The Customs Union’s Single Labor Market Fantasy

April 8, 2014

This article is co-written by Luke Rodeheffer and Devin Ackles.

Admist the chaos in Ukraine, the leaders of Belarus, Kazakhstan and Russia recently convened in Astana as part of the Eurasian Economic Commission. Beyond the upbeat statements from the troika’s leaders, one topic that remains a source of anxiety is how effectively a common labor market is being created within the Customs Union (CU) and what this means for the establishment of the Eurasian Union in 2015. The CU is rapidly transforming into a vehicle to both protect Russia’s domestic industry and replenish its labor market at the expense of Belarus and Kazakhstan. News that Global Trade Alert ranked Russia as the world’s most protectionist market in 2013 has been accompanied by increasing evidence that the Customs Union is not creating a common labor pool between the three member states so much as causing ever greater numbers of qualified Belarusians and Kazakhs to leave their homelands and work in the Russian Federation.

In addition to the continuing flight of skilled labor to the West, Belarus’s brain drain is accelerating as a result of the Customs Union’s common labor market. The Belarusian Ministry of Labor admitted this fact at a recent conference, with Labor Minister Marianna Shetkina revealing that approximately 100,000 Belarusians are working in Russia, and the amount of money that they are sending back to Belarus is growing yearly, reaching $1 billion in 2012 and $700 million in the first three quarters of 2013. As a result of the mass outflow of workers into Russia, Belarus faces a growing labor shortage. Nowhere is this better illustrated than in Minsk, where the number of vacancies is eleven times higher than the number of unemployed.

The number of guest workers in Belarus doubled to 18,000 in 2013, coming to the republic from other former Soviet states and Southeast Asia after being recruited by Belarusian factories, who have offered them housing and training. Fifty guest workers from Tajikistan were fired from an enterprise in Minsk last year as a result of a conflict with Belarusians, a sign that Belarusian authorities will have to contend with the same type of ethnic clashes between guest workers and natives that occur in Russia with ever increasing frequency if it plans to join a common labor market within the Eurasian Union.

A very similar situation is developing in Kazakhstan. A study by a personnel management consultancy based on interviews with 1600 recent graduates in the country revealed that 20 percent of respondents wished to emigrate to Russia if they received a work permit. In a follow-up study conducted one year later, nearly one third of the same respondents had either left Kazakhstan or were in the process of obtaining work permits abroad, contributing to a serious lack of qualified labor.

Andrei Kazantsev, a specialist on migration issues at the Moscow State Institute of International Relations, has confirmed this trend: in August of last year, more than 600,000 Kazakh citizens were registered in Russia, an even higher number than the number of Kyrgyz guest workers, “a change in the proportion of migrants that was not considered by the creators of the Customs Union.” Seventy percent of emigrants from Kazakhstan were of ethnic Russian origin in 2013.

Despite the flight of qualified workers, the number of guest workers entering Kazakhstan is on an upward trend. Over the past seven years, the number of imported laborers has increased by a factor of three, mostly low-qualified laborers from Tajikistan, Kyrgyzstan, and Uzbekistan. In December 2013, Kazakh President Nursultan Nazarbayev signed legislation aimed at creating a legal framework for guest workers, as most are working in the country illegally.

Similar trends are present in other former Soviet republics. With the expected entry of Kyrgyzstan and Armenia into the Eurasian Union in 2015, even more guest workers will leave these impoverished former Soviet states for the Russian labor market. Russia’s Immigration Service announced that the number of guest workers from Armenia in 2013 increased by 20 percent, while Russian figures indicated a similar increase in the number of Kyrgyz who entered the Russian Federation for work.

The surge of workers from other former Soviet states into the labor market comes at a time when Russia’s Duma is considering amending existing citizenship laws to dramatically simplify the procedures and shorten the length of time necessary for foreigners to obtain Russian citizenship. These procedures will affect foreigners who have established successful businesses in Russia, who have invested in Russian companies, or studied at Russian universities, as well as native Russian speakers. The Customs Union is not creating a common labor market so much as a large funnel as Russia pulls ever more workers from the former Soviet space into its own beleaguered labor market.

Devin Ackles is an analyst at CASE Ukraine, independent political risk consultant and editor for english-language Belarus news and analysis website Belarus Digest ( He can be found on twitter at

Luke Rodeheffer is an MA candidate in International History and a research assistant at Koç University in Istanbul, as well as a freelance analyst on Eurasian geopolitical affairs. He tweets on Eurasian geopolitics at