: / Strategies / National Poverty Reduction Strategy (2003-2005)

Kyrgyzstan Review, 10 years ago

E. The Labor Market and Job Creation

206. For the past several years, the supply of labor has continued to be excessive. Structural adjustment in the economy and recession in many production sectors have resulted in the growth of unemployment. Unemployment growth has reflected the following:
Workers discharged due to staff redundancies. These have averaged 20,000 over the past three years. Over one third are registered with the employment services.
Workers voluntarily quitting their jobs. Over 70 percent of this category is looking for work and registered with the employment services. Workers often leave their jobs because of the long periods of enforced vacation due to cessation of production.
As a result, in the period from 1999 to the first half of 2002, the number of the unemployed registered with employment services increased from 54,700 to 62,700 people. In 2001, the level of registered unemployment was 3.2 percent, 0.3 percentage points higher than in 1999. Analysis of the labor market situation suggests the following:
The state sector of economy plays an insignificant role in creation of jobs. The real potential for job creation lies with the private sector.
Unemployment growth continues.
207. In these circumstances, the role of the State is to create the necessary conditions for the development of the private sector and the adoption of social protection measures with respect to unemployed citizens. The active policy measures undertaken in the labor market over the period from 1999 to 2002 helped to bring about the following developments:
  • The Law on Promotion of Employment of the Population was passed.
  • The number of unemployed participating in paid public works increased 1.4 times. These works have provided an opportunity to identify poor families, reconstruct and rehabilitate irrigation networks and water pipes, and make other improvements.
  • Vocational training of the unemployed increased by 128 percent.
  • The number of the unemployed recipients of microcredits has increased three fold.
  • The number of jobs created, using all sources of financing, grew at over 116 percent.
208. Along with these developments, the following issues have required attention:
Official unemployment figures do not fully reflect the situation in the labor market; consequently, a serious problem is determining an unemployment indicator that adequately reflects the real situation. The level of general unemployment estimated in accordance with the World Labor Organization (WLO) methodology is currently in the range of 7 to 11 percent.
The number of citizens released from enterprises and organizations is on average 30 percent higher than the number of newly employed. More than 40 percent of these unemployed citizens seek assistance from the employment services each year.
The Social Fund of the Kyrgyz Republic is in arrears in paying even the insignificant amount of funding set aside under employment policy.
Each year, over 34 percent of graduates of various educational institutions (secondary schools, higher educational institutions, special colleges and vocational schools) cannot find employment due to their inexperience and a lack of demand for the skills and training that they have acquired.
209. Given the situation in the labor market and the issues raised, the mission in the labor market has been identified as raising the employment of the population through creation of new jobs. The mission envisages adoption of effective measures in the following priority areas:
Strengthening the legal framework to foster the development of the labor market.
Development and improvement of active policy mechanisms in the labor market to reduce poverty through increased employment, vocational training, public works, and accessible microfinancing.
Development of the labor market infrastructure (establishment of information-advisory centers, business centers, youth labor fairs, etc.) throughout the Republic.
Comprehensive analysis of the labor market. The analysis should support development of effective policy measures for reducing unemployment and poverty.
Development of adequate measures in the area of labor migration so as to expand the employment opportunities for Kyrgyz citizens (including better monitoring of domestic and external factors affecting migration).
Creation of jobs in priority areas (service sector, tourism, processing industry).
210. The following mechanisms will be used to stabilize the situation in the labor market and attain priority goals:
  • Full and timely transfer of financial resources provided for the implementation of employment policy measures from the Social Fund to the Employment Promotion Fund.
  • Fostering vocational training of unemployed citizens in occupations and skills in demand in the labor market.
  • Issuing microcredits to unemployed citizens to support creation of private businesses in priority sectors.
  • Arrangement of public works to provide paid employment opportunities for the unemployed.
  • Creation of new jobs through the encouragement of small and medium businesses.
  • Raising the role of the Tripartite Employment Council in development and implementation of measures in the labor market.
211. Employment promotion and poverty reduction mechanisms will be given effect through:
  • improvement of human resource management;
  • expanded forms and methods of fostering employment;
  • optimization of training and education in secondary and higher education with consideration of actual country needs;
  • provision of vocational training to the unemployed in the skills and occupations demanded in the labor market;
  • annual increase of 5 to7 percent in the number of unemployed citizens engaged in paid public works;
  • raising the number of microcredit recipients through liberalization of conditions and crediting terms;
  • creation of a state service dealing with the external labor migration issues to expand the employment opportunities for Kyrgyz citizens and reduce poverty in the Republic;
  • an annual 5-percent increase in the number of employed youth through creation of youth labor fairs in all regions of the Republic;
  • establishment of business centers for the unemployed on the basis of idle industrial enterprises;
  • creation of social partnerships involving state agencies, labor unions and employers for the development of effective employment policy measures and the reduction of poverty in the Republic; and
  • conducting comprehensive labor market survey for the development of effective unemployment reduction policy (domestic labor migration; quality of the labor force; permanent territorial attachment of the employed population; tenure, etc.).