Transcript Budget Support as an Instrument for Sustaining Policy and

KYRGYZSTAN
Labor Market
Situation and Policies
in the Kyrgyz Republic
Roman Mogilevsky
Center for Social and Economic
Research CASE-Kyrgyzstan
Presentation on official launch of the
BSECAO, Bucharest, 23 June 2008
Key Facts on the Kyrgyz Economy
GDP per capita – US$720 @ current
exchange rate or US$2100 @ PPP (2007)
 GDP growth rate – 8.2% (2007)
 The largest economic sectors (2007):
- Agriculture (29% of GDP)
- Trade (18% of GDP)
- Industry (13% of GDP)
 Government expenditures per capita –
US$200 (2007)
 Poverty rate – 40% (2006)

Employment and Unemployment
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Population – 5.2 million, labor force – 2.3 million,
participation rate – 65.5% (2007)
Unemployment rate – 8.3%; registered
unemployment rate – 3.1% (2006)
Change in sector structure of employment
17.4
12.0
11.9
8.7
50.0
2002
Agriculture
Trade
Non-market services
19.0
17.8
14.5
10.2
38.5
2005
Industry
Other market services
Employment and Unemployment (2)
Unemployment rate, %
Dynamics of unemployment
20
15
10
5
0
2002
All population


2006
Urban
Rural
Men
Average monthly wage – US$107 (2007)
Real wage growth rate – 19% (2007)
Women
Government Labor Market Policies
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Liberal labor legislation with some safeguards for
vulnerable groups (youth, women etc.)
Labor taxation: 27% payroll tax and flat 10% income
tax
Preferential taxation regime for small businesses,
agriculture and services
Unrestrictive minimum wage: US$9 per month or
12% of minimum consumption basket (2007)
Limited use of active labor market policies:
government expenditure on these policies are less
than 0.1% GDP
Very limited use of passive labor market policies:
only 5% of all unemployed received unemployment
benefit (while more people receive different social
benefits)
Coping Mechanisms on Labor Market

Informality
- Share of informal economy in GDP: 53% (2006)
- Share of official employment in total employment:
24.5% (2006)
- Key sectors with informal employment: agriculture,
trade, market services, light industry

Migration
- Number of labor migrants: 250-500 thousand (1122% of total labor force)
- Remittances: up to US$1 billion or 27% of GDP
- Main destinations: Russia and Kazakhstan
Conclusions
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Kyrgyzstan, similarly to many other CIS countries,
faces serious challenges of unemployment and low
wages
Limited resources of the government substantially
reduce its ability to implement and effectiveness of
active and passive labor market policies
Key government strategy is to let people help
themselves
Informal employment and labor migration are main
adjustment strategies of the population; these
strategies are effective for poverty alleviation in the
mid-term, but may create problems for long-term
economic development of the country