Journal of Central Asian and Caucasian Studies, 2, 4, 2007,pp 103-130. ISSN: 1306-682X

SOURCES OF AND SOLUTIONS TO YOUTH UNEMPLOYMENT

AND EMPLOYMENT PROBLEMS IN THE NEW MARKET ECONOMIES; EVIDENCE FROM CENTRAL ASIA*

Ken Roberts, University of Liverpool**,

Jochen Tholen, University of Bremen Lyazat Kozhamkulova, Al-Farabi National University, Almaty,

Aikanysh Abulgazieva, Socioinformbureau, Bishkek, Kurbanov Firdavsiy, Central Asia, and

** Corresponding author Professor K Roberts Department of Sociology, Social Policy and Social Work Studies, University of Liverpool, Eleanor Rathbone Building, Bedford Street South, Liverpool L69 7ZA, England. Phone: 44 (0)1695 574962 Fax: 44 (0)151 794 3001 Email: bert@liverpool.ac.uk

* The research on which this paper is based was funded by INTAS, award 04-79-6914

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April 2008

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ABSTRACT

This paper reports findings from surveys in 2006 of matched samples totalling 61

enterprises from old and new business sectors and 1402 of their young (aged up to 30)

employees in Almaty (Kazakhstan), Bishkek (Kyrgyzstan) and Samarkand (Uzbekistan).

The evidence is used to interrogate three possible explanations of the high levels of youth

unemployment and under-employment that are proving persistent in all CIS countries

(and elsewhere in East-Central and Western Europe). The explanations are: i. Weak

labour demand relative to supply, ii. Mismatches between the skills and knowledge

imparted in education and the requirements of firms in expanding business sectors, and

iii. ‘Partial Americanisation’ – the expansion of general/academic upper secondary

schooling and higher education without complementary changes in firms’ approaches to

youth recruitment and training, or in young people’s career expectations and ambitions.

We argue that the evidence justifies rejecting the mismatch hypothesis and amending the

others. The problems associated with partial Americanisation appear most likely to prove

temporary because the circumstances created are encouraging businesses and their young

employees to take corrections actions. The weak labour demand hypothesis is supported

not just because, inevitably, shortfalls in demand have left young people unemployed, but

also because a local context of expanding and profitable businesses appears necessary to

foster the confidence and optimism to lead firms to invest in their workforces, and young

people to invest in order to boost their own employability and career prospects.

Keywords: Central Asia, Education, Employment, Unemployment, Youth.

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INTRODUCTION

Explaining youth labour market problems High levels of youth unemployment and under-employment (in low wage, short hours,

temporary or casual jobs) are persistent problems in all CIS countries, throughout East-

Central Europe, and much of the pre-2004 EU also. In the new market economies this

problem is commonly attributed (wholly or partly) to weak labour demand: it is said (or

hoped) that young people will be absorbed into their countries’ workforces as the

economies expand. In this paper, ‘weak labour demand’ will be hypothesis 1. One reason

for querying this hypothesis is the persistence of substantial youth unemployment and

under-employment even in places where the economies are buoyant as in allegedly

booming cities such as, for example, Moscow in Russia1 and Almaty in Kazakhstan (see

below). An alternative or complementary diagnosis is that youth unemployment is

structural: the result of a mismatch between the output of education and the kinds of

knowledge and skills that are now in demand. The solution, it is said, is to cease

equipping too many young people with old skills (in mining and engineering for

example) and to gear vocational education and training towards expanding business

sectors such as ICT, financial and consumer services. ‘Wrong skills’ will be hypothesis 2

in this paper. However, we also entertain and interrogate a third ‘partial Americanisation’

hypothesis, which suggests that hypothesis 2 mistakes the character of the mismatch that

has arisen in most parts of Eastern Europe and the former Soviet Union.

1 K Roberts, G Osadchaya, H V Dsuzev, V G Gorodyanenko and J Tholen, ‘Who succeeds and who flounders? Young people in East Europe’s new market economies’, Sociological Research Online, 7, 4, 2002.

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Education in Eastern Europe and the former Soviet Union

Every country’s education has unique features but nowadays most countries’ systems

approximate to one or the other of two global models, described here as the European and

the American. These models have their origins on their respective continents but both are

now global. European systems divide secondary age pupils into academic/general tracks

on the one side and vocational/technical/professional tracks on the other. The age when

this division first occurs varies, as do the proportions on the different tracks and the ease

with which young people can switch tracks, but throughout Europe this division is made

at some point between age 10 and 16. US education was generically European to begin

with but by 1939 most vocational highs had been merged into comprehensive high

schools, and most young people were becoming high school graduates at age 18/192. By

1970 college had become the normal next step for high school graduates, and nowadays

around two-thirds of young Americans progress from high school into college amid a

debate about over-education3. For present purposes, which model produces the best

results in terms of levels of attainment is not the issue. The crucial point is that the

different models of education interface with labour market processes and businesses’

2 E A Krug, The Shaping of the American High School (New York, Harper and Row, 1964); P Osterman, Getting Started, (Cambridge, Mass, MIT Press, 1980); R H Turner, ‘Sponsored and contest mobility in the school system’, American Sociological Review, 25, 1960, pp. 855-867. 3 R Duncan and J Goddard, Contemporary America (2nd edition, Basingstoke, Palgrave Macmillan, 2005); R B Freeman, The Over-Educated American (New |York, Academic Press, 1976); R W Rumberger, Overeducation in the US Labor Market, (New York, Praeger, 1981).

5

methods of human resource management different ways which are summarised in Table

I.

