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    Uzbekistan Economics Central Asia

    Uzbekistan’s labour market: journey from old challenges to new opportunities

    Uzbekistan’s labour market: journey from old challenges to new opportunities

    The difficulty lies not so much in developing new ideas as in escaping from old ones.

                 John Maynard Keynes, English economist

    Uzbekistan's reliance on labour migration stems from a densely populated landscape and a constrained domestic labour market. Each year, about 650,000 Uzbekistanis complete their general secondary or vocational education, the Oliy Majlis reports. Of these, only a quarter pursue higher education, while the remainder enter a job market that annually creates approximately 300,000 new jobs, which is insufficient to accommodate the influx of new workers. This disparity resulted in an unemployment rate of 6.8% by the end of 2023 and a poverty rate of around 11%, the Ministry of Employment and Poverty Reduction of Uzbekistan reports.

    Infographic: Sabina Aliyeva

    The labour force experienced modest growth, expanding by 207,000 individuals or 1.1%, bringing the total to 19.7 mn as of January 1, 2024. It indicates a slow but steady adaptation of the labour market to the changing economic conditions in the country.

    Key factors influencing unemployment

    Uzbekistan's Ministry of Employment and Poverty Reduction identifies several critical drivers behind the national unemployment rates:

      • Job distribution and investment shortfalls: A primary concern is the uneven distribution of job opportunities and insufficient investment in key economic sectors.
      • Skill discrepancies: The market faces a mismatch between the demand for highly skilled labour and the surplus of less skilled workers.
      • Regional disparities: Significant differences in employment opportunities are evident between the Tashkent region and other less economically developed regions.
     Infographic: Sabina Aliyeva

    The dynamics of remittances and migration also play a critical role in the labour market.  Uzbekistan received over $2.5 bn in remittances in 1Q24, reflecting an 8.6% growth. Following the Russia-Ukraine conflict, remittances soared to nearly $17 bn in 2022. However, by 1Q24, Russia's contribution to these remittances decreased from 87% to 68%, with other countries compensating for this decline.

    This shift is linked to the decreasing number of Uzbek migrant workers in Russia, driven by the ruble’s devaluation. In response, Uzbekistan is broadening the geographic scope of its migrant workforce to include Canada, Germany, South Korea, Bulgaria, and Romania focusing on the high demand for skilled labour that is not met by Russia.

    For instance, despite the attractive salary of €2,500 for nursing positions in Germany, only 44 out of 20,000 vacancies were filled, primarily due to the stringent requirements for higher education and a B1 level in German language proficiency.

    "The more world-class professional staff in the country, the more money will flow in, the sum will be stronger, and the economy will grow," said Bankir News, a telegram channel dedicated to providing financial insights.
    Photo: Unqualified personnel
    Source: HR Daily Advisor

    Compounding these employment challenges is the rapid population growth, which reached 36.8 mn at the beginning of 2024, growing annually by approximately 700,000-800,000 people (2.1%). This demographic pressure necessitates substantial job creation to accommodate an expanding workforce in the coming years.

    A major issue plaguing Uzbekistan's labor market is the extensive shadow economy. President Shavkat Mirziyoyev highlighted this as a critical challenge, noting that nearly 5 mn individuals are employed in informal sectors. The shadow economy not only undermines the formal labor market but also results in significant losses to the nation’s GDP, estimated at $10.8 bn, with governmental budget deficits around $2.4 bn. The prevalence of informal employment exacerbates the instability of the labor market, particularly affecting the socially vulnerable segments of the population.

    In response to these challenges, many Uzbek nationals, particularly from rural areas, seek employment overseas. In 2022, remittances from these labour migrants totalled $13.5 bn, equivalent to 17% of the national GDP, ranking Uzbekistan 15th globally in remittance receipts.
    Photo: Labour migration
    Source: Yandex

    Over the years, the patterns of labour migration have evolved. While earlier in the 2000s, between 3-4 mn Uzbek citizens migrated annually for work, this number reduced to 2-3 mn by 2023. Seasonal fluctuations further complicate the exact figures, though, in 1Q22 alone, 2.3 mn citizens were reported to be working abroad.

    The Uzbek government transitioned from stigmatizing labour migration to supporting it under President Shavkat Mirziyoyev, contrasting sharply with his predecessor, Islam Karimov, who infamously criticized labour migrants in 2013 for being "lazy" and bringing "shame" upon the nation.

