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Kazakhstan and Kyrgyzstan: Coronavirus Aggravates Unemployment

Coronavirus pandemic has hit not only business, but the labour market of Kazakhstan and Kyrgyzstan. 

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Kazakhstan: a new wave of unemployment?

In the first month of lockdown in Kazakhstan, almost 443 thousand people joined the ranks of unemployed, according to the report of the statistics committee of ministry of national economy. Experts predict further growth of the indicator.

Earlier, Zhanat Begimbetov worked as commodity expert in a system of stores selling technical equipment in Nur-Sultan. After the introduction of the media system and restrictive measures, it emerged that he was unemployed.

 “On the first day after the lockdown, we were asked to write letter of resignation. Everyone had to leave officially their jobs. The state has paid social allowance, 42,500 tenge (104.5 dollars). This is one fourth of my salary. Two months later I turned to the management, and they said they would reduce the staff,” Begimbetov said.

According to the First Credit Bureau, 2.5 thousand sole proprietors fell into arrears because of the emergency and the lockdown. The total debt exceeds 147 million tenge (361.3 million dollars). Moreover, they have to pay to their staff for non-productive time.

According to new amendments to the Labour Code as of May 20, the minimum salary in the amount of 42,500 tenge, which was provided by the state during the emergency, will now be paid by the employer. From May 12, all companies that forced employees to take leaves have to pay them for their non-productive time. This, according to experts, can cause a wave of dismissals.

Nariman Abilshaikov. Photo: taldyk.info

“Without sales, or turnover, earnings, our entrepreneurs will have to pay minimum salary to employees from May 12. This will force them to cancel their contracts. The regional chamber at the local and republican levels calls for the revision of this issue,” Nariman Abilshaikov, head of the Chamber of Entrepreneurs of Almaty, said.

Meanwhile, the national government has approved the anti-crisis plan. The amount of money allocated to support citizens and businesses is quite big – nearly 6 trillion tenge (14.75 billion dollars).

According to the press service of Centre for Labour Resource Development of Ministry of Labour and Social Protection of the Republic of Kazakhstan, the implementation of this plan will let employ about 690 thousand Kazakhstanis, including over 475 thousand under national and regional programmes, and 215 thousand as anti-crisis measures. Also, every third job will be permanent.

“The plan provides for the involvement of non-productive self-employed, unemployed and temporary discharged citizens into projects implemented under national and regional programmes,” according to the message.

According to experts, the most important thing for the government now is to minimise the risk of social unrest because of unemployment, and crime rate.

Reduction of income of citizens along with the commodity price rise can lead to debt load of citizens, which is also one of the factors that cause such crimes as theft, robbery and armed assault.  However, the ministry of interior affairs assure that the reduction of the number of posts and easing of requirements do not lead to the burst of crimes.

Kyrgyzstan: a chronic problem

In Kyrgyzstan, coronavirus left over 700 thousand people jobless, according to Ministry of Economy. Moreover, migrant workers who had worked abroad before the pandemic joined them. The unemployment of migrant workers will have the most devastating effect on Naryn, Dzhalal Abad and Osh regions.

Also, according to Denis Berdakov, expert in economy, the number of unemployed in Kyrgyzstan would increase because the crisis affects the sphere of services, clothing retailing, and sewing industry of the republic.

“The sewing industry could recover very fast. However, the problem is a drop in demand in Kyrgyzstan and Russia, which is the main buyer of our sewing products. People save money and do not buy clothing as a reserve and do not buy new, extra clothes. This will have a definite impact on the sewing industry, which employs dozens of thousands of workers,” the expert said.

Photo: tazabek.kg

At the briefing in early May, Vice Prime Minister Erkin Asrandiev said that free of charge training and retraining would be available for the unemployed. And on May 22, at the session of the Cabinet of Ministers, the head of the government, Mukhammedkalyi Abylgaziev, suggested to involve temporarily unemployed citizens into public works.

But this measure is not enough. The International Business Council (IBC) in its recommendations to the second stage of the governmental programme to support business wrote recommendations, including the ones directly concerning the unemployment:

  • To develop electronic platform of employment adapted to the current situation that ensures permanent contact between employees and employers, identifies employment market capacity, and availability of required staff.
  • To determine general provisions of distance work in the labour code subject to peculiarities of distance work: electronic document management in simplified form, exclusion of inapplicable duties to ensure job safety, etc.
  • To determine the possibility of express free of charge assistance to representatives of micro-, small and  medium businesses who suffered most from the crisis in order to avoid bankruptcy of their businesses and in order to provide support to their employees, who faced severe problems.
Photo courtesy of Denis Berdakov, Facebook

However, the recommendations were not considered. The government did not make any statements regarding whether there is any programme to solve this issue.

According to Denis Berdakov, public contract for agricultural product output can partly solve the problem, as well as the launch of infrastructure facilities, whose implementation would not need any foreign supplies.

“Are the attempts of the government sufficient? No, they were never sufficient since 1991. Unemployment is a chronic socioeconomic and sometimes even political disease of our society,” the expert said.

This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project.

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