STRUCTURAL SHIFTS IN THE EMPLOYMENT SPHERE IN CENTRAL ASIAN COUNTRIES

Leonid FRIEDMAN


Leonid Friedman, D.Sc. (Econ.), head, Laboratory for Complex Studies of Central Asia and the Caucasus, Institute of Asia and Africa at Moscow State University (Moscow, Russian Federation)


In the 1990s, all the Central Asian countries experienced deep-cutting structural changes, both external and internal, in their policies and economies. Some of them lived through military shocks (a civil war in Tajikistan). Their economic potentials dropped dramatically; it was in the latter half of the 1990s that an economic growth trend became clear.

The economic crisis of a transitional type lasted five years in Kazakhstan, Kyrgyzstan, and Uzbekistan, six years in Turkmenistan, and eight years in Tajikistan. Its deepness varied from country to country: in Tajikistan the GDP volume dropped nearly three times in the worst year, in Uzbekistan, by 17 to 18%. In Kazakhstan, Kyrgyzstan, and Turkmenistan production dropped by 40 to 50% of the best pre-crisis level.

In the last 4 to 6 years the Central Asian countries have been demonstrating economic growth the rates of which differ by countries and years. According to preliminary assessments, in 2002 the GDP of Kazakhstan will reach about 95% of 1991; the figure for Kyrgyzstan is 78-80%; official assessments for Turkmenistan are 85 to 90%; Tajikistan will reach 45 to 50% of the 1991 level while Uzbekistan has already restored its economy: its GDP reached 103-105% of the 1991 level.

While the crisis and economic revival went on, the economic and social structures were experiencing shifts in various directions. I shall describe these highly contradictory and mainly unfavorable processes, using materials on the dynamics of employment in the key economic branches. Their analysis allows one to disregard the colossal changes and deformations of the value indicators caused by many years of inflation in the context of liberalized prices.

These shifts were very contradictory and combined regressive and progressive trends. Their coexistence and struggle were demonstrated on the macrolevel in redistribution of the gainfully employed population between the three key sectors of national economy (agriculture, industry, and services) and inside each of them.

I

I shall first examine the materials related to redistribution of the gainfully employed within the three key economic sectors in 1991-2000 and start with the sphere of services. During the Soviet period, in these and other Soviet republics, education, health protection and partly social insurance were developing at a comparatively rapid pace while the people were living amid a constant deficit of goods and services acutely felt in the spheres of trade and personal services.

A shift to the market economy produced an extremely contradictory result: the share of those employed in education and health protection dropped while the absolute and relative employment in trade and related types of activities increased dramatically. As a result, it is hard to offer a straightforward assessment of the dynamics of relative employment in trade. Extension of wholesale and retail trade and disappearance of deficit speak of progressive economic changes. At the same time, one can hardly approve of forced reorientation of tens and hundreds of thousands of engineers, researchers, specialists and skilled blue- and white-collars to the shuttle and other types of retail trade. This hardly means that the relatively highly skilled labor resources are used to the best of their potentials. At the same time, contracted employment in education and science mainly caused by economic considerations speaks of highly contradictory social and economic changes even if one cannot describe them as purely negative.

Western economies are moving toward an increased bias toward the services spherethe share of those employed in it is growing. Table 1 offers a possibility to assess real dimensions of relative tertiary employment in this sphere in the Central Asian countries in the late 1990s by comparing them with the figures for some of the East and West European countries. The figure for Kazakhstan, for example, is 59.9% while its per capita GDP in 1999 ($4.4 thou) was much higher than in the other Central Asian republics and even higher than in economically more developed Hungary and Poland. At the same time, it was much lower than in Russia ($6.3 thou) and Turkey ($6.1 thou). This can be explained by the growth of an absolute number of those employed in trade (by 2.6 times) and the shrinking numbers of those employed in education, health protection, etc.