Table I Ideal typical education-labour market relationships European model American model Vocationally specific skills General abilities Occupational identities Vague but high aspirations Obtain jobs easily High unemployment in early career

stages Good fit between jobs entered and qualifications

More mismatches: over-qualified young employees

Immediate income returns on education Delayed returns External occupational labour markets Internal labour markets: on the job

training Derived mainly from M Gangl, ‘European patterns of labour market entry: a dichotomy of occupationalized and non-occupationalized systems’, European Societies, 3, 2001, pp. 471-494; B M Schneider and D Stevenson, The Ambitious Generation: America's Teenagers,Motivated but Directionless, (Boston, Yale University Press, 1999); M Szdlik, ‘Vocational education and labour markets in deregulated, flexibly coordinated and planned societies’, European Societies, 4, 2002, pp. 79-105. In the European model, pupils/trainees tend to develop occupational identities. Each

cohort becomes occupationally segmented prior to entering the labour market proper.

Labour markets themselves are occupationalised. When workers switch jobs they

normally do so while remaining within their occupations, and career progress is normally

within the same occupations. When occupations contract, the vulnerable workers may

need to retrain for entirely different kinds of work.

The American model encourages young people to develop high but otherwise vague and

flexible career aspirations. Entrants to the labour market are arranged in a single

metaphorical queue by their levels of educational attainment. The best-qualified young

people get the best jobs, and the employers who are offering the best jobs get the best-

6

qualified young people. Employers need to provide newcomers with basic induction

training and then further training as the businesses’ operations change and as individuals’

careers develop. Typically employees will learn a wide range of skills that their particular

employers need. Businesses incentivise their workforces by creating internal labour

markets thereby enabling employees to achieve promotion as their skills and know-how

make them increasingly valuable to their companies. Employees are likely to face

difficulties if a company closes or downsizes since much of their vocational capital will

be firm-specific. If forced back onto external labour markets, individuals may find it

necessary to accept demotion before beginning to work their way up again.

Europe’s and America’s education systems, labour markets and businesses developed in

parallel, each adjusting to the other. In times of rapid change, as during the

transformation of the former communist countries, incongruities are only to be expected.

The European and American models constructed above are unrealistically pure ideal-

types which are useful because of their ability to illuminate changes over time, and the

situations at particular times in any country and region therein, which is how the models

are used here. The Soviet Union adopted a version of the European model with which all

the CIS countries embarked on their transformations in 1991. Thereafter most (but not

all) of their education systems have been at least partly Americanised. This development

was unplanned. The initial catalyst was the closure or labour rundowns at most of the

state plants to which vocational secondary schools and many higher education institutions

were linked. The abandonment of state central planning (where this was abandoned) was

7

not accompanied by the development of German-style corporatist arrangements through

which to plan the re-alignment of businesses’ needs and vocational education. One

outcome in most of the relevant countries has been large increases in the proportions of

young people completing general/academic secondary education and, in most places,

progressing into higher education4. The extent of these changes varies from place-to-

place. Everywhere there are still some vocational/technical/professional secondary

schools, sometimes still servicing their original industrial plants, sometimes revived or

newly created by new private businesses5, and sometimes acting as residual safety-nets,

accommodating young people who fail to gain places in other schools6.

The countries where there has been least structural change in education are those that

have been slowest to ‘reform’ their economies and politics (Azerbaijan, Belarus and

Uzbekistan, for example). In practice, all countries have mixed systems; they are never as

pure as the ideal types. That said, the direction of change in most CIS countries has been

4 F Markowitz, Coming of Age in Post-Soviet Russia (Urbana and Chicago, University of Illinois Press, 2000); E Meshkova, ‘Education and restructuring Russia: history and tendencies’, paper presented to International Sociological Association Congress, Montreal, 1998; R M Sattarov and L M Lemberanskaya, ‘Changing socio-economic system and transitions of youth into the labour market in Azerbaijan’, in Transitions and Mobility in the Youth Labour Market: Proceedings of Workshop of the European Network on Transitions in Youth, Norwegian Social Research, Oslo, 1999, 25-34. 5 K Roberts, ‘The new East European model of education, training and youth employment’, Journal of Education and Work, 14, 2001, pp. 315-328; K Roberts and T Szumlicz, `Education and school-to-work transitions in post-communist Poland', British Journal of Education and Work, 8, 1995, pp. 54-74. 6 F Markowitz, Coming of Age in Post-Soviet Russia, (Urbana and Chicago, University of Illinois Press, 2000).

8

unmistakable and in the countries that have changed there can probably be no turning

back for two sets of reasons. First, the relevant ex-communist countries are not yet

capable (and may never become capable) of introducing the kind of corporatist economic

management that is required if the European model is to work at its best7. Second, the

European model was probably better-suited to twentieth century industrial contexts than

to twenty-first century global market conditions. The model is creaking even in the

European countries such as Germany where it has been strongest8. It has proved

impossible to implant (West) German practices into the new eastern Lander9. The basic

problem appears to be that the model proves too cumbersome amid turbulent

technological and market conditions. Businesses find that they need to be flexible which

is easier within the American model.

If the future is American in this respect, then, where Americanisation has occurred, the

new market economies’ education systems have been changing in the right direction. The

questions that then arise are:

7 Y Shavit and W Muller, ‘Vocational education: where diversion and where safety net?’ European Societies, 2, 2000, pp. 29-50. 8 H-D Kohler, ‘Adjustment problems between human resource strategies and public educational systems in Germany and Spain’, paper presented to European Research Network on Transitions in Youth, Oslo, 1999. 9 K Evans, M Behrens and J Kaluza, Learning and Work in the Risk Society: Lessons for the Labour Markets of Europe from Eastern Germany, (Basingstoke, Macmillan, 2000); H Grunert and B Lutz, ‘A double process of destabilization in post-socialist societies: the case of Germany’, paper presented to Workshop of the European Science Foundation Scientific Network on Transitions in Youth, La Ciotat, 1996; R Hyman, ‘Institutional transfer: industrial relations in Eastern Germany’, Work, Employment and Society, 10, 1996, pp. 601-639.

