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Original Articles

Labour market policies and Central Asian poverty

Pages 351-371 | Published online: 08 Aug 2006
 

Notes

1. R. R. Hanks, ‘Emerging special patterns of the demographics, labour force and FDI in Uzbekistan’, Central Asian Survey, Vol 19, No 3/4, 2000, pp 351–366.

2. This paper uses International Labour Office Bureau of Statistics, LABORSTA Database, based on the United Nations Population Division 2000 Revision.

3. This paper takes working ages as 15 to 64, rather than the larger cohort utilised by the LABORSTA Database.

4. The CIS comprises twelve of the republics of the former Soviet Union; the three Baltic Republics did not join and became members of the European Union in 2004.

5. ILO, World Employment Report 2004–05 (Geneva: ILO, 2005), Table 1.3, p 27.

6. The validity of this conclusion would be nullified if the ILO projection assumed for 2010 the same ratio as obtained in 1990.

7. In 2003 41,000 Kyrgyz workers were in employment but on short-time or on forced leave (IMF, Kyrgyz Republic: Statistical Appendix, February 2005, Country Report 05/3, Table 13), as were 60,000 in Uzbekistan (IMF, Republic of Uzbekistan: Interim Poverty Reduction Strategy Paper, May 2005, Country Report 05/160, pp 14).

8. EBRD, Transition Report 2003 (London: EBRD, 2003), Charts 2.8–2.10.

9. Hanks, op cit, Ref 1, p 356.

10. Factors in the earlier disturbances are considered by L. M. Handrahan, ‘Gender and ethnicity in the “transitional democracy” of Kyrgyzstan’, Central Asian Survey, Vol 20, No 4, 2001, pp 467–496.

11. Studies of Central and East European labour market evolution in transition notably include two by H. Feldmann, ‘Labour market institutions and labour market performance in transition countries’, Post-Communist Economies, Vol 17, No 1, 2005, pp 47–82 (12 countries including Russia and Ukraine), and ‘Labour market policies in transition: lessons from East Germany’, Post-Communist Economies, Vol 14, No 1, 2002, pp 47–84.

12. M. Kaser, ‘Economic transition in six Central Asian economies’, Central Asian Survey, Vol 16, No 1, 1997, pp 5–26.

13. EBRD, Transition Report (London: EBRD, 2004), Table 1.1; country scores for 2004 were 3 for both Kazakhstan and Kyrgyzstan, 2 + for Tajikistan, 2 for Uzbekistan and 1 + for Turkmenistan.

14. UNECE, Economic Survey of Europe, 2005 (Geneva: United Nations, 2005), No 1, Table B.1 shows 2003 GDP as 7.1% below the 1989 level for the five states (weighted on purchasing-power parities). As it reports in Box 5.2.1 (p 76), the Secretariat uses estimates for GDP considerably adjusted against the official figures (e.g. GDP growth in Turkmenistan in 2002 was 1.8% compared with the official 20.4%). EBRD, Transition Report Update May 2005, p 13, gives 2004 GDP for the five states as index 1989 = 100 at 103 for Kazakhstan, 80 for Kyrgyzstan, 69 for Tajikistan, 112 for Turkmenistan and 113 for Uzbekistan.

15. B.Y. Kim, ‘Informal economy activities of Soviet households: size and dynamics’, Journal of Comparative Economics, Vol 31, No 3, 2003, pp 532–551, , estimates that in 1989 informal activities added 7.6% to measured GDP in the five Central Asian republics; generally, the study finds informal activities by enterprises smaller than by households, but gives no estimate. For 1995 it gives no estimate for Central Asian republics, but the share added in Russia rose to 17% from 4% in 1989. Kim's estimates are lower that those of earlier authors.

16. ILO, Key Indicators of the Labour Market, 3rd edn (Geneva: ILO, 2005), Figure 7c.

17. IMF, Republic of Kazakhstan: Statistical Appendix, November 2004, Country Report 04/363, .

18. IMF, Turkmenistan: Recent Economic Developments, December 1999, Country Report 99/140, p 11.

19. 39% in 1998, the latest available return in Commonwealth of Independent States in 2003 (Moscow: Interstate Statistical Committee of the CIS, 2004), p 119.

