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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.
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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 • Population – 5.2 million, labor force – 2.3 million, participation rate – 65.5% (2007) • Unemployment rate – 8.3%; registered unemployment rate – 3.1% (2006)
Employment and Unemployment (2) Dynamics of unemployment • Average monthly wage – US$107 (2007) • Real wage growth rate – 19% (2007)
Government Labor Market Policies • 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 (11-22% of total labor force) - Remittances: up to US$1 billion or 27% of GDP - Main destinations: Russia and Kazakhstan
Conclusions • 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