Table 1

Shifts in the Employment Sphere in the Central Asian Countries (1991-1999) for Three Economic Sectors (%)

Country

Agriculture

Industry and construction

Services

1991

2000

1991

2000

1991

2000

(1)

Kazakhstan

(2)

24.3

22.7

30.5

17.4

45.2

59.9

 

26.4

 

20.0

 

53.6

Kyrgyzstan

35.9

53.3

26.1

10.8

38.0

35.9

           

Tajikistan

44.7

65.0

20.5

9.0

34.8

26.0

           

Turkmenistan (1998)

42.3

48.2

21.1

18.4

36.6

33.4

(1) 1999

Uzbekistan

(2) 1997

41.9

36.2

22.4

19.9

35.7

43.9

 

40.7

 

19.1

 

40.2

For comparison:

Russia

13.5

13.4

41.8

30.4

44.7

56.2

Poland (1997)

 

20.5

 

31.9

 

47.6

Portugal (1997)

 

13.7

 

31.9

 

54.4

Hungary (1997)

 

8.1

 

33.9

 

58.0

Indonesia (1996)

 

44.0

 

18.1

 

37.9

Pakistan (1995)

 

46.8

 

18.5

 

34.7

Kazakhstan (1)according to current statistics.

Kazakhstan (2)according to the 1999 population census.

Sources: SNG99. Statisticheskiy ezhegodnik, pp. 269, 316, 414-415, 464-465, 509, 540-541; 10 let sodruzhestva nezavisimykh gosudarstv (1991-2000). Statisticheskiy sbornik, Moscow; Sodruzhestvo nezavisimykh gosudarstv i strany mira, Moscow, 1999, pp. 58-59; Agentstvo Respubliki Kazakhstan po statistike. Zaniatoe naselenie Respubliki Kazakhstan, Vol. 2, Almaty, 2000, p. 8.

In 1999, Kazakhstan conducted a general population census, the materials of which on the whole can be compared with the results of the last Soviet population census of 1989. A comparison of current statistics and the population census revealed an amazing difference in absolute and relative numbers of those employed in many economic branches. According to current statistics, for example, there are about 1.4 million working in trade. The population census produced a figure of 450 thou, which is much lower than an analogous figure for 1991. An analysis of the situation in all former Soviet republics that have known no wars demonstrated that the number of people working in trade has increased considerably. There is no doubt that this is true of Kazakhstan as well. If we take into account the post-Soviet reality, we can say that current statistics reflected not only permanent employment but also partial, inefficient and even false employment in trade and services in the first place.

In Kyrgyzstan, as distinct from Kazakhstan, the share of those employed in the services dropped from 38 to 35.9% and reached the share of Pakistan (34.7%) where per capita GDP ($1.8 thou) is lower than in Kyrgyzstan ($2.2 thou). A more detailed analysis of the internal shifts in the sector reveals two opposite trends. On the one hand, the number of those employed in the spheres of transport, education, health and certain other services dropped in Kyrgyzstan. This trend, no matter which economic considerations are used to justify it, is regressive. On the other hand, in 1991-2000 the number of those employed in trade grew by 68%, which reflected an objective need of an expansion of this sphere of market economy and was of a progressive nature.

One is tempted to ask whether this extension of the employment sphere in trade was excessive to include a large number of those partially or even casually employed. On the whole the dynamics of relative tertiary employment in Kyrgyzstan illustrates objective and mainly progressive as well as regressive trends that reflected the deepness of the socioeconomic crisis of the transition period and its long duration.

By the late 1990s, the economy of Tajikistan still preserved its prewar features. Despite a certain economic growth, in 2002 the countrys economic potential was nearly 2.5 times smaller than in the late 1980s. For this reason the inter-sectoral shifts, including a dramatic drop in the number of those employed in the sphere of services, reflect the sad results of the civil war: the scale of losses in human lives and in economy and the deepness of the socioeconomic crisis. It will take a lot of time to leave it behind.

Uzbekistan and especially Turkmenistan are two states with a very slow pace of structural changes in the economic, social, and political spheres. This explains why in Turkmenistan the index of relative tertiary employment remained nearly the same: relative employment in education, health protection, and science dropped while it increased in trade and related spheres.