20. EBRD, Transition Report Update May 2005 (London: EBRD, 2005), p 73, quotes surveys showing 19% in 1998.

21. Ibid, p 71.

22. IMF, op cit, Ref 17; IMF, Kyrgyz Republic, op cit, Ref 7, Country Report 05/31, Table 13.

23. IMF, May 2005, op cit, Ref 7, and p 13.

24. Enforcement of the direction of labour by criminal sanctions was abandoned in 1951 and the last legal restrictions of quitting state employment were repealed in 1959; the vast network of ‘corrective labour camps’ (of which Kazakhstan was a major location) paralleled the free labour market. For a concise survey of state controls on labour in the USSR, see I. Jeffries, The New Russia: A Handbook of Economic and Political Developments (London: Routledge/Curzon, 2002), pp 54–56.

25. P. Verne, ‘The choice of the working sector in transition: income and non-income determinants of sector participation in Kazakhstan’, Economics of Transition, Vol 8, No 3, 2000, pp 691–731.

26. Commonwealth of Independent States in 2003, op cit, Ref 19, p 118.

27. IMF, op cit, Ref 18, Table 10; its definition of the working-age population is smaller than that used in of the present study, because it excludes women aged 55–64, men aged 60–64 and all 15-year olds.

28. Commonwealth of Independent States in 2003, op cit, Ref 19.

29. Ibid.

30. IMF, May 2005, op cit, Ref 7, pp 13 (for total employment) and 14 (for new jobs); adding unemployment to yield economically-active population.

31. ‘There are no medium-sized firms in Uzbekistan, only large and small ones’, is a trader's remark cited by J. Rasanayagam, ‘Spheres of communal participation: placing the state within local modes of interaction in rural Uzbekistan’, Central Asian Survey, Vol 21, No 1, 2002, pp 55–70, which also describes the household as ‘a small mahalla’, i.e. more flexible in its embrace than a typical western household.

32. N.A. Khalmurazaev, ‘Small and medium-sized enterprises in the transition economy of Uzbekistan: conditions and perspectives’, Central Asian Survey, Vol 19, No 2, 2000, pp 281–296, at p 295.

33. Ibid, p 13.

34. K. Anderson and R. Pomfret, ‘Challenges facing small and medium-sized enterprises in the Kyrgyz Republic, 1996–7’, MOCT-MOST, Vol 11, No 3, 2001, pp 205–219.

35. Commonwealth of Independent States in 2003, op cit, Ref 19, p 118.

36. IMF, Republic of Kazakhstan: Selected Issues and Statistical Appendix, July 2003, Country Report 03/211, p 76, and IMF, Republic of Kazakhstan: Statistical Appendix, July 2005, Country Report 05/239, p 9.

37. B. Reilly and G. Krstić, ‘Employees and second-job holding in the Federal Republic of Yugoslavia’, Economics of Transition, Vol 11, No 1, 2003, pp 93–122, draw this conclusion from Yugoslavia, and briefly survey other transition states, though not Central Asia. Noting that it has hitherto been considered that second-job holding rose during recession in industrially-developed economies, C. Amadeo-Dorantes and J. Kimmel, ‘Moonlighting behavior over the business cycle’, IZA Working Paper No 1671, July 2005, on the contrary find multiple job-holding procyclical from US surveys.

38. M. Alexeev and W. Pyle, ‘A note on measuring the unofficial economy in the former Soviet Republics’, Economics of Transition, Vol 11, No 1, 2003, pp 153–175, at p 165.

39. This report, of April 2004, cites 18% for the informal economy in OECD countries.

40. World Bank, ‘Small and medium enterprises across the globe’, Policy Research Working Paper, WPS 3127, August 2003, .

41. Reported in Financial Times, 28 January 2005.

42. ‘The curse of cotton in Central Asia’, Report of the International Crisis Group (Brussels), 28 February 2005, also summarised in Financial Times, 10 March 2005.

43. IMF, Republic of Kazakhstan: Selected Issues, Country Report 05/240, July 2005, p 9.

44. World Bank, Transition: the First Ten Years, Washington DC: World Bank, 2002, pp 39–40.

45. World Bank, op cit, Ref 40.

46. State Statistics Committee, ‘Basic results of social and economic development in 2003,’ www.gov.uz/en/section.scm.

47. Half a million ethnic Germans (Aussieder) annually migrated from the transition countries to Germany between 1990 and 1994, but the flow subsequently dropped to about 280,000 annually according to IOM, World Migration Report 2005 (Geneva: International Organization for Migration, 2005), p 384. Of nearly a million Germans in Kazakhstan at independence, ‘only a third of them remain’ (A. J. Brown, ‘The Germans of Germany and the Germans of Kazakhstan: a Eurasian Volk in the twilight of diaspora’, Europe-Asia Studies, Vol 57, No 4, 2005, pp 625–634, at p 625).

