The Future of Human Capital in Central Asia

Nargiza Juraboeva2009

Human Capital ???

Human capital refers to skills, education, health

and training of individuals.

Linked to human development and is measured based on human development

indicators

Expenses that a Government makes into the education and health are seen as an investment into future

productivity . . .. . . returns of

which are later seen in wages and input into the economy.

Education Health

Labour market

GrowthIncome

Productivity

We will talk about...

• Central Asia in brief • The Soviet influence on human

capital• Independence: what went wrong? • The current state of affairs• What is next?

The Soviet influence

1. Universal access to education and health2. Equal access to boys and girls3. High quality of education4. Innovation , science and research5. Nearly universal employment6. Women in decision making roles7. Universal social security system

Independence: what went wrong?

• Reforms can be painful– Inability of existing systems to adjust smoothly– Time it takes to start new market oriented reforms

• Severe implications on citizens– Declining social indicators– Increase in poverty and inequality – Rising unemployment and rise of the informal sectors – Decreased investment to R&D and science

One of the recent books:Central Asia’s Second Chance

- geopolitics- power- institutions

by Martha Brill Olcott

New challenges• Shift in the architecture of the labour market• Rise of the private sector (liberalization policies)

• Rise of the informal sector (labour dislocations)

• Decreasing quality of education (motivation)

• Gap between the education system and new market demands

• Increase in poverty and inequality Negative impact on human capital

Real GDP growth (%)

GDP per capita

Increasing disparities...

• KAZ: 18.2% population live below poverty line, with 40% close to poverty line (2006)

• KYR: 35% in poverty and 6.6 in extreme poverty (urban – 30%, rural – 51%)

• TAJ: 64% below poverty line, 2006• TUR: about 21 % (ADB estimation), 2006• UZB: 23,6% (urban-17,6%, rural-27,1%), 2007

Education• For all Central Asian states the literacy rate is

95% and over• Schooling is compulsory and gender equality is

maintained• Enrolment is lower specialized colleges and

higher education gender disparities are more vivid (KAZ an exception)

• The number of early marriages has increased – a barrier for girls to continue education

What is new?

• Identification of gaps and new programmes• Expansion of education facilities

– Creation of specialised colleges

• Revised curricular at all levels• Introduction of IT and resource centres• Education programs for talented youth (study

abroad and exchange)

Despite certain achievements, the existing system of educational

management has failed to promote successful implementation of public

policy in the area of developing human resources, which is oriented

towards current and prospective labour force demands.

It has also failed to ensure an increased

level of education among the population.

Health• Human capabilities and the level of productivity

have a direct link to health• Anaemia is very high in the region lower work

output• Malnutrition – height and lack of vitamins• Iodine deficiency intellectual level• Vitamin A mortality and death (50-60% of

women and children in the region)• Lack of access to quality basic health services• Low awareness and early marriages

People that don’t have jobs...

Tajikistan: unofficial

unemployment rate is 33%

Kazakhstan: 8.4% in 2004, down from 13.5 % in 1999

Uzbekistan: officially at

4%, but others

estimate at 4, 5 times higher

Kyrgyzstan:Officially 8.1 in 2005

I need a job...30% of university

graduates in Uzbekistan do not work in the area of specialization

20-24% of graduated from construction

colleges cannot find jobs, at a time when

there are lack of specialists in other

KAZ: proportion of the unemployed with only secondary or primary

vocational education was 38.1%; the proportion without any vocational education was 49.7% in

2002

What is for gender in employment?

construction, transportation, communications

industries; production and distribution of electricity,

gas, and water

Men

education, healthcare,social services sectors

Salaries in these sectors areapproximately 2.5 times lower than salaries in the

traditionally “male” sectors

Female

unemployment among women in all

agegroups is more than

1.5 times higher than that of men

Where can I earn for living...

Russia?

Kazakhstan?

Foreign markets

? Brain

Drain

bubble

Labour migration• Total labour migrants (including dailylabour and shuttle trade, 2004):

– Around 600,000 for Tajikistan, Kyrgyzstan, Uzbekistan

– 1,209,814 people emigrated from Kazakhstan between 1995 and 2005.

• Remittances:– Up to 20% of GDP in Tajikistan (2005)– 10% of GDP in Uzbekistan (2007) – 27% of GDP in Kyrgyzstan (2007) = 1bln USD

What next?• Commitment and political will

– Can we learn from mistakes?– Can we close the gaps?

• Strengthen public administration reforms: invest in institutions and capacity development

• Strengthen the rule of law

Did we miss a chance to integrate better...

Time is ticking....

...and money is flowing

What next?• Continuous improvement in the education

sector– Focus on quality (creativity, innovation, self-

expression)– Spend resources wisely, M&E system

• Address the market demand and adjust supply of graduates– Analyze the market to learn what skills are missing– Learn from others and take action

The region is rich in human resources. We should not lose the momentum to enhance the capacities of our people and help create

knowledge based economies. There is a need for the right kind of reforms, that are

sustainable in the long term.