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• Have there been corresponding changes in firms’ and young people’s labour

market behaviour?

• Have there been corresponding changes in businesses’ skill formation strategies

and employees’ approaches to their own career development?

• If not, what are the obstacles and how might these be overcome?

In these changed times, young people should expect and accept:

• Employment that does not match their education-based specialties.

• Initial jobs which fall short of their aspirations.

• A period of trial and floundering prior to finding jobs in which they want and are

able to settle.

• That they need training on taking-up employment, then recurrently.

• That they need to take personal responsibility for enlarging their portfolios of

skills and qualifications, partly as a safeguard if they need or want to change their

employers.

For their part, employers should:

• Seek recruits who are trainable rather than ready-skilled.

• Provide basic training and then prescribe subsequent training for recruits and staff

at all levels.

• Create internal labour markets to incentivise employees to extend their skills and

to demonstrate their capabilities and commitment.

Then, in so far as employers and employees are willing to change, the questions arise as

to whether they are encountering obstacles such as:

• No suitable education or training facilities.

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• Education failing to provide clear signals of trainability.

Methods

Questions about the sources of young people’s school-to-work transition problems are

highly policy-relevant in all the new market economies (and elsewhere as well). The

research reported here has sought answers in just three specimen regions in three of the

new market economies (Kazakhstan, Kyrgyzstan and Uzbekistan). It tests simultaneously

the ‘weak labour demand’ hypothesis, the ‘wrong skills’ hypothesis, and the ‘partial

Americanisation’ theory. If hypothesis 2 (wrong skills) or hypothesis 3 (partial

Americanisation) is correct, then unless corrective actions ensue the likely long-term

outcomes will be firms operating on low-skill/low-pay equilibriums, and long-term

reliance on foreign trained and based staff for many high-level skills. The hypotheses,

and especially the third (partial Americanisation) hypothesis, arise from previous

research in the new market economies but up to now none have been tested properly.

During 2006 each of three local-based research teams studied a ‘balanced selection’ of 20

or 21 businesses in its home region (Almaty in Kazakhstan, Bishkek in Kyrgyzstan, and

Samarkand in Uzbekistan). The balance was between firms that were small but not micro

(10-99 employees) and larger, and in old and new business sectors. Food and drink

processing, engineering and other manufacturing, and construction represented the old

economies, while financial services and ICT represented the new. With a total of 61

businesses (21 in Bishkek, 20 elsewhere) from the three regions/countries, we will show

that it is possible to draw tentative conclusions about differences according to business

11

sector and country/region. Information from the companies was obtained by interviews

with the personnel/human resource or more senior managers, or the owners. The

interview schedule was developed from instruments that had previously been used

successfully in enquires in East-Central Europe and the former Soviet Union10. These

schedules focused on changes in the businesses since independence (or whenever the

companies were formed if post-1991), trends in profitability, volume of output and

turnover, and in the workforces (numbers and types of employees and occupations).

Thereafter, the interviews explored in depth the firms’ methods of recruitment, types of

recruits sought to different occupations, amounts and types of training provided and

prescribed, and opportunities for career progression, all within a framework of changes

and stabilities over time. Other issues that were explored in depth were the firms’

satisfaction or otherwise with the quantity and quality (suitability) of the staff they were

able to attract and retain, and the firms’ practices as regards training and retraining

employees using internal and external facilities. These interviews included both

structured and open-ended questions.

A second, parallel strand in the fieldwork comprised surveys using self-completion

questionnaires of young employees (up to age 30) in all the participating companies (total

response = 1402). This schedule too was based on instruments already used successfully

10 K Roberts, A Kurzynowski, T Szumlicz and B Jung, ‘Employers’ workforce formation practices, young people’s employment opportunities and labour market behaviour in post-communist Poland’, Communist Economies and Economic Transformation, 9, 1997, pp. 87-98; K Roberts, D Duisenbekov, T Balykbaev, V Shabelnikov and J Tholen, ‘How to manage successfully in Central Asia’, Journal of East European Management Studies, 7, 2002, pp. 316-322.

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to gather information about young people’s labour market behaviour and career

development in the new market economies11. Information on family backgrounds, age,

sex, nationality and region/country of origin was sought, then on education and labour

market/employment biographies. Thereafter the schedule explored in detail post-labour

market entry experiences of education and training, qualifications and skills acquired, the

respondents’ ambitions at the time of leaving school and whether these had subsequently

changed and if so why, and the extent to which the individuals were satisfied with their

current employment, opportunities to add to their skills and qualifications, and to

progress within or outside their present companies. The total response (1402) was

sufficient to explore differences by place, types of firms and many other factors.

A third strand in the project involved profiling post-1991 changes in secondary and

tertiary education, and in the structure of the economies, business mixes and labour

markets, in each of the participating regions and countries. The profiling was from

documentary sources and existing data sets, supplemented by interviews with key

informants in central and regional/local government departments.

Both the questionnaire for use with young employees and the interview schedule for use

with employers were piloted prior to the main fieldwork. In each of the regions

investigated, the project’s normal fieldwork language was Russian. 11 K Roberts, S C Clark, C Fagan and J Tholen, Surviving Post-Communism: Young People in the Former Soviet Union (Cheltenham, Edward Elgar, 2000); K Roberts, G Osadchaya, H V Dsuzev, V G Gorodyanenko and J Tholen, ‘Who succeeds and who flounders? Young people in East Europe’s new market economies’, Sociological Research Online, 7, 4, 2002.