48. Although a decree of 1967 revoked the deportation of 1944, permission to return was greatly restricted until the 1980s, since when 270,000 Tatars have repatriated, leaving an estimated 30,000 to 150,000 in Uzbekistan (G. L. Uehling, ‘The Crimean Tatars in Uzbekistan: speaking with the dead and living homeland’, Central Asian Survey, Vol 20, No 3, 2001, pp 391–404.

49. Twenty-five million Russians were in other Union Republics at the time the USSR broke up. E. Poppe and L. Hagendoorn, ‘Types of identification among Russians in the “near abroad”’, Europe-Asia Studies, Vol 53, No 1, 2001, pp 57–71, cite this total and, from surveys with a 98% response rate in five CIS states, find that 46% of such Russians prefer to remain in their republic, 27% wish to emigrate to Russia, 3% to another CIS state and 24% to outside the CIS. The article gives extensive references to other studies on such Russians. M. Gentile, ‘Former closed cities and urbanisation in the FSU: an exploration in Kazakhstan’, Europe-Asia Studies, Vol 56, No 2, 2004, pp 263–278, finds that comparisons of housing and public infrastructure have postponed Russian retro-migration, but that as such geographical disparity disappears, many Russians may return to Russia.

50. Russian unemployment rose by 1.2 mn between 1992 and 1998.

51. A. C. Diener, ‘Kazakhstan's kin state diaspora: settlement planning and the oralman dilemma’, Europe-Asia Studies, Vol 57, No 2, 2005, pp 327–348.

52. Commonwealth of Independent States in 2003, op cit, Ref 19, p 110; the ‘later year’ is 2003 except for Uzbekistan (1998) and Turkmenistan (1999), but no figures were supplied by Tajikistan.

53. Central Asia News, cited by Interfax/WPS, 8 December 2004.

54. BBC Monitoring Central Asia, 11 February 2005, citing Bishkek TV. The same, 21 May 2005, citing The Times of Central Asia, estimates that more than 500,000 Kyrgyz, 10% of the population, are in Russia, a total also given in The Economist, 16 July 2005.

55. K. Anderson and R. Pomfret, ‘Living standards during transition to a market economy: the Kyrgyz Republic in 1993 and 1996’, Journal of Comparative Economics, Vol 28, No 3, 2000, pp 502–523, at p 521.

56. Commonwealth of Independent States in 2003, op cit, Ref 19, p 142. The same source, p 143, gives indicators of the level of education of the population, showing rises in three republics between 1989 and a recent year, but the governments of Turkmenistan and Uzbekistan have withheld such returns from the CIS Interstate Statistical Committee.

57. The requirement was temporarily suspended between January 2002 and March 2003 (Annette Bohr, ‘History’, in Eastern Europe, Russia and Central Asia 2005 (London: Europa, 2004), p 489.

58. M. Kaser, ‘The economy’, in Eastern Europe, Russia and Central Asia 2005 (London: Europa, 2004), p 497.

59. Russia and Kazakhstan are more thinly populated.

60. Citing the Soros-funded Turkmenistan Project's Director, Erika Dailey, ABREES, No 157, 2005, p 76, notes that in the USSR ‘Turkmenistan had one of the worst-resourced healthcare systems’ and the deleterious effects of the replacement by President Niyazov in 2004 of 15,000 healthcare professionals by army conscripts.

61. The Times of Central Asia, cited by Asia-Plus News Agency, 7 July 2005.

62. I. Iwasaki, ‘Industrial structure and regional development in Central Asia: a microdata analysis on spatial allocation of industry’, Central Asian Review, Vol 19, No 1, 2000, pp 157–183.

63. BBC Monitoring Service, citing President Emomali Rakhmanov from Asia-Plus News Agency, Dushanbe, 16 June 2005; balance-of-payments data from IMF, Republic of Tajikistan: Selected Issues and Statistical Appendix, April 2005, Country Report 05/131, Table A-26.

64. The Times of Central Asia, op cit, Ref 61; balance-of-payments data from IMF, Kyrgyz Republic, op cit, Ref 7, Table 16.