    Who do I call ‘lazy’ — those who go to Moscow and sweep streets and squares. One gets disgusted that people from the Uzbek nation go there just to earn bread. No one is starving in Uzbekistan… [They] go there to quickly earn a lot of money, but bring shame upon us all.”

    - Islam Karimov, the First President of Uzbekistan stated.

    Photo: Employment office
    Source: CalMatters

    In 2018, the establishment of the Agency for Foreign Labor Migration marked a significant policy shift. This agency focuses on supporting citizens working abroad, protecting their rights, and aiding their reintegration upon return. A 2020 presidential decree introduced measures to ensure safe and legal labour migration, including low-interest loans for poor migrants to cover travel expenses and work permits.

    Moreover, Uzbekistan has been proactive in fostering international relationships to facilitate labour migration, negotiating with nearly 300 recruiting agencies across 28 countries. This strategic diplomacy expanded employment opportunities for Uzbeks in various developed nations.

    Despite these advancements, challenges persist, particularly the mismatch between available jobs and the qualifications of potential employees. To address this, the Uzbek government has implemented affordable language and vocational training programs nationwide. However, the high cost of comprehensive training remains a barrier for many.

    The Uzbekistan Ministry of Employment and Poverty Reduction reported that in 2023, it employed 4.1 mn citizens through various initiatives, including 2.3 mn in both permanent and seasonal roles, 112,800 in paid public works, and 1.6 mn who became self-employed. Under the initiative "20,000 Entrepreneurs and 500,000 Qualified Specialists," partnerships with 6,700 businesses facilitated employment for 455,000 people.

     Infographic: Sabina Aliyeva
    For 2024, the government aims to create 5 mn new jobs through its employment assistance program. Currently, Uzbekistan has approximately 1.3 mn unemployed individuals. This year, an additional 2.4 mn people are expected to join the workforce. The plan includes generating jobs for 2.5 mn in the service sector, 2.1 mn in agriculture, 250,000 in investment projects and industry, and 140,000 in the construction sector.

    Jamoliddin Kalandarov, the Head of Uzbekistan's Ministry of Employment and Poverty Reduction, outlined the long-term goals for the nation’s labor force development. "In the future, there will be an increasing demand for personnel in IT, business and finance, ecology, construction, agriculture, and medicine," Kalandarov stated. 

    In 2023, the unemployment rates among Central Asian countries showed varying levels. Kyrgyzstan and Turkmenistan reported the lowest unemployment rates, at approximately 4.04% and 4.1% respectively, suggesting a relatively tight labor market in these countries. Kazakhstan's unemployment rate stood at 4.7%, slightly higher but still indicative of low unemployment. In contrast, Uzbekistan and Tajikistan experienced higher unemployment rates of 6.8% and 6.9% respectively. 

     Infographic: Sabina Aliyeva

    Following incidents like the Crocus City Hall terrorist attack, which sparked discrimination against Central Asian migrants in Russia, Uzbekistan intensified efforts to support its overseas citizens. 

    Jamoliddin Kalandarov, Head of Uzbekistan's Ministry of Employment and Poverty Reduction, addressed the condition of Uzbek nationals in Russia following the March 22 terrorist attack in Moscow.

    "The situation in the migration sphere remains stable with no excessive repression by law enforcement against Uzbek citizens, nor any obvious discrimination on religious or ethnic grounds," Kalandarov told Daryo's correspondent.

    The ministry debunked rumors of a mass exodus of migrants and denial of state services for labor patents circulated on social media platforms like Telegram. "These do not correspond to reality," stated Kalandarov. He also noted an increase in law enforcement raids, but clarified these were routine measures to identify illegally staying foreign nationals and not a direct consequence of the attack.

    To aid Uzbek citizens, the Ministry's representative office in Russia implemented several initiatives. These include a 24/7 hotline (+7 (903) 010-13-38), increased outreach at work sites, and legal advisories for 1,900 migrants at 33 enterprises. "To date, we have not received any complaints regarding excessive measures or discrimination," Kalandarov concluded, highlighting the effective response to ensure the welfare of Uzbeks in Russia.

     

    Journalist - Sabina Aliyeva

    Follow Daryo's official Instagram and Twitter pages to keep current on world news.

    29.04.2024, 12:00   Comments (0)   5625
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    ##LaborMigration##UzbekistanEconomy##EmploymentCrisis##PovertyReduction##JobMarketTrends
    Sabina Aliyeva

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