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The information gathered in the three strands of research enables the project’s hypotheses

to be tested.

i. If the ‘weak labour demand’ hypothesis is correct, then in the places where

labour demand was weakest, employers should have been experiencing the

least difficulties in recruiting the numbers and types of personnel sought

whereas, at the beginning of their careers, difficulties among young people

should have been most severe and widespread.

ii. If the ‘wrong skills’ hypothesis is correct then employers in new (expanding)

business sectors should have been experiencing difficulties (moreso then those

in old sectors) and likewise young people without new skills (moreso than

those prepared for employment in new, expanding business sectors).

iii. If the ‘partial Americanisation’ hypothesis is correct, then where education

had changed in this particular way, difficulties should have been equally

widespread across all business sectors and among both employers and young

people.

It should be noted here that the hypotheses are not all either/or. Hypothesis 1 is

compatible with both 2 and 3, whereas 2 and 3 are not compatible with one another.

Many studies of youth labour market issues, especially young people’s transition to work

problems, have focused on the young unemployed (or the ‘socially excluded’ as they are

often described nowadays). Our research differs in this respect. We gain impressions of

14

conditions in the external youth labour markets in the three cities via the experiences on

leaving education and seeking their initial jobs of the young employees in our samples,

and from firms’ experiences when seeking young recruits. We know from previous

research in the new market economies that on leaving full-time education young people

have very soon (within a year) been divided into those who obtain regular employment

then stay fully employed, their work experience becoming an additional asset should they

need or wish to change jobs, and others who face long-term difficulties in breaking in12.

All the young adults in our research had broken in, and their experiences in employment,

and their employers’ experiences and behaviour, enable us to explore the sources, the

causes, of young people’s employment and unemployment problems more effectively

than is possible when focusing exclusively on young people (their numbers and their

characteristics) who have failed to break in.

FINDINGS

The locations

We need to refine our original hypotheses in order to engage with the evidence that we

collected. This is because the situations encountered ‘on the ground’ were predictably

more complicated than our initial questions. Social research can never achieve the purity

of a laboratory experiment. For example, whether firms were finding it difficult to recruit

the kinds of labour that they needed nearly always depended on the types of occupations

being filled. Also, each city had particular features that were likely to be affecting the

12 K Roberts, ‘The career pathways of young adults in the former Soviet Union’, Journal of Education and Work, 19, 2006, pp. 415-432.

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ease with which its businesses could recruit, and the ease with which young people could

obtain jobs.

Almaty was by far the most prosperous of the three cities. This was a result of the oil and

gas revenues that had been flowing into Kazakhstan since the end of the 1990s. There

were numerous indicators of Almaty’s relative economic buoyancy: 84% of its firms said

that their business was currently expanding compared with 70% in Samarkand and 65%

in Bishkek; since 2000 there had been overall increases in employment in 84% of the

Almaty businesses against 70% in Samarkand and 56% in Bishkek; and 59% of the

young employees in Almaty were earning at least the equivalent of $250 a month

whereas none were earning this much in either Samarkand or Bishkek. Exactly how much

of Almaty was prospering was a topic of local debate at the time of our fieldwork.

Despite the economic boom that had been underway for several years, there still appeared

to be a huge excess of local job-seekers, partly due to an influx of people moving from

more depressed areas of Kazakhstan into ‘booming’ Almaty13. In 2006 there was still a

great deal of youth unemployment, attributed in a 2004 report from the United Nations

Development Programme Kazakhstan (see below) to a mismatch between the skills that

school and college leavers could offer and what businesses required – our hypothesis 2,

which we treat as just one of several possible explanations for the persistence of youth

unemployment in Almaty and elsewhere in the following analysis. All that said, in

relative terms Almaty was far more prosperous in 2006 than either Bishkek or

Samarkand, so our hypothesis 1 suggests that young people should have been finding it 13 S Kurakbaev, Migrants Compound Almaty’s Problems, (London, Institute for War and Peace Reporting, 2001).

16

easiest to obtain their first jobs, and employers should have been finding it more difficult

to recruit in Almaty than in either of our other research locations.

Uzbekistan, in which Samarkand is a regional capital, was making a transition from

communism into a managed market economy (and a managed democracy), and alone

among our research locations had retained the basic structure of education inherited from

Soviet times. There had been substantial government investment in education in

Samarkand (and throughout Uzbekistan as a whole) but with the intention of updating

and strengthening the old routes through education towards employment. By 2006 around

30% of the upper secondary age group in Samarkand was being educated in newly built

or refurbished academic lyceums from where most students were expected to progress to

university. The rest of the age group was to be educated in professional colleges (also

newly built or completely refurbished), which were replacing the former general

secondary and vocational secondary schools and were preparing young people for work

in different branches of the Samarkand economy.

By 2006 Almaty and Bishkek had both experienced large increases in the proportions of

their young people who were completing an academic secondary education then

proceeding to university, and the numbers attending vocational schools had declined in

both cities. If either our hypothesis 2 (wrong skills) or hypothesis 3 (partial

Americanisation) is correct, businesses in Samarkand should have been experiencing less

difficulty in finding young people with appropriate skills, and young people should have

been finding it less difficult to obtain jobs commensurate with their education than in

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either of the other two cities. Labour demand in Almaty was considerably stronger than

in ether Samarkand or Bishkek, so the fairest comparison to assess the consequences of

retaining vocational tracks in upper secondary education and capping the expansion of

higher education in Samarkand is with Bishkek.

By 2006 Kyrgyzstan (where Bishkek is the capital) was just regaining its 1991 level of

economic output, and Uzbekistan was in roughly the same position in this respect.

Kyrgyzstan differed in that, as noted above, the number of students on vocational courses

had declined, and higher education had expanded massively – from a participation rate of

around 12% in 1991 to over 50% by 2006. In 1991 Kyrgyzstan had just nine higher

education institutions whereas by 2006 there were 51 (including nine new private

universities). Most of the growth had been in subjects unrelated to the students’ likely

future employment14.