65. The Times of Central Asia, op cit, Ref 61.

66. Income inequality was narrower in Soviet experience, but in a ‘shortage economy’ money purchasing power ranked lower than access to the purchase of consumer goods and to the supply of services, both skewed to chosen recipients (nomenklatura, etc.), in determining a standard of living.

67. R. Pomfret, ‘The Uzbek model of economic development, 1991–99,’ Economics of Transition, Vol 8, No 3, 2000, pp 733–748, at p 736.

68. 1988 and 1993 from A. Nesporava, ‘Employment and labour market policies in transition economies’, Employment and Labour Market Policies Branch, ILO, 1999, Table 2.10; 1996 and 2002 from EBRD, Transition Report (London: EBRD), respectively 2002, p 164, and 2004, p 140.

69. B. Milanovic, Income, Inequality and Poverty during the Transition from Planned to Market Economy (Washington DC: World Bank, 1998), cited as the highest for any transition economy by Anderson and Pomfret, op cit, Ref 55, p 503, but, while analysing in depth the factors conducing to poverty, they do not furnish the GDP percentage for transition years.

70. Pomfret, op cit, Ref 67 for 1989; later years are from IMF, Kyrgyz Republic: Sixth Review under the Poverty Reduction and Growth Facility, March 2005, Country Report 05/119, p 5; but, using other criteria, EBRD, Transition Report 2002, p 168 gives 84% (no date cited) and 2004, p 144, gives 27% for 2001 and 41% for 2003.

71. IMF, Republic of Tajikistan: 2004 Article IV Consultation, April 2005, Country Report 05/132, p 7.

72. EBRD, Transition Report 2002, p 204, gives 96% and 2004, p 184, gives 51%.

73. EBRD, Transition Report 2002, p 208, gives 34% and 2004, p 188, gives 44%.

74. R. Pomfret, ‘Turkmenistan: from communism to nationalism by gradual economic reform’, MOCT-MOST, Vol 11, No 2, 2001, pp 165–176, at p 172.

75. IMF, May 2005, op cit, Ref 7, pp 4–5.

76. ILO, Employment Trends, ‘Employment Strategy’, 2 June 2004, www.ilo.org/public/English/strat.

77. Notably a symposium on ‘Job Creation and Job Destruction in Transition Countries’, Economics of Transition, Vol 11, No 2, 2003, pp 205–381, and the numerous ILO reports. At least one paper of a workshop ‘Labour Markets and Welfare during the Transition’ (Vilnius, April 2000) has been published—in Economics of Transition, Vol 8, No 3, 2000, p 691), as also one of a conference ‘Labour Markets in Transition Countries’ of IZA-WDI (May 2000)—in Journal of Comparative Economics, Vol 32, 2004, pp 37–55.

78. See Ref 21.

79. Cited by Nesporava, op cit, Ref 68, p 31.

80. K. H. Anderson and R. Pomfret, ‘Relative living standards in new market economies: evidence from Central Asian household surveys’, Journal of Comparative Economics, Vol 30, 2002, pp 683–708. The 1997 surveys in Kyrgyzstan showed only an insignificant return to technikum education, although a significant return had been shown in the 1993 surveys (p 698).

81. R. Haarr, ‘Violence and exploitation of children in Tajikistan’, Central Asian Survey, Vol 24, No 2, 2005, pp 131–149, cites surveys in three regions where ‘51% of girls reported experiencing and/or witnessing parents prohibiting girls from attending school after the sixth or seventh grades and 25% of girls watched other girls coerced or forced into an arranged marriage at an early age’ (at p 143).

82. A. Ishkanian, ‘Gendered transitions: the impact of the post-Soviet transition on women in Central Asia and the Caucasus’, in M. P. Amineh and H. Houweling, eds, Central Eurasia in Global Politics: Conflict, Security and Development, 2nd edn (Leiden: Brill, 2005), p 171; the chapter summarises Soviet experience and the ‘de-development' affecting women since their countries’ independence.

83. G. Myrdal, Economic Theory and Underdeveloped Regions (London: Duckworth, 1957) (among many relevant works); for Kaldor, see Ref 101.

84. F. Heyat, ‘Re-Islamisation in Kyrgyzstan: gender, new poverty and the moral dimension’, Central Asian Survey, Vol 23, No 3-4, 2004, pp 275–287, at p 275.

85. IMF, May 2005, op cit, pp 4–5.

86. L. P. Dana, When Economies Change Paths (Singapore: World Scientific, 2002), p 264.

87. Nesporava, op cit, Ref 68, p 47.

88. J. C. van Ours, ‘The locking-in effect of subsidized jobs’, Journal of Comparative Economics, Vol 32, 2004, pp 37–55 exemplifies Slovakia, but makes a general examination of active labour market policies.