In Uzbekistan the processes are much more complex: the index of relative employment in health protection and education either increased or remained the same while relative employment in trade and related spheres considerably increased. Relative employment in administration and management increased to a certain extent while the similar index for science and related spheres dropped by 2 times. Finally, the general dynamics of relative tertiary employment partly mirrors the changes in agriculture. (The statistics related to agriculture causes great doubts of which more below.)

On the whole in Uzbekistan the inter-sectoral employment structure as well as the structure of tertiary employment were somewhat more balanced (but not optimal) if we take into account that the number of those employed in trade increased by 58% and that the number of people employed in education and health protection grew, albeit insignificantly.

When analyzing the situation in this sphere we should also probe deeper into the dynamics of employment in administration, mainly in public administration. Under the administrative-command system and a nearly completely state-controlled economy in the Soviet Union the growing number of those employed in administration conditioned, and reflected in its turn, the increasingly bureaucratized nature of socioeconomic and sociopolitical life. Theoretically, one could expect that a gradual transition to the market economy, privatization which has already taken place in many economic branches and democratization of the administrative sphere that has been proclaimed in the Central Asian countries will result in the states diminished involvement in economic and public life. At the same time, all the countries of the region demonstrated an objective process of shaping real national statehoods, its key structures and attributes.

According to current statistics, in Tajikistan and Turkmenistan the share of people employed in administration dropped while in Kyrgyzstan that had opted for accelerated pace of transformations it increased from 2.1% in 1991 to 4.2% in 2000. In Uzbekistan which is following the evolutionary path this share also grew, though less noticeably: from 1.2 to 1.4%, respectively. In this way, current statistics presented in Table 1 reveal no connection between relative employment in administration and the rate of social, economic, and political changes in various countries.

These indices, however, can hardly be described as exact or even as correctly reflecting, in some cases, the key trend and the direction of shifts in administrative sphere. This is best illustrated by the figures obtained in Kazakhstan during the 1999 population census and supplied by current statistics. According to the latter source, the number of those employed in administration dropped from 222 thou in 1991 to 186 thou in 1999. According to the former source, the number of people working in administration in 1999 was 324 thou. From this it follows that the number of those working in administration dropped by 16% in eight years according to current statistics, and according to the census results, the number of people employed in administration increased by nearly 46%, that is, in the former case the share of those working in administration was not more than 3% of the total number of gainfully employed, in the latter it was as high as 7.7%.

This increase in employment in the sphere of public administration that is accompanying a dramatic decline in the states direct involvement in economic activities can hardly be combined with the thesis of de-bureaucratization of economic and sociopolitical life. One can rather believe that in all Central Asian states (irrespective of the pace, deepness and scale of socioeconomic and political reforms) the trend toward bureaucratization has been preserved or even increased.

II

An analysis of the shifts in other economic sectors and employment should be introduced with an observation that in Kyrgyzstan, Tajikistan, and Turkmenistan agriculture became the dominant economic sector. This was especially evident in Kyrgyzstan and Tajikistan: in 1991 about 36% of the gainfully employed population of Kyrgyzstan worked in agriculture; the figure for 2000 was 53.3%; in Tajikistan45 and 65%, respectively. In Turkmenistan the increase was less noticeable: from 42 to 48%.

I would like to say here that in the 1990s this was a rare phenomenon on the regional as well as the global scale. Neither in the developed nor in the developing countries the share of those working in agriculture increased. Even in the states affected by stagnation or in those where per capita GDP was steadily declining the share of those working in agriculture either contracted or remained the same.

Let us have a look at these figures in a wider historical context. First, the share of people employed in agriculture in Kirghizia, Tajikistan, and Turkmenia in 1991 was 4 to 5 points higher than the figures of the all-Union population census of 1989. According to it, the figure for Kirghizia was 32%, for Tajikistan, 41%, and for Turkmenia, 37%. One can suppose that part of the people returned to their villages in the last years of Soviet power, yet the process could hardly assume this scope during two years. The census results were probably doctored for political and ideological reasons: the number of people working on land was diminished while the number of industrially employed was increased to illustrate the pace of industrialization in the republics. In any case, this problem requires further investigation.

