According to reports by the Ukrainian daily Sevondnya 2016, there was are markable double growth in the level of remittances from $ 3.5 billion to $7 billion in 2016 and 2017 respectively. This growth attribution is due to the government policy that has on the International Organization for Migration. This policy states that for every dollar sent home by a Ukrainian their host country 2.4dollars remain in their host country.

Connection

Ukrainian immigrants maintain a relationship with their families through sending remittances which is a portion of migrant’s income to their place of origin. According to scholars the motivation of Ukrainian immigrants in the USA is an obligatory as well as altruistic sending(Center., 2019). It is essential to note that remittances have been a mechanism immigrant protect their status in host countries. Likewise, among transnational communities and a means of alleviating hardship for their family. Recently there has been an increase in remittances sent by immigrant workers from 7 billion in 2017 to 9 billion in into its local economy in 2018. Several reasons indicatean increase in remittances that is nearly outpacing migration. Mostly the main reason for the growth in remittance is the composition of migrants and the changing macroeconomic conditions that area strong determinant of the remitting behaviour.

Survival and reduction of dependency ratios

Remittances play a significant role in reducing the dependency ratio of recipients in the country of origin as Ukrainian’s. The families receiving money from abroad have to make investment decisions with the funds received to cater for their development to be able to provide for essential commodities. Ability to generate cash form business ventures from remittance as the source of business capital enables the survival of the Ukrainian population living within the country particularly women and children

Positive effects

National development

Remittances have led to the development of the Ukrainian nation as the remittances are proportionally equivalent to the foreign direct investment offered to the country. According to the International Organization for Migration (IOM), there would have been a 7% decline in Ukraine’s economic potential had it not been the stimulating effects of migrant workers(Migration., 2019). Consequently, remittances by Ukraine’s citizen has led to the reduction of poverty levels within the country by 3.5% decrease of people living in poverty. According to IOM, expenses take the lion’s share of remittances at 76 %, and consumer goods take 23% while lastly 3.3% is used in setting up businesses within Ukraine.

Negative effects

Exploitation by online money transfer services

The money transfer market has been on its highest within Ukraine as 3.2 million of its labour works outside the country(Ratha, Migration and remittances Factbook 2016. The World Bank, 2016).Their ability to transfer money back home depends on the online money transfer markets which are currently exploiting their remittances with high charges. These charges are affecting the remits as reducing the need to wire money as most Ukrainian’s are preferring cash transactions.

Increase in Labor migration

The other effect is that the labour migration has made Ukrainian’s to work abroad on a permanent basis is on a continuous trend due to the prospect of skilled individuals to attain better living standards and higher salaries. Ukraine’s government has failed to combat the unemployment problem, improve wages and enable a quality workplace environment(Zong, 2015). According to Ukrainian prime minister Volodymyr Groysman, there is a possibility to stop labour migration within a few years as the country is trying to develop a sustainable development capacity on its human capital.

Trafficking and Labor exploitation

The country has remained to be the among countries with highest victims of trafficking out of the possible 111,000 Ukrainian’s. According to IOM, there are 7% of victims of trafficking with a rough estimation of 7500 victims from since 1991(Migration., 2019).There are also increasing trends of labor exploitation as most Ukrainian’s are either working in fields that are in line with their speciality. In other instances, the immigrants are doing odd jobs regardless of their qualifications while only a few have found jobs in their area of specialisation.

References

Center., W. (2019). Ukrainians Abroad: The Economics and Politics of Labor Migration. [online] Available at: https://www.wilsoncenter.org/blog-post/ukrainians-abroad-the-economics-and-politics-labor-migration [Accessed 28 Jan. 2019].

Migration., U. A. (2019). Retrieved from https://www.wilsoncenter.org/blog-post/ukrainians-abroad-the-economics-and-politics-labor-migration.

Ratha, D. (2016). Migration and remittances Factbook 2016. The World Bank.

Ratha, D. (2016). Migration and remittances Factbook 2016. The World Bank.

Zong, J. &. (2015). European immigrants in the United States. Migration Policy Institute.

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