1.
General environment of Employment
1.1 National vision, Governmental medium- and long-term strategies
High demographic pressure, low incomes of the population, under-reformed status, high level of
monopolization and regulation unable the economy to create sufficient jobs. This makes employment
problem in the public policy agenda. Although there is no separate officially issued employment policy, the
Government of Uzbekistan (GoU) focuses on 2 major issues in economic policy sector, that is, enhancing
exports and employment.
In fact: (i) there is no unified principles, approaches and tools on employment policy; (ii) no considering
indirect effects of sectoral policies; (iii) no estimations of cost of new job establishment by competing
policies and projects; (iv) weak ex-post monitoring over efficiency of public policies implementation, e.g.
reality of declared new jobs creation or even simple profitability of investment projects.
In 2017-2018, the Ministry of Employment and Labor Relations was restructured, responsibilities,
available tools for employment policy implementation as well as financing were enhanced. Moreover, the
procedures of traditionally used tools as unemployment allowances were simplified. Together with new
opportunities to get some temporary and permanent jobs (in many cases Public Works), resulted in
increasing usage of employment public services. As mentioned earlier, there is no officially issued
employment vision or strategy. There are mid- and long-term development strategies for numerous sectors,
but integrated national strategy has not issued. It is expected to publish draft national development concept
up to 2030 by end of February. From fragmented information (official reports, some governmental decrees
and resolutions) one can derive pieces of the GoU mid- and long-term plans on employment, such as the
plan for enhancing number of employed persons, improving system of training for the unemployed,
improving number of training courses and making them more labor market demand oriented, etc.
1.2 Law, Act and Policies
There are several employment-related Law, Act, Policy, and Decree in terms of General, Unemployment
allowances, Allocation of subsidies and grants, Training and retraining for unemployed, Salaries and wages,
Annual employment program, Foreign labor migration.
For example, General includes Labor code, Law on Employment (edition of 2020), President‘s Decree
#UP-5052 from May 24, 2017 ―On further improvement of the public policy on employment and
improving efficiency of public employment service‖, etc. Umeployment allowances includes Regulation on
registering citizens‘ in the public authorities on employment, paying them unemployment allowances
(registration #831). Allocation of subsidies and grants include Regulation on allocation of grants and
subsidies in the expense of the Employment Fund (registration #316), President‘s Resolution #PP-4804
from July 11, 2020 ―On additional measures on stimulating entrepreneurship, active participation in the
labor market, training for poor and unemployed and enhancing employment‖.
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INTERNAL. This information is accessible to ADB Management and staff. It may be shared outside ADB with appropriate permission.
1.3 Major government organizations and affiliated-organizations
There are various organization and affiliated organization directly and indirectly related to employment
service in Uzbekistan, including the Ministry of Employment and Labor Relations (MOELR), Ministry of
economic development and poverty reduction (MEDPR), Ministry of Higher and Secondary Special
Education (MOHSSE), Ministry of Support of Makhalla (citizen‘s self-governance) and Family, State
Statistics Committee, Youth issues agency, Regional and district governors, Federation of trade unions.
1.4 Characteristics of Labor Market
In macroeconomic perspective, it seems that the economy is steadily growing. Between 1997 and 2003,
real GDP growth averaged 4.4%. From 2004 onward, Uzbekistan experience economic growth rates above
7.0% every year until 2015. This rapid economic expansion was driven by the global commodity price
boom. More recently, GDP growth rates decelerated to 4.5% in 2017 and 5.1% in 2018 due to a
combination of falling commodity prices and a sharp decline in exports to the People‘s Republic of China
and Kazakhstan.
1.4.1. Labor Supply Side : Demographic and Labor Force situation
Uzbekistan has the most populated country in the Central Asia. Total population of Uzbekistan as of Oct,
2020 is 34.4 million. The population is fast-growing with the annual rate of 1.7-1.9%. Population is mostly
young. The share of the group aged under 34 was 63.6% in 2020.
The labor market is Uzbekistan‘s greatest challenge and opportunity at the same time: (i) on the one hand,
young and fast-growing population creates opportunities for accelerating economic growth, fast learning
and adaptation to new technologies as well as low dependency rate allows to keep labor taxation in
moderate level. (ii) on the other hand, it requires permanent creation of huge amounts of new jobs.
Labor resources grow annually at 1.7-1.8% but only 75% of labor resources are economic active.
Unemployment is significant. In 2019, the unemployment rate was 9%. The main reason of such high
unemployment is decoupled economic growth and jobs creation. Total formal employment rose from 8.2
million in 1996 to 12.3 million in 2016 (50% increase). However, as a result of the simultaneous growth in
the economically active population (and the working-age population), the employment rate declined by
0.52 percent per year on average between 1996 and 2016.
Unemployment problem worsened owing to COVID-19. The GDP growth rate dropped to 1.5% for 2020.
Therefore 2.3 million people got unemployed during January-June 2020, resulting in an unemployment rate
of 13.2%. Youth and women unemployment are even higher. As of June 2020, one out of five young people
(aged 16-30 years) were unemployed; and women unemployment rate reached 17.4%.
Lack of jobs has resulted in large labor migration outside of Uzbekistan. The number of labor migrants
was officially reported as 2.38 million (12.7% of workforce) in 2018, 2 million in II Quarter of
2020(however, real figures are higher).
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INTERNAL. This information is accessible to ADB Management and staff. It may be shared outside ADB with appropriate permission.
One of the major characteristics of Uzbekistan‘s labor market is informality. Most of jobs are in informal
sector. According to the MOELR estimates, the share of informal jobs is 59.3% (5.4 million persons) in
2018. Informal employment share is especially high in construction, trade and catering, transportation and
storage. Informality most of jobs results in lacking social benefits, workers protection, labor safety issues,
etc, so adversely contributes to inclusiveness.
1.4.2. Labor demand side
The biggest employer sectors are primary agriculture and services. Despite to discrepancy in statistical
data, these two sectors are the largest employers. From 2005 employment in primary sectors have been
reducing, with services and industry sectors have been accounting for almost 80% of all newly created jobs.
Also, the structure of the services sector is continually changing. Judging by these trends, a large proportion
of jobs created in the labor market in the near future will be in services.
Despite to large unemployment, there is keen need for qualified workforce. Skills shortages have been
identified as the critical constraint for private sector growth and economic diversification. As a result, main
trend of Uzbekistan labor market is developing corporate capacity building/skills improvement. For
example, in 2018 average sum for capacity building/skills improvement increased 7 times.
1.5. Labor migration and Overseas employment
High unemployment and low incomes drive foreign labor migration. Main destination for labor migration
is Russia. According to the MOELR estimates, 2.2 million people worked abroad in the beginning of 2020.
However, real numbers are more. ADB estimates that about 2.6 million migrant workers are employed,
often on uncertain terms and with limited rights, in the Russian Federation alone. The major characteristics
of labor migration and overseas employment are following:
∙
Remittances among the major contributors to economic growth, but levels have been declining in recent y
ears. In 2020 remittances were USD 6 billion.
∙
Only 9% of labor migrants hired through ―organized migration.‖ During the pandemic, about 500 thousan
d persons returned to Uzbekistan.
∙
A typical migrant is 31 years old, comes from a rural area, is male, married, and has completed at least sec
ondary education.
∙
Share of remittances in personal incomes is highest in Samarkand (22.7%), Khorezm (22.7%) and Surkha
ndarya (20.1%) Regions. Less depend on remittances industrialized Novoi (4.4%) and Tashkent (5.7%) re
gions.
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