Second, in 1999-2000 the share of agricultural workers in Kyrgyzstan (52.5 to 53.3%) was nearly equal to the 1959 figure (53.5%). In Tajikistan the 2000 figure (65%) proved to be higher than the 1959 figure (62.9%), while in Turkmenistan this figure for 1998 (48.3%) was very close to that supplied by the 1959 population census (49%). These are not accidental coincidences. In a normal market economy, in the developing countries of Asia, Africa, and Latin America in particular the share of agricultural workers on the whole is inversely proportional to the countrys general economic development level. If this were true of the Central Asian countries, then they would have been pushed back by 30 to 40 years as a result of both an economic crisis of the transition period and their employment structure. This looks a bit exaggerated and does not fit the rapidly changing situation in these republics. All of them have already passed the lowest point of industrial production and have started climbing up in new, mainly market, economic conditions. Despite serious losses, they have preserved the key elements of their fairly developed economic infrastructure. The human potential accumulated during previous decades has become considerably weaker but it is still able, in favorable conditions, to speed up economic revival. Still, the figures quoted above speak about regressive shifts in the socioeconomic structures.

According to current statistics, the share of those employed in agriculture in Kazakhstan and Uzbekistan has dropped somewhat: from 24 to 23% and from 42 to 36%, respectively. These figures, however, contradict other statistics related to the same period. According to the 1999 population census, in Kazakhstan agriculture and forestry employed not 21.9 but 26.4% of the gainfully employed population. Normally, general population censuses better reflect the structure and dynamics of employment. If this is true, then the 1999 census testifies that by the late 1990s the share of those connected with agriculture proved higher than in 1989 (22.4%), 1979 (24.7%) and was only slightly different from the 1970 figure (27.0%). In other words, the share of those employed in agriculture returned to that of the first half of the 1970s.

This fact becomes even more significant if we take into account that in the 1990s the title population was actively moving from the countryside to towns and cities. There were obviously two trends at play: on the one hand, crisis in agriculture drove people from villages to cities in search of the means of subsistence. On the other, the countryside was getting more and more agrarian. It looks as if part of the recent city dwellers in the regions hit by industrial decline preferred to return to their villages (at least for several months every year).

The glaring contradictions between information about employment supplied by the 1999 census and current statistics raised numerous questions. According to official data, over 2 million left Kazakhstan (its total population strength dropped by 8 to 12%). Current statistics says that the total number of gainfully employed dropped by 28%. If we accept the figures of the 1999 census, then the total number of employed decreased by 46% in 8 years. One can admit that in the past the scope of temporal labor migration outside the republic was neglected. Even if this was true, one is still left with the question about the real numerical strength of permanent population and about the scale of latent, partial, temporal, and false employment, of how the census reflected the victims of social exclusion surviving on the brink of unemployment. In this context we still have no answer to the question about how the share of people connected with agriculture in 1991-1999 or wider, in 1989-2000, changed.

Current employment statistics in Uzbekistan testifies to a wide-scale agrarian overpopulation and to partial and unregistered employment in the rural regions. According to the Soviet population census of 1989, agriculture employed 35.2% of all gainfully employed; in 1990 the figure increased to 39.3%, a year later, to 41.9%. The share continued its upward movement until 1994 when it reached 43.2%. In 1997-1998, it declined to 39-40%. In 1999 alone, for the reasons that remain vague, the number dropped by 250 thou and reached 36%. This obviously contradicts the changes of the index that reflects the movements of the non-agrarian population.

We are dealing here with relative disurbanization. While in 1989 (and in 1979) about 41% of the population in Uzbekistan lived in cities, in 1999 only 37%, the figure for 1970 being 36%.1 Administrative barriers contributed to this process: under the laws and rules of the time people from the countryside found it hard to register in cities. One cannot exclude that there are fairly large groups of people living in the social margins, neither in cities nor in villages, who escaped official statistics. Still, it is hard to believe that a significant drop in employment in agriculture and a less significant drop in the share of urban population could occur simultaneously. While the real dimensions of relative disurbanization in Uzbekistan are smaller than the official figures, there is no doubt about the scope of this process in other Central Asian countries.