Almaty (and Kazakhstan in general) had experienced similar developments. In

Kazakhstan the proportion of 19-24 year olds in higher education rose from 17.8% in

1996 to 33.4% in 200115. In 1999, when a national examination for university entry was

introduced in Kazakhstan, 23% of secondary school leavers took the tests; by 2002 89%

were taking them16. If our hypothesis 3 (partial Americanisation) is valid, one would

14 B Kassymbekova, ‘Seeds for a poor harvest’, www.eurasianet.org. Posted 18 February 2005, accessed 25 February 2005. 15 United Nations Development Programme Kazakhstan, Poverty in Kazakhstan: Causes and Cures (Almaty, Publication UNDPKAZ08, UNDP, 2004). 16 G Zhakenov, Kazakhstan National Report on Higher Education System Development. www.unesco.kz/he/kazakh_eng.htm. Posted, no date. Accessed 29 January 2007.

18

expect firms in all sectors, and young people in general, to have been encountering

greater difficulties in the labour market in Bishkek than in Samarkand. Strong economic

growth could have accounted for any greater difficulties encountered by firms in Almaty,

but not in Bishkek.

Recruitment and job hunting

Which employers were experiencing the most serious difficulties when hiring labour, and

which young job seekers were experiencing the most problems? Before proceeding to

the relevant evidence, a restatement of what we are initially looking for may be useful.

• If the main determinant of levels of difficulty on both sides of the labour market

was the relative strength of labour demand and supply (hypothesis 1), young job

seekers should have encountered least difficulty in Almaty, and employers should

have encountered the most serious difficulties, in Almaty.

• If mismatch (hypothesis 2) was the main problem, both sides of the labour market

should have experienced least difficulty in Samarkand, and employers in old as

opposed to new business sectors in all three cities, and young people with new as

opposed to old skills, again in all three cities.

• If partial Americanisation (hypothesis 3) was the main source of difficulties, once

again, both employers and young job seekers should have experienced fewest

problems in Samarkand, but in this case the problems elsewhere should have been

spread evenly across business sectors.

Table II

19

Firms’ recruitment difficulties by location (in percentages)

Almaty

Bishkek

Samarkand

Recruitment usually difficult for:

Managers 63 61 45 Professionals 42 41 40 Office staff 17 18 15 Manuals 17 5 0 Difficulties when recruiting managers

Shortage of specialists 88 83 70 Working conditions 0 25 55 Low salaries 0 41 55 Professionals Shortage of specialists 83 82 70 Working conditions 0 43 35 Low salaries 0 50 55 Office staff Shortage of specialists 67 56 35 Working conditions 0 39 35 Low salaries 50 62 40 Manual Shortage of skilled workers

50 47 35

Working conditions 0 25 15 Low salaries 100 53 45 N = 20 21 20 Table III Firms’ recruitment difficulties by business sector (in percentages) Old sector New sector Recruitment usually difficult for:

Managers 54 59 Professionals 36 48 Office staff 19 13 Manuals 9 4 Difficulties when recruiting managers

Shortage of specialists 73 88 Working conditions 48 29 Low salaries 57 33 Professionals Shortage of specialists 69 88

20

Working conditions 48 21 Low salaries 67 29 Office staff Shortage of specialists 36 65 Working conditions 35 36 Low salaries 52 43 Manual Shortage of skilled workers 48 31 Working conditions 26 7 Low salaries 56 43 N= 37 23 Our actual findings do not match any of these clear hypothesised patterns. Most

employers in all three cities, in old and new business sectors, reported that filling office

and manual vacancies was not a problem (see Tables II and III). Filling management and

professional/specialist positions was often reported to be a problem in all three cities, and

in all business sectors; this applied whenever the firms wanted someone with relevant

experience. Salary competition, and other terms and conditions of employment, were the

most likely problems when there were any difficulties (which were exceptional) in

recruiting to manual and office posts, and higher-level positions as well in some cases.

Salary competition was a more serious problem for employers in Samarkand and Bishkek

than in Almaty because in the former cities manual employees (especially skilled

construction workers) were liable to exit for Kazakhstan or Russia where considerably

higher earnings were available. Two-thirds of the employers reported that they were

satisfied with the quality of the people they were recruiting into all types of jobs with no

clear differences between the cities or business sectors (see Tables IV and V)

Table IV Firms’ satisfaction with the quality of recruits by location (in percentages) Not satisfied with quality of recruits

Almaty Bishkek Samarkand

Managers 16 21 25 Professionals 11 24 25

21

Office 28 25 35 Manuals 33 35 25 N = 20 21 20 Table V Firms’ satisfaction with the quality of recruits by business sector (in percentages) Not satisfied with quality of recruits

Old sector New sector

Managers 20 22 Professionals 27 8 Office 32 26 Manuals 29 35 N = 37 23 The samples of young employees were asked how easy they it had been for them when

they were searching for their first jobs, how many jobs they had been offered at the time,

whether they had managed to avoid unemployment lasting a month or longer, whether

their first jobs matched what they wanted at the time, and how easy they thought it would

be to move to another job which was as good or better than their current jobs. We also

asked how closely their first and current jobs matched their education.

Once again, there is no clear, immediately visible pattern in the evidence which matches

just one or two of our initial hypotheses (see Tables VI and VII). The young employees

had received the most job offers on first entering the labour market in Almaty but had

been most likely to avoid unemployment in Samarkand. Bishkek does not head the league

on any of the indicators of ease of finding jobs and comes a poor third in the number of

job offers typically received on leaving education, and how easy the respondents felt it

would be to move to another job as good or better than those they currently occupied.

