Remittances of foreign workers

The major foreign worker groups in Austria are traditionally from the former region of Yugoslavia and from Turkey. With free mobility of labour within the EU the situation changed as increasingly Germans – particularly after the implementation of Hartz 4 regulations in 2006 – and workers from the new EU-MS in Central and Eastern Europe (CEEC) moved in.

Accordingly, there is a shift of remittances over time, away from the traditional guest worker regions to the source regions of EU-migrants.

Remittances to the region of former Yugoslavia have been high and rising in the early 1970s as the employment of Yugoslavs was growing rapidly in Austria. With the onset of restrictions in the recruitment of foreign workers and the settlement tendencies of Yugoslavs in Austria the amount of money transferred to Yugoslavia decreased and came almost to a standstill after 1990 as political unrest and eventual war developed in the region of former Yugoslavia.

In 1993 the transfers started to rise again until 1995 (245 million ATS or 17.8 million €). In the course of 1996, a slight decline to 17.5 million € (241 million ATS) set in again. (Figure 63)

The development of remittances to Turkey follows a very different pattern over time. The pattern is anti-cyclical; the remittances increased in periods of economic slack and growing unemployment in Austria. Ever since 1987, when a very low level of money transfers to Turkey was reached, the remittances started to rise on a continuous basis until 1995. Then 119.8 million € (1,649 million ATS) were transferred to Turkey, the highest amount ever since the beginning of the series in 1966. In 1996 the sum declined again somewhat to 111.1 million € (1,529 million ATS).

Regulatory changes by the Austrian National Bank pertaining to the registration of money transfers abroad caused a break in the series. The amount of money, which an individual wants to transfer abroad, must be registered, if it surpasses € 5,087 (ATS 70,000). This is a rather high amount of money, which means that a large number of small individual transfers go unregistered, while playing an important role for the individual and family welfare in the recipient countries.

74 For more see Ministry of the Interior: Fremdenpolizei, Visawesen 2015.

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Figure 63: Remittances of foreign workers to their home countries 1966-2006

0 100 200 300 400 500 600 700 800 900

1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

In 1,000 Euro

Turkey Former Yugoslavia Sum of Transfers of Turks and Yugoslavs

Total transfer of foreign workers (debit) Total transfer of foreign workers (credit)

Source: Austrian National Bank (OeNB).

In the light of the relatively small amount of money which is being transferred home annually by foreign workers via registration by the Austrian National Bank, often no differentiation by country of destination or nationality is possible. One may, however, differentiate between large destination regions of remittances. The Austrian National Bank has completely revised the data base and provides a differentiated time series (by country) for the period 1995 to 2010. Flow data is no longer publicly but may be provided by the National Bank upon request.

Austria has seen a total net outflow of money as a result of remittances of migrants over the whole period 1995-2017, amounting to 226 million € in 1995 and rising to 390 million € in 2010 and further to 583 million € in 2017. The net flow results from 267 million € inflows (credit) and 850 million € outflows from Austria (debit) in 2017. In 2007, as can be seen in the figure below, the net financial outflows have increased drastically – an indication of the onset of the financial crisis and the increase in remittances to the regions of origin of the migrants who tended to be harder hit than Austria. The net outflow of remittances to the outside world (total) rose from 388 mill euro in 2007 to 583 mill euro in 2017, i.e. by 195 mill euro or 50%.

(Figure 64)

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Figure 64: Total gross flow of remittances between Austria and the rest of the world: 1995-2017 (in million euros)

Source: Austrian National Bank (OeNB).

Remittances between countries of the Euro-17 area and Austria result in a net inflow of money into Austria. Since 1995 the amount is declining, however, from 76 million Euro in 1995 to 40 million € in 2010. In contrast, significant net outflows of remittances go into Central and Eastern European Countries (CEECs), indicating that labour migrants of these regions save as much money as they can to send it back home to their families. In 2010 the net outflows to CEECs amounted to 573 million Euros.

The flow of remittances between Austria and the EU27/28 is also linked with a rising outflow of money from Austria, reaching 215 million € in 2010, after 75 million in 1995. Until 2016 the net outflow of remittances to other countries of the European Union increased further, reaching 330 million € in 2016. Somewhat less pronounced is the net outflow of remittances of migrant workers in Austria to countries outside the European Union, i.e., to third countries. It can be taken from Figure 65 that – in 2016 -the net outflow amounted to 203 mill euro, somewhat less than in 2007 (238 mill€) but exhibiting by and large a rather stable picture over time.

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Figure 65: Net remittances of migrants in Austria to their source regions in million €:

1995-2017

Source: Austrian National Bank (OeNB).

The impact of the financial squeeze migrants experienced as a consequence of the economic downturn in 2008 becomes even more obvious if looked at the various major recipient countries of money transfers from migrants in Austria. Significantly more money has been transferred to the source countries of migrants, in particular Russia, Bosnia-Herzegovina, Romania and Poland as well as Asia. The money transfers often constitute a major source of income for the families back home. (Figure 66)

It can be taken from Figure 67 that migrants from the traditional foreign worker source regions, who by now tend to be well established and to have accumulated some wealth in Austria, are the ones that send more money ‘back home’ than the more recent migrants from CEECs, Russia and Asia. Turkey is an interesting case; the volatility of economic growth in Turkey and the onset of the recession in 2000 triggered off increasing outflows of remittances from Austria to Turkey. Net remittances increased from 55 million in 1995 to 72 million € in 2002.

In the wake of economic recovery in Turkey outflows remained stable for a while but started to increase again in the wake of the international financial crisis in 2007/08, reaching a peak of 79 million € in 2008; as the financial crisis hit Austria as well, and Turkish migrants in Austria in particular, the outflow of remittances declined to a low of 63 million € in 2010.

In the wake of the economic recovery in Austria, the net outflows of remittances to Turkey picked up again and reached 79 million € in 2016. By sending remittances to Turkey, the

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Turkish migrants in Austria contribute to investment and consumption in Turkey, thereby promoting Turkish economic growth. This point is examined in more detail by Akkoyunlu—

Kholodilin (2006). The authors conclude that remittances buffer above all the negative consequences of economic volatility for poor households, thereby stabilising consumer demand in Turkey.

Figure 66: Net financial flows of migrants in Austria to their home countries in million Euros 1995-2010

-100 -90 -80 -70 -60 -50 -40 -30 -20 -10 0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

in million euros

Bulgaria Hungary Poland Romania

Slovakia Bosnia Croatia Russia

Turkey Czech Republic Asia

Source: Austrian National Bank (OeNB).

It can be taken from Figure 67 that remittance flows between Austria and Germany tend to be positive, i.e., more migrant money transfers go from Germany to Austria than the other way around. This is a fairly long-term trend, but the net inflows from Germany decline over time, in particular since 2009. Then the net inflow to Austria amounted to 141 million €; until 2016 the net inflow declined to 48 million € in 2016.

In contrast, the net outflow of remittances to Yugoslavia has lost its former dynamics. Partly because some of the former Yugoslav countries have become members of the European Union, partly because many former Yugoslavs have settled and start investing in Austria.

Nonetheless there is still some net outflow of remittances to Yugoslavia, amounting to 47.5 million € in 2016.

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Figure 67: Net flow of remittances from and to Austria: 1995-2017

Source: Austrian National Bank (OeNB).