Back in the 1970s and 1980s, during Soviet times, Uzbekistan as well as Tajikistan, Kirghizia, and Turkmenia displayed stagnation or even decrease in the share of urban population. In Tajikistan the share of urban dwellers reached its maximum (34.6%) in 1979, ten years later it dropped to 32.6%. According to the 1999 census, it dropped to 28% (the 1959 figure was 32.6%). This is one of the results of many years of the civil war and a deep-cutting socioeconomic crisis accompanied by massive migrations.

In Turkmenia the share of the urban population reached its peak in 1970 (47.9%) and dropped to 45.4% by 1989. By the late 1990s it dropped still lower to 43.6% and was even lower than the 1959 figure (46%). This negative dynamics completely corresponds to the growing share of those employed in agriculture. In Kirghizia the share of urban dwellers in 1979 and 1989 was not greater than 38%. According to the 1999 census, it dropped to 35% (in 195933.7%).

From this it follows that stagnation or even the lowering of the urbanization level in the Central Asian republics that had begun during the last Soviet decade accelerated during a profound systems crisis of the 1990s. At that time relative disurbanization and a relative increase in employment mainly reflected regressive shifts in the socioeconomic structures of the Central Asian countries and corresponded to the interconnected figures that were inversely proportional to the indicators of employment in the agrarian sector and urbanization of the 1950s-1960s.

In the 1970s and 1980s the share of urban dwellers in Kazakhstan was steadily climbing up from 50.3% in 1970 to 53.5% in 1979 and to 57.2% in 1989. In 1999, according to the population census, the figure was 56%. All possible statistical errors taken into account, this figure was still a sign of stagnation. In fact, however, much more contradictory processes that were developing in different directions took place. Emigration in which over 2m were involved mainly affected urban dwellers and a small part of people from the countryside. It seems that the bulk of these 2 million was Russians and people of European stock from cities. At the same time, Kazakhs, the title population, were becoming urban dwellers: in 1979, they accounted for 30.9%, in 1989, for 38.4%, in 1999, for 45.3% of the republics Kazakh population.

There was even a more important trend: between 1989 and 1999 the total number of those living in cities dropped by 755-900 thou2 according to different sources. This mainly affected the mining and industrial centers of Northern and Central Kazakhstan. First, it was an important sign of the republics absolute disurbanization. Second, the number of people in the countryside also declined. As a result the relative urbanization level remained practically the same. Third, an outflow of Europeans and a considerable Kazakh migration from villages to towns and cities raised the level of the title populations relative urbanization to a great extent. It should be added that this was not due to (and probably no so much due to) towns and cities attractionthis happened because of a profound crisis in agriculture that made many people in the countryside redundant.

III

Relative disindustrialization of economics and employment sphere was one of the major factors of disurbanization of population in Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan that took place in 1991-2000. This process turned people into mostly agrarian population. According to current statistics, in Kazakhstan the share of industrially employed dropped from 20.2 to 13.8%; of those working in construction, from 10.3 to 3.6%. The corresponding figures for Kyrgyzstan are 18.0 to 8.3% and 8.1 to 2.5%; in Tajikistan the shares dropped from 13 to 6.9% and from 7.5 to 2.1%, respectively; in Uzbekistan, from 14.7 to 12.7% and from 8.2 to 7.2%. In Turkmenistan the share of those working in the construction sector dropped dramatically (from 10.7 to 5.9%) while relative industrial employment increased from 10.4 to 12.5%.

At the same time, all Central Asian countries experienced a large drop in the sizes and intensity of investments, which considerably cut down the total amount of workers in construction in Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan (by 35 to 75%). In Uzbekistan the decline was relatively flat. These figures are a sign of underfunding or even of an outflow of money from the key economic branches of Kazakhstan, Kyrgyzstan, Tajikistan, and to a certain extent Turkmenistan. Money continues coming to Uzbekistan, though the process has lost some of its former intensity.