The generally greater difficulties reported by the young people in Bishkek are consistent

with all our hypotheses: labour demand was weaker than in Almaty, and, unlike in

22

Samarkand, education in Bishkek had not normally prepared young people for any

specific types of employment.

Table VI Young employees’ labour market difficulties by place (in percentages) Almaty Bishkek Samarkand Very easy or easy to find first job

37 52 58

Perfect match to what wanted 33 29 34 How many jobs offered: more than 1

67 35 48

Never unemployed for at least a month

35 35 50

Very easy/quite easy to find another job at least as good

58 30 60

Education corresponds with first job Wholly

45

29

33

Partly 43 21 45 Education corresponds with current job Wholly

45

29

33 Partly 43 21 45 N = 480 503 419 Table VII Young employees’ labour market difficulties by place and business sector (n percentages) Almaty

old sector

Almaty new sector

Bishkek old sector

Bishkek new sector

S’kand old sector

S’kand new sector

Very easy or easy to find first job

47

47

50

57

63

53 Perfect match to what wanted

24

38

21

43

26

44 How many jobs offered: more than 1

63

69

25

55

45

51 Never unemployed for at least a month

33

37

32

42

53

44 Very

23

easy/quite easy to find another job at least as good

60

56

24

41

52

72 First job corresponded with educational background: Wholly

36

49

18

57

32

42 Partly 42 39 18 17 42 44 Current job corresponds with educational background: Wholly

32

52

15

55

27

40 Partly 47 41 19 24 47 44 N = 180 300 330 173 245 161 It is of some interest here that the reported correspondences between the young people’s

education and the jobs they had entered were closer in Almaty than in Samarkand, and on

all the intra-city comparisons these correspondences were closer when the young

employees were employed in new rather than old business sectors. This evidence alone

may be considered sufficient to reject hypothesis 2 (the mismatch explanation) because

the differences run in exactly the opposite directions than suggested by the hypothesis.

Also, none of the evidence from employers gives clear support to the mismatch theory.

However, although sometimes inconsistent, the evidence presented above is insufficient

to reject the labour supply/demand imbalances explanation of labour market difficulties

(hypothesis 1). Labour demand was stronger in Almaty than in the other cities, but as

indicated above, there is evidence from other sources that there was still substantial

excess labour in Almaty in 2006 where, as in the other locations, employers very rarely

24

reported difficulties when filling any kinds of occupations except when they were seeking

relevant experience. Variations in the strength of reported correspondence between the

young people’s education and their jobs were unrelated to variations in the ease or

difficulties that they had experienced when job searching, and which employers were

experiencing when recruiting. As stated above, when employers reported any difficulties

it was relevant experience that was said to be in short supply rather than young people

with appropriate education.

If mismatch (hypothesis 2) is rejected, then partial Americanisation (hypothesis 3) stands

as an alternative plausible explanation for some of the difficulties reported by young

people in Almaty and Bishkek. In Samarkand, weak labour demand relative to supply

appears to be the sole plausible explanation of young people’s job finding difficulties.

Developing human resources

One reason why firms in all three cities reported few difficulties when filling manual

vacancies was that in old business sectors (where most manual employment was based)

expanding firms had found it possible to recruit staff who had been offloaded from other

companies. In Almaty, when these local human resources dried up, it was possible to

attract migrants from neighbouring CIS countries (usually Kyrgyzstan or Uzbekistan).

Clearly, neither of these solutions to skill shortages could operate universally or

indefinitely. All types of businesses in all three cities reported difficulties when seeking

qualified and experienced managers and professionals/specialists. In so far as they were

25

experiencing skill shortages, to what extent were the firms developing the required skills

and experience within their own workforces?

We can measure the ways and extent to which different kinds of businesses were

investing in human resources from the reports of their young employees. They were

asked, in relation to their current jobs, whether they had received formal induction

training, then subsequent training either inside or outside their firms, whether they had

moved on to different jobs from those that they did when they first joined the companies,

and whether they felt that they had progressed in their careers and skills (see Tables VIII

and IX).

Table VIII Young employees’ career development experiences by place (in percentages) Almaty Bishkek Samarkand Not still doing basically same job as when started at firm

43 38 49

Formal induction 55 54 43 Subsequent formal training in firm

41 21 33

Sent outside for training 34 12 28 A great deal of progress in terms of: Skill

63

48

37 Career 28 9 24 N = 480 503 419 Table IX Young employees’ career development experiences by place and business sector (in percentages)

Almatyold sector

Almatynew sector

Bishkekold sector

Bishkeknew sector

S’kand old sector

S’kand new sector

Not still doing basically same job as when started at firm

40 45 38 37 52 45

Formal induction 45 61 41 79 32 60 Subsequent formal 30 49 11 39 29 40

26

training in firm Sent outside for training 23 40 4 26 22 35 A great deal of progress in terms of: Skill

50

70

42

61

33

42 Career 20 33 6 14 20 29 N = 180 300 330 173 245 161 Here we see some very clear-cut differences. On five out of the six indicators the Almaty

sample of young employees reported the most career development experiences at their

current workplaces (Table VIII). On 16 out of the 18 intra-city comparisons (Table IX),

young people in new business sectors had more career development experiences than

those employed in old sectors. The new sector employers, of course, had the greatest

need to nurture the particular skills that they required if only because there were no older,

experienced staff available in the local labour markets. A plausible explanation of

Almaty’s lead is its expanding economy fostering confidence that the businesses would

reap returns on their investments in human resources.

We should note that the absolute proportions of young people experiencing all forms of

training and career development were rather modest. This was especially so in old

business sectors where, in all three cities, less than a half of recruits had received any

formal induction training and less than a third had received any subsequent training in

their current jobs. Even in new sector businesses in Almaty, only 33% of the young

employees felt that they had made a great deal of career progress since joining their

current employers, just 49% had received any formal training after their initial inductions

(if any), and 55% reported that they were still doing basically the same jobs as when they

started at the firms.

