Uzbekistan Quality Job Creation as a Cornerstone for Sustainable Economic Growth

Unlocking the Potential for Labor Productivity Growth
Table 3.6: Formal and Informal Employment, Uzbekistan, 2016 
(%)
Men
Women
Total
Employed as permanent employees
Formal
69.4
85.2
75.2
Informal
10.0
6.9
8.9
Employed as part-time employees
Formal
2.5
1.0
1.9
Informal
1.2
0.7
1.0
Employed in seasonal jobs
Formal
1.9
1.3
1.7
Informal
8.1
1.3
5.6
Casual/daily workers
5.8
3.0
4.7
Others
1.2
0.7
1.0
Total
Informally employed
26.2
12.5
21.1
Note: Informal employment is defined as working without a formal contract or unpaid family work. 
Sources: CER and UNDP (2018), based on the data from the European Bank for Reconstruction and 
Development and World Bank survey, Life in Transition III (EBRD and World Bank 2016)
Factors contributing to the high level of informal employment in Uzbekistan 
include the low level of education among the population;
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a complex and 
uncertain tax system; and a high tax burden on larger businesses, which 
discourages entrepreneurs from expanding and growing their businesses. High 
personal income tax rates and a single social payment lead to underreporting 
of wages, a cash-based payment, and double accounting. 
A high incidence of informality usually indicates that other factors hinder 
firm entry, growth, and exit in the formal private sector and is a symptom of 
challenges to both firms and workers. The Enterprise Surveys (World Bank 
2013b) show that the top business environment obstacles firms in Uzbekistan 
face are electricity issues, followed by practices of competitors in the informal 
sector, and then tax rates (Figure 3.12). These findings are robust regardless 
of firm size. A flourishing informal sector is a major obstacle for starting a new 
business in the formal sector given the perceived unfair competition brought 
about by the presence of informal firms. Informal enterprises have an average 
operating life of 2 years without a formal registration. 
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The higher the taxpayer’s level of education, the higher the tax literacy, and therefore the higher the incentive 
to work formally. For example in 2016, informal employment among people with higher education was one-
third the level of people with only secondary education (CER and UNDP 2018).

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