An analysis of the dynamics of absolute employment in varied economic sectors and branches can produce interesting results. In fact, an objective assessment of the dynamics of the numerical strength of the gainfully employed population and its distribution by sectors should rest on the dynamics of all permanent dwellers in the region. I have already said above that according to official (and frequently contradictory) figures the strength of the permanent population of Kazakhstan dropped by 9 to 12% between 1991 and 2000, while in other Central Asian republics such population increased despite a certain outflow of Russians and Russian speakers. This speaks of a relatively high natural growth rates among the title nations.

Direct comparison of the dynamics of the total and the gainfully employed population shows that in Kazakhstan the latter was contracting twice as fast. In Tajikistan the number of gainfully employed dropped by 12% while the total population strength increased by 14-15%. In Kyrgyzstan, Turkmenistan, and Uzbekistan their number grew slower than the strength of their permanent population. This is an important observation: the age groups that were entering the labor market in the 1990s had been formed in the past, that is, in the context of much more rapid rates of natural increase, therefore in the 1990s the growth rates of the numerical strength of the able-bodied should have been slightly higher than the similar rates of the total population strength.

From this it follows that the gap between the dynamics of the numerical strength of the total, able-bodied, and gainfully employed population speaks of vast groups of totally unemployed or partially and casually employed. The deep economic crisis created mass unemployment and partial employmentthe fact officially recognized in some countries and concealed, according to the traditions of the past, in others. Kazakhstan that has already published the results of the 1999 population census and where statistics is much closer to the world standards than in its neighbors offers the fullest possible idea of the real scope of unemployment and underemployment. According to current statistics, in 1999 there were 251 thou registered unemployed in the republic. According to the WLO standards, there were 950 thou of them, or 11.3% of the countrys labor resources. There is another amazing fact: in 1999 the population census registered merely 4,179 thou employed in the countrys economy, not 6,105 thou. The difference of over 1.8m is too great to be explained by statistical errors. It was declared in both cases that all employed were taken into account (those engaged in large- and small-scale production, employees and employers and also self-employed). There can be two possible explanations. First, one should not rule out a possibility that throughout the period of independence the total numerical strength of permanent population was overstated, that is, real emigration, especially labor migration to other countries, was ignored. Second, despite a formally standard approach to the definition of employment, the census registered mainly completely or partially employed thus leaving outside its scope a huge number of temporally or casually employed. Probably, both explanations are true. In any case my talks to economists and the published materials suggest that the earlier figures related to total and employed population might be overstated.

In many respects the situation in Kazakhstan is a unique one but the differences in the dynamics of the total population strength and the number of gainfully employed in other Central Asian countries say that mass unemployment, underemployment and false employment have already appeared there and are increasing. One can even surmise that agrarian overpopulation is especially great in Turkmenistan and Uzbekistan while Kyrgyzstan and Tajikistan are affected by all forms of open and latent unemployment both in the countryside and in towns.

An analysis of the dynamics of the number of those employed in individual branches of the real economic sector (in agriculture and industry in the first place) reveals a number of important albeit contradictory trends. In 1991-1999 in Tajikistan the number of people employed in agriculture increased by 27%, in Turkmenistan, by 37%, in Kyrgyzstan, by 49%. At the same time, in 1999, the total volume of agricultural production in Tajikistan comprised 65% of the 1991 level; in Turkmenistan, according to my estimate, it was probably 70 to 75%; in Kyrgyzstan it reached 98%. This means that agricultural production per capita of employed population dropped considerably. The year 1991 was not the best one for local peasants: in Kazakhstan and Kyrgyzstan the volume of crop and husbandry production dropped by 8 to 10%, in Tajikistan and Turkmenistan by 4% against 1990. From this it follows that real labor productivity in agriculture was even lower. At the same time, according to official figures published in Uzbekistan, labor productivity in agriculture slightly increased in 1999 while in 1998, according to official information, it slightly decreased. I have already written that the number of those employed in agriculture in 1999 was probably greatly understated. One may surmise that labor productivity in Uzbek agriculture either remained on the same level or (which is even more probable) decreased to a much smaller extent than in other Central Asian countries.