27

To what extent were the young employees behaving pro-actively, and how flexible were

they willing to be in promoting their own career development? We have six indicators:

the competence that they had developed in English language (higher levels of

competence usually required private classes or coaching), whether they had taken any

courses on their own initiative and gained further qualifications as a result since starting

their employment careers, whether they possessed written CVs, whether they had

changed their ambitions since completing full-time education, and whether they would

seek fresh challenges and opportunities to learn new skills if they changed jobs (see

Tables X and XI).

Table X Young workers’ pro-activity and flexibility by place (in percentages) Almaty Bishkek Samarkand Good or better English 42 22 20 Ambitions changed since left education

77 61 69

Taken course(s) on own initiative

26 17 14

Further qualification(s) 17 12 8 Written CV 42 31 23 If look for another job, very important that it offers new challenges/opportunities to learn new skills

65

61

55 N = 480 503 419 Table XI Young workers’ pro-activity and flexibility by place and business sector (in percentages)

Almatyold sector

Almatynew sector

Bishkekold sector

Bishkek new sector

S’kand old sector

S’kand new sector

Good or better English 32 49 12 39 12 30 Ambitions not still the same as when left education

75 78 56 71 70 69

28

Taken course(s) on own initiative

22 28 8 35 13 15

Further qualification(s) 13 19 9 17 11 5 Written CV 31 49 20 54 10 41 If look for another job, very important that it offers new challenges/opportunities to learn new skills

64

66

57

68

53

56 N = 180 300 330 173 245 161 On all six indicators the young people in Almaty proved more pro-active and flexible

than their comparators in Bishkek and Samarkand. Within Almaty, on five out of the six

indicators, and on all six in Bishkek, young employees in new business sectors were the

most pro-active and flexible. In Samarkand, in contrast, there were no clear differences

by sector (Table XI).

What conclusions can be drawn? We infer that young employees were most likely to be

pro-active in their own career development and flexible in their ambitions when they

were in locations where career opportunities were expanding, that is, in Almaty rather

than Bishkek or Samarkand, and in new rather than old business sectors except that this

appeared to depend on their education not having led them to believe that they were

already vocationally proficient (most likely in Samarkand). Generally, the young

employees were flexible in their career planning and were seeking to develop their

careers. Over 50% of those in both old and new business sectors in all three cities said

that if they changed jobs they would seek new challenges and opportunities to expand

their skills. Over two-thirds, again in both old and new business sectors and in all three

cities, had changed their ambitions since completing full-time education; the sole

29

exception here is that just 56% of those working in old business sectors in Bishkek had

done so.

All this evidence supports a somewhat amended version of our original hypothesis 1. The

different overall balances between labour demand and supply were not explaining the

extent to which firms or beginning workers experienced difficulties at the points of hiring

and job searching respectively. However, an expanding economy and expanding labour

demand seemed to be increasing firms' need and confidence to invest in developing the

skills of their workforces, and the same conditions seemed to be encouraging young

employees to invest in their own career development. ‘Partial Americanisation’, which

had occurred in Almaty and Bishkek, appeared to be having positive rather than negative

consequences in terms of young people’s opportunities for career development. Firms

knew that they needed to nurture within their existing workforces the skills that they

required. Young employees knew that they were deficient in occupation-specific skills. In

stark contrast, rather than promoting ongoing human resource development, Samarkand’s

planned routes from education into different segments of the workforce were failing to

encourage either employers or their young employees to put themselves in charge of their

own prospects.

DISCUSSION

A normal outcome of fieldwork is that surviving hypotheses are amended, then in their

revised form become available for testing in further enquiries. This is how knowledge

progresses: nothing is ever established beyond dispute with 100% certainty. In contrast,

30

hypotheses can be rejected and thereby, at least for the time being, jettisoned from

research agendas. In our case we believe that ‘mismatch’ (hypothesis 2) can be

abandoned.

Our research locations did not include an example of young people being trained in

excessive numbers in old outdated skills or for employment in declining industries. We

doubt if there are any such places. It appears that the normal course of events in the new

market economies has been for vocational schools and courses to contract alongside

corresponding businesses and jobs. Samarkand was restructuring its upper secondary

education to correspond with the changing profile of the region’s workforce. In Almaty

and Bishkek young people were not continuing to be trained in old skills but had moved

from vocational routes into enlarged educational programmes that did not prepare them

for any particular kinds of employment unless they went on to become teachers or

researchers in their academic specialisms. Another reason for dispensing with the

mismatch hypothesis is that we did not find that businesses in new sectors were

experiencing more difficulty than their counterparts in older sectors in recruiting

appropriate staff and building skilled workforces.

We are minded to dismiss rather than amend the mismatch hypothesis not just because of

the absence of any support in our quantitative data, but also on account of softer evidence

that we collected. An occasional employer did say that it would be helpful if there were

more applicants who had been prepared specifically for jobs in the particular industry, but

this was exceptional. Most employers, in old and new business sectors, said that they

31

would always give equal consideration to applicants from a range of educational

backgrounds. This applied even in Samarkand where most businesses were not restricting

recruitment, and usually did not even have a preference for, young people who had

attended corresponding schools and colleges. Some employers in Samarkand argued that

the region’s vocational schools had been better in the past, in communist times, when the

schools had been sited on enterprises’ premises and when much of the curriculum

consisted of work experience. They did not have equal regard for the upgraded

professional colleges where more of the instruction was classroom-based.

