Uzbekistan: towards a employment generation

programmeNotes for presentation

Eduardo Zepeda

IPC

Uzbekistan: Growth Performance

• Osmani informed us about the smoothed transition process of Uzbekistan.

• Official figures for GDP indicate give a average growth rate of 4.3% for 97-03.

• This figures are contested by the IMF, the WB, the ILO’s study.

• But if true or nearly true, these figures give a good room for poverty reduction.

Poverty declined in Uzbekistan

• Poverty decreased from mid 1990s.

• Cornia’s incidence of poverty: 23% in 1997 to 16% in 2001.

• Needy families decreased from 53% to 36% over the same years.

• WB’s 2000/1 estimates: – Extreme poverty 10%.– Poverty, sf, 27%.

Poverty (WB estimates)

• Large regional differences ranging:– ep: 2% Bukhara, 42% Kashkadarya– p: 13% Tashken, 63% Kashkadarya.

• Poverty, sf,:– unemployed 35% – employed 25%

–industry 40%–agriculture 24%

Major problems with Uzbekistan strategy

• Running out of steam

• Diminishing scope for import substitution

• High inequality (possible rising)

• Underutilisation of capacity

• Low employment elasticity

• Concentration on capital intensive projects

• Unemployment and underemployment

labour market policiesUNDP (Mckinley’s ) proposals

• Extend public works– turned to infrastructure & regional dev. :

• renovate the irrigation system• Build rural roads, Improve agricultural markets• Create infrastructure for exports

– Operation of public works:• Wage bill to total expenditures ratio of 0.7• Fine tune the setting of wages

– With poverty reduction impact• An ‘employment guarantee scheme’ (low-wage employment on public works within ~10 Km of anyone. • Enhance labour mobility (flexibility in residence permits, affordable housing for rent). • Improve training programs

– Ensure access of the poor youth– Develop vocational training).

Employment

• Population 2003 26 m.• Working age population 14 m.• Employed 9.6 m.• Employed youth (16-24) 14%• Unemployment 3.9%• Registered 0.4%• Unregistered 3.5%• By ILO standards ~6%

Employment % distribution

Industry 13

Agriculture 32

Transport 8

Trade, public catering 8.4

Health 7

Education 13

Financing 0.5

Government 2

Housing, communal serv 3

Construction 8 (other 9%)

Employment

• Small businesses 5.4 m. (57% work force)

• Small and micro 1.0 m.

• Farms 0.6 m.

• Self (agric & non) 3.6 m.

Informal employment

• Informality has grown• 1 January 2004: 28% or 2.9 m., of which:

– Industry 1%– Agriculture 18%– Construction 21%– Trade public catering 26%– Services 21%– Transport 7%– Other 6%

Informality• Who are the informal (01-2002 Decree):

– Hired• Temporary one-time or day work employees.• Irregular employees.• Seasonal employees.• Migrants

– Self employed.• Assisting family members.• Vendors at markets and outside of them

• Reasons (survey responses):– Ees willingness ees (avoid registration).– Eyers willingness (avoid regulation, costs).– Low pay in the formal sector.

Accommodating to employment adjustments

• Releasing excess labour in agriculture– 500 th. 98-01– 300 th. 02-04

• Absorbing released workers into created farms– 438 th. 98-01– 290 th 02-04

• Releasing from large non-agriculture enterprises: 400 th. 02-03

• Absorbing 470 th. in small bs. 02-03

Are these new bs. productive?

• The process seems not much more from a change of status and a breakdown of size, but

• U. gov. programe to promote local content (local raw materials) in small bs suppliers of large bs.– Exemptions from tariffs– Bonuses: managers, engineers & technicians– Priority servicing by banks

• Light inds, machinery, chemicals.

Prommotion of small businesses

• Simplification of registration & regulation– U. ranks good among transition economies.

• Access to financial resources.

• Tax benefits.

• However, cash restrictions & tax collections remains a problem.

Public works

• Financed by 50% enterprises & organisations and 50% from local budget & the employment fund (payroll taxes), no plans for clear & large budget allocations.

• Responsibility of state government bodies.• Miscellaneous activities, including improvement of land,

but not much strategic design (seasonal work, public events, etc.).

• PW participation is closely regulated in terms of eligibility & temporariness (it might even become permanent).

• Wages are calibrated, at regular official wages & tariffs, but not less than 1.15 of the unemployment allowance. Are these right?