The situation in the Kazakh agriculture is especially interesting. According to current statistics, the number of employed dropped approximately to the same extent that the volume of production. However, first, it was precisely in Kazakhstan that due to unfavorable climatic conditions the volume of agricultural production in 1991 dropped by 10% as compared with the 1990 level. Second, while current statistics stated that the total share of those employed in agriculture was about 71%, the 1999 population census indicated that it was not more than 60% of the 1991 level. Probably, the real figures can be found in the interval between 60 and 71%. If this is true, then labor productivity in agriculture in Kazakhstan decreased (if at all) to a lesser degree than in Kyrgyzstan, Tajikistan, and Turkmenistan.

In 1991-1999, the number of industrially employed dropped in all Central Asian countries (except Turkmenistan), Tajikistan and Kyrgyzstan being affected by this trend to a much greater extent than Uzbekistan. The results of the population census in Kazakhstan, however, say that in 1999 industrial employment dropped not by 42 but by 56% of the 1991 level. In fact, one can expect that the decline in Kazakhstan was approximately the same as in Kyrgyzstan and postwar Tajikistan. This is explained by the scope of industrialization in Soviet Kazakhstan that developed its mining industry the products of which were used across the country, especially by the Soviet military-industrial complex. The Soviet Unions disintegration disrupted economic ties and sent down military spending, which caused a deep crisis in these key links of Kazakhstans industry.

A comparison of the dynamics of employment and of the volume of industrial production shows that labor productivity in industry in Kyrgyzstan and Tajikistan decreased while Kazakhstan probably preserved the old level. According to official figures published in Uzbekistan, labor productivity slightly increased there. These conclusions can be corrected by the rapidly changing economic situation in some of the Central Asian countries. We should also bear in mind that the local statistics is far from perfect and new, more exact figures may appear.

By way of summing up I would like to say that it is only in Turkmenistan that total industrial employment slightly increased while in other countries it decreased considerably. To some extent that was an inevitable process of adaptation to the new, market conditions and integration into world economy. There is no doubt that the old economic system needed restructuring, yet it demanded modernization of the key economic elements that would include, together with the real sector, social infrastructure, science, and other components.

IV

Meanwhile an analysis of employment in education, health protection and especially in science shows that in 1991-1999 in Kazakhstan, Kyrgyzstan, and Tajikistan the total number of the employed in these important sectors dropped to a much greater extent than the total number of those working in national economy. At the same time, in Uzbekistan the share of people employed in education and health protection was climbing up because the republic had preserved much of the old socioeconomic system and extensive development of its traditional branches. Extended employment is a key element of this development pattern. This prompts a conclusion that in the other countries that opted for radical, or even shock, reforms the lower number of people working in education and health protection has already produced positive results (a lower sickness and infant mortality rate, better indices of literacy and a higher quality of education at all levels, etc.).

In fact, life has demonstrated contradictory results: schools, hospitals, higher educational establishments and other elements of social infrastructure have become differentiated. Some of them started charging fees and excluded the poorer sections. As a rule, but not always, their services were of a higher quality. Others found themselves caught in financial traps, they were underfunded and, as a result, unable to keep their better skilled specialists. Their services worsened and their clients suffered.

Science is coming to the fore in the contemporary world, therefore lets have a closer look at this sphere of employment. During Soviet years the Central Asian republics acquired a definite scientific potential propped up not so much by economic as by political and ideological considerations.

During the years of independence the number of those employed in science and related spheres in Uzbekistan dropped two times; in its neighbors, 3 to 5 times. Other economic sectors did not experience this, which is explained, to a great extent, by the inflated size of the scientific or rather quasi-scientific sphere in the Soviet Union. Contraction of the number of people employed in the sphere of science was of an objective nature, yet it hardly merely corrected the deformations created by the administrative-command system and its political and ideological priorities. To obtain an objective description of what has happened to the academic community one has to identify, among the data related to all those directly or indirectly connected with servicing science, a group of figures related to those engaged in research proper. According to official figures, between 1991 and 1997 their number dropped from 41 to 15 thou in Uzbekistan; from 4.4 to 1.3 thou in Tajikistan, later their number climbed up to 2.7 thou. In Kyrgyzstan their number dropped from 5.7 to 2.5 thou, in Kazakhstan, from 27.6 to 10.8 thou. The figures for Turkmenistan are related to the total number of those working in science and related spheres: their number declined from 14 to 5.2 thou.