Hypothesis 3, partial Americanisation, is supported by our evidence in so far as this is

exactly what had happened in Bishkek and Almaty. Their education systems were not

continuing to produce young people prepared for employment in occupations and

industries that had disappeared, but had shifted young people onto enlarged educational

programmes where the content bore no close relationship to any of the kinds of

employment to which graduates might progress (unless they became teachers or

researchers in the subjects). However, our original statement of this hypothesis needs

amendment into line with our evidence. The original statement posited partial

Americanisation as an obstacle to the employment of young people and a cause of youth

unemployment and under-employment. These would have been among the consequences

if young people had been rigidly committed to careers in their academic specialisms, but

this was simply not the case. Partial Americanisation would also have been an obstacle to

youth employment if firms had been unwilling to hire and train young people with no

prior experience or knowledge about the businesses, but in practice many (though

32

admittedly not all) employers were responding differently. Some believed that there were

advantages in doing all occupation-specific training in-house. Were they doing enough?

Probably not. None of the firms had developed a reliable way of producing future

managers and professional-grade staff – the positions that were usually reported to be

difficult to fill and where most firms were trying (with mixed results) to acquire relevant

experience via external labour markets. Businesses in older sectors were relying heavily

on older skilled staff, people who were in mid- or late-career. In both old and new sectors

young employees were typically doing low skill, low paid, and often, we suspect, low

quality work. However, some firms (mainly in new business sectors) were developing

their own training provisions and using external providers, including local universities

who were willing to lay-on customised courses. The solution to any problems created by

partial Americanisation appeared to be to push on to full Americanisation rather than to

try to re-create, through state or corporatist planning, programmes in upper secondary and

higher education matching particular countries’ and regions’ new occupational mixes.

Hypothesis 1 (insufficient demand for labour being responsible for young people’s

transition into employment problems) is supported by our evidence, but this evidence

also shows that our original hypothesis needs substantial amendment. Evidence is hardly

necessary to argue that youth unemployment will rise and fall according to the relative

strength of labour demand and supply in local markets. However, our original hypothesis

envisaged large shortfalls in labour demand having generalised depressing effects on job

opportunities for young workers, and correspondingly making life easier for employers.

This was not how affairs were working out in practice. Once young people had broken

33

into regular employment they became ‘insiders’, largely insulated from the effects of

external levels of unemployment. Huge surpluses of job seekers did not make it easier for

employers to select the most suitable, or to solve problems related to shortages and the

production of the particular skills and other capabilities that the firms needed. Relatively

low unemployment did not necessarily make it easy for young people to find the

particular jobs that they wanted. The mechanisms remain unclear, but our evidence

suggests that when firms are growing and confident about their future prospects, both the

employers and their young employees are willing to ratchet up their ‘investments in

human resources’. This scenario was more likely to be found in new as opposed to old

business sectors in Almaty and Bishkek, and more often in all sectors in Almaty than in

either of the other research locations.

There were crude surpluses of labour in all the cities that we investigated. These

surpluses may take a long time to drain. A current fact of life throughout the entire post-

communist world seems to be that when a particular city’s economy booms, labour is

sucked in from other regions and sometimes from other countries. However, in some

ways this makes no difference to ‘insiders’ (the businesses or their employees). What

seems to make a difference to human resource formation is whether particular businesses

are growing and can be optimistic about their futures, and such businesses, needless to

say, will be most numerous in times and places of general economic expansion.

This is our amended version of original hypothesis 1, which interfaces with amended

hypothesis 3. Economic growth may not eliminate unemployment, but it increases the

34

chances of young people obtaining regular jobs, and also creates the conditions inside

firms which impact on the experiences of owners, managers and employees in ways that

speed up the transition from partial to full Americanisation.

35

Authors

Ken Roberts is Professor of Sociology at the University of Liverpool. He is an

academician of the Academy of Social Sciences, and is among his country’s senior youth

researchers. In the late-1980s he was one of the principal investigators in the Economic

and Social Research Council’s research programme on young people and social change.

Subsequently he co-directed an Anglo-German comparative study. Since 1992 he has co-

ordinated a series of projects into the effects among young of the ongoing changes in

former communist countries. His books include Poland’s First Post-Communist

Generation (Avebury, Aldershot, 1995), Surviving Post-Communism: Young People in

the Former Soviet Union (Edward Elgar, 2000), and Youth in Transition in Eastern

Europe and the West (Palgrave Macmillan, 2008).

Lyazat Kozhamkulova is Professor and Head of Sociology at the Al-Farabi National

University, Almaty. She is also President of the Kazakhstani Association of Social

Workers, which has undertaken research into sociological, social policy, welfare and civil

society issues. Her publications include Social Work in Urban Areas: Principles and

Directions (2003), and Social Partnerships: The Mechanisms of Partnership (2003).

Aikanysh Albulgazieva is an economist. She is the director of Socioinformbureau,

Bishkek. The main focus of this NGO’s research and teaching is on transition problems

in education and management. They have been involved in a series of projects variously

funded by the World Bank, Eurasia Foundation, UNDP and the Carl Dusiberg Society.

36

Her publications include Economic Security in the Epoch of Globalisation (2002), and

National Report on Human Development in Kyrgyzstan (2002).

Kurbanov Firdavsiy is a pseudonym.

Jochen Tholen is an economist and sociologist with special interests in the management

of work organisations, labour markets and industrial relations. He has co-ordinated

comparative studies of managers in Germany, Britain and Russia, as well as on the

Europeanisation of industrial relations and human resource management in Central Asia.

Since 1991 he has been senior researchers and deputy leader of the Department of

Labour/Chamber of Commerce of the University of Bremen, and since 2001 he has been

research director of the Institute of Labour and Economy, University of Bremen. His

books include Labour Relations in Central Europe (Ashgate, Aldershot, 2007) and

Market or Mafia? Russian Managers on the Difficult Road to an Open Society (Ashgate,

Aldershot, 1997).

37