The Future of Human Capital in Central Asia Nargiza Juraboeva 2009

Human Capital ??? Human capital refers to skills, education, health and training of individuals. Linked to human development and is measured based on human development indicators Expenses that a Government makes into the education and health are seen as an investment into future productivity returns of which are later seen in wages and input into the economy.

Education Health Labour market Growth Income Productivity

We will talk about... Central Asia in brief The Soviet influence on human capital Independence: what went wrong? The current state of affairs What is next?

The Soviet influence 1.Universal access to education and health 2.Equal access to boys and girls 3.High quality of education 4.Innovation, science and research 5.Nearly universal employment 6.Women in decision making roles 7.Universal social security system

Independence: what went wrong? Reforms can be painful – Inability of existing systems to adjust smoothly – Time it takes to start new market oriented reforms Severe implications on citizens – Declining social indicators – Increase in poverty and inequality – Rising unemployment and rise of the informal sectors – Decreased investment to R&D and science

One of the recent books: Central Asia’s Second Chance - geopolitics - power - institutions by Martha Brill Olcott

New challenges Shift in the architecture of the labour market Rise of the private sector (liberalization policies) Rise of the informal sector (labour dislocations) Decreasing quality of education (motivation) Gap between the education system and new market demands Increase in poverty and inequality Negative impact on human capital

Real GDP growth (%)

GDP per capita

Increasing disparities... KAZ: 18.2% population live below poverty line, with 40% close to poverty line (2006) KYR: 35% in poverty and 6.6 in extreme poverty (urban – 30%, rural – 51%) TAJ: 64% below poverty line, 2006 TUR: about 21 % (ADB estimation), 2006 UZB: 23,6% (urban-17,6%, rural-27,1%), 2007

Education For all Central Asian states the literacy rate is 95% and over Schooling is compulsory and gender equality is maintained Enrolment is lower specialized colleges and higher education  gender disparities are more vivid (KAZ an exception) The number of early marriages has increased – a barrier for girls to continue education

What is new? Identification of gaps and new programmes Expansion of education facilities – Creation of specialised colleges Revised curricular at all levels Introduction of IT and resource centres Education programs for talented youth (study abroad and exchange)

Despite certain achievements, the existing system of educational management has failed to promote successful implementation of public policy in the area of developing human resources, which is oriented towards current and prospective labour force demands. It has also failed to ensure an increased level of education among the population.

Health Human capabilities and the level of productivity have a direct link to health Anaemia is very high in the region  lower work output Malnutrition – height and lack of vitamins Iodine deficiency  intellectual level Vitamin A  mortality and death (50-60% of women and children in the region) Lack of access to quality basic health services Low awareness and early marriages

People that don’t have jobs... Tajikistan: unofficial unemployment rate is 33% Kazakhstan: 8.4% in 2004, down from 13.5 % in 1999 Uzbekistan: officially at 4%, but others estimate at 4, 5 times higher Kyrgyzstan: Officially 8.1 in 2005

I need a job... 30% of university graduates in Uzbekistan do not work in the area of specialization 20-24% of graduated from construction colleges cannot find jobs, at a time when there are lack of specialists in other KAZ: proportion of the unemployed with only secondary or primary vocational education was 38.1%; the proportion without any vocational education was 49.7% in 2002

What is for gender in employment? construction, transportation, communications industries; production and distribution of electricity, gas, and water Men education, healthcare, social services sectors Salaries in these sectors are approximately 2.5 times lower than salaries in the traditionally “male” sectors Female unemployment among women in all age groups is more than 1.5 times higher than that of men

Where can I earn for living... Russia? Kazakhstan? Foreign markets? Brain Drain bubble

Labour migration Total labour migrants (including daily labour and shuttle trade, 2004): – Around 600,000 for Tajikistan, Kyrgyzstan, Uzbekistan – 1,209,814 people emigrated from Kazakhstan between 1995 and Remittances: – Up to 20% of GDP in Tajikistan (2005) – 10% of GDP in Uzbekistan (2007) – 27% of GDP in Kyrgyzstan (2007) = 1bln USD

What next? Commitment and political will – Can we learn from mistakes? – Can we close the gaps? Strengthen public administration reforms: invest in institutions and capacity development Strengthen the rule of law

Did we miss a chance to integrate better...

Time is ticking and money is flowing

What next? Continuous improvement in the education sector – Focus on quality (creativity, innovation, self- expression) – Spend resources wisely, M&E system Address the market demand and adjust supply of graduates – Analyze the market to learn what skills are missing – Learn from others and take action

The region is rich in human resources. We should not lose the momentum to enhance the capacities of our people and help create knowledge based economies. There is a need for the right kind of reforms, that are sustainable in the long term.