Normally this decline is justified by lack of money and the need to cut down the inflated staffs of laboratories and research institutes, and similar considerations. This hit hard tens of thousands and produced other frequently contradictory results.

Quite a few research associates who during Soviet power were underpaid junior research staff became senior and middle businessmen, administrators, bankers and heads of trade and industrial companies, etc. There is no doubt that this made the budding market economy more efficient. At the same time, many of the former researchers were literally driven to the chaos of petty trade. They went into shuttle trade, lost their jobs and former skills, lived through acute psychological crises and joined the constantly increasing army of the socially excluded.

An increased agrarianism, disindustrialization and disurbanization, a dramatic drop in investments, a narrowing sphere of education and health services, together with the loss of a considerable part of scientific potential, show that regressive patterns in the lives of states, societies and large social groups are snowballing. If these changes dominated in the Central Asian states in the 1990s, one could have limited oneself to this conclusion. Nearly all these trends proved indispensable to correct the deeply rooted structural distortions and deformations that reached their maximum during the Soviet Unions last years. The old economic ties were ruptured while consumer supply and demand in the new (small or medium-sized where their industrial and human potentials were concerned) states dropped. This made it harder to create new market structures. At the same time, in the 1990s, all Central Asian countries were developing, to different degrees, new, market structures. It was a revolutionary process that moved the countries away from the old system of the total state control to a different one in which private property predominated in economy and democratic forms in the social sphere and administration. The process is far from being completein some of the countries it has just begun. Today, there are even reverse movements in the economies and politics of certain states, therefore only the main development trend has become obvious.

I have not posed myself a task of analyzing the economic reformsthe subject is too vast and merits special research, yet one can speak about the general results of reforming the property structurethe main basis and prerequisite of all systems changes in the Central Asian republics.

According to calculations and estimates, by the late 1990s the private and mixed economic sectors of Kazakhstan accounted for about 77% of all employed and 55% of GDP; the figures for Kyrgyzstan are 73 and 70%, respectively; for Tajikistan, 61-62 and 30-35%; for Turkmenistan, 59 and 25-30%; for Uzbekistan, 69 and 45%. From this it follows that in all the countries of the region the private and mixed sectors have concentrated the larger part of all employed, yet their share in GDP is over 50% only in two countries (Kazakhstan and Kyrgyzstan). Still, this testifies to the fact that all these countries have moved far ahead toward market economy and that the majority of their gainful population is involved in such changes.

Here are certain conclusions. The unavoidable problems and difficulties of the transition period, partial agrarianism, disindustrialization and disurbanization, relative and even absolute decline in the educational, medical, scientific and technical potential, along with other similar trends, signified that the elements of traditionalism, sometimes primitivization, archaization and a temporal structural economic and social chaos were gaining ground. These elements coexisted in a very contradictory way with the emerging and developing market and (in future) democratic institutions typical of the states, societies, small and large social groups and individuals undergoing modernization. These modernization elements intensified as the countries were joining the system of world economic relations, the content and dynamics of which depend on the developed states. As a result, life and everyday details in towns and countryside of the Central Asian republics are exposed to an extremely contradictory cooperation, coexistence and the struggle of two directly opposite trends: traditional (primitive) and modern, chaotic and organizing, regressive and progressive.


1 Here and elsewhere, information about the share of urban population of the Central Asian countries in 1999 is taken from: SNG99. Statisticheskiy ezhegodnik, pp. 268, 315, 463, 508, 539; World Development Report 2000/2001, pp. 276-277; World Development Indicators 2001, pp. 28-30.
2 See: KISI. Analiticheskoe obozrenie, 1/January 2001, Almaty, 2001, p. 30.

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