89. IMF, Kyrgyz Republic, op cit, Ref 7, Table 13.

90. IMF, op cit, Ref 63, Table A-12.

91. EBRD, op cit, Ref 13, Table 1.1.

92. Pomfret, Ref 74.

93. IMF, op cit, Ref 18, p 11.

94. EBRD, Transition Report Update May 2005, op cit, Table A3.

95. T. Ranaweera, ‘Alternative paths to structural adjustment in a three-gap model: the case of Uzbekistan’, Post-Communist Economies, Vol 15, No 4, 2003, pp 595–611, at p 595.

96. IMF, May 2005, op cit, Ref 7, p 19.

97. T. Dudabaev, ‘Post-Soviet realities of society in Uzbekistan’, Central Asian Survey, Vol 23, No 2, 2004, pp 141–166, at p 162.

98. ‘From House to House: Abuses by Mahalla Committees’, Human Rights Watch (New York), Vol. 15, No. 7, 2003 (www.hrw.org/reports/2003/uzbekistan0903/)

99. K. Munshi and M. Rosenzweig, ‘Economic development and the decline of rural and urban community-based networks’, Economics of Transition, Vol 13, No 3, 2005, pp 427–443.

100. Nesporava, op cit, Ref 68, p 53.

101. H. Feldmann, ‘Labour market institutions and labour market performance in transition countries’, Post-Communist Economies, Vol 17, No 1, 2005, pp 47–82, at p 73.

102. IMF, op cit, Ref 17, .

103. IMF, Kyrgyz Republic, op cit, Ref 7,Table 11.

104. IMF, op cit, Ref 18, .

105. IMF, Republic of Tajikistan: Selected Issues and Statistical Appendix, January 2003, Country Report 03/5, Table A-20; IMF, op cit, Ref 63, Table A-17.

106. Such data were published in the Soviet period: thus in Uzbekistan in 1955, 36.1% of all industrial employees were in the 1.6% of enterprises employing more than 1,000 each (Narodnoe khozyaistvo Uzbekskoi SSR: statistichesky sbornik, Tashkent: Gosstatizdat, 1957, p 22). In August 2005 UNIDO's statistical database in this category was ‘under construction’ (www.unido.org/data/country).

107. In the Soviet period, cooperatives formed a category which effectively embraced self-employment: in 1991 Uzbekistan 61,684 persons worked in cooperatives, of which 20,957 in construction and 10,225 in workshops for food and other consumer goods (Narodnoe khozyaistvo Uzbekskoi SSR 1990: statistichesky ezhegodnik, Tashkent: Izdatel'stvo Uzbekistan, 1991, p 156).

108. The ‘Dutch disease’ and the Balassa–Samuelson effect.

109. Building Institutions for Markets. World Development Report 2002 (Washington, DC: World Bank and Oxford: Oxford University Press, 2002), p 58.

110. R. G. Rajan and L. Zingales, ‘Financial dependence and growth’, American Economic Review, (1998) Vol 88, No 3, pp 559–586.

111. IMF, July 2005, op cit, Ref 36, Table 30.

112. Commonwealth of Independent States in 2003, op cit, Ref 19, pp 380, 436, 603, 644 and 683, and IMF, ‘Analysis of recent growth in low-income CIS countries’, August 2004, Working Paper WP/04/151, .

113. M. Khawar, ‘Foreign direct investment and economic growth: a cross-country analysis’, Global Economy Journal, Vol 5, No 1, 2005, examines cross-country series for two decades and finds significant and positive relationships irrespective of human capital requirements (www.bepress.com/gej/vol5/iss1/8).

114. J. Aizenman and I. Noy, ‘FDI and trade: two-way linkages?’, NBER Working Paper No. W11403, June 2005, after controlling for other macroeconomic and institutional effects find strong feedback between FDI and trade in manufactures. The classic paper is N. Kaldor, ‘The role of increasing returns: technical progress and cumulative causation in the theory of international trade and economic growth’, Economie appliquée, Vol 34, No 4, 1981, pp 593–617.

Additional information

Notes on contributors

Michael Kaser

The experience of Gregory Kaser, HTSPE Ltd (www.htspe.com), in economic development consultancy in Central Asia has been especially informative for this study.

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