Uzbekistan: towards a employment generation programme Notes 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 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 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 policies UNDP ( 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 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 Industry13 Agriculture32 Transport8 Trade, public catering8.4 Health7 Education13 Financing0.5 Government2 Housing, communal serv3 Construction8 (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 ( 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 –300 th Absorbing released workers into created farms –438 th –290 th Releasing from large non-agriculture enterprises: 400 th Absorbing 470 th. in small bs

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?