Building Inclusive Labour Markets in Kazakhstan A Focus on Youth, oLder WorKers And PeoPLe WIth dIsABILItIes Building Inclusive Labour Kazakhstan has made major economic and social advances in the past decade and a half. Yet, Kazakhstan needs to sustain high growth rates in the future to converge towards the living standards of OECD countries. Markets in Kazakhstan This report provides a review of the labour market and social policies that could help Kazakhstan in its dual B u objectives of building more inclusive labour markets, while maintaining a path of strong growth. It explores ild the role that institutions and policies play in helping vulnerable groups to access gainful and productive jobs, in particularly focusing on three key groups: youth, older workers, and people with disabilities, and provides a g A Focus on Youth, oLder WorKers And PeoPLe In comprehensive set of policies to increase the employment and employability of these groups. Evaluations and c WIth dIsABILItIes lessons from innovative experiences in OECD and other countries are used to formulate recommendations lu s tailored to Kazakhstan. iv e L a b o u r M a r k e t s in K a z a k h s t a n A F o c u s o n Y o u t h , o L d e r W o r K e r s A n d P e o P L e W It h d Is A B Consult this publication on line at http://dx.doi.org/10.1787/9789264273023-en. IL It Ie This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. s Visit www.oecd-ilibrary.org for more information. IsBn 978-92-64-18844-0 9HSTCQE*biieea+ 81 2017 07 1 P WINNER Building Inclusive Labour Markets in Kazakhstan A FOCUS ON YOUTH, OLDER WORKERS AND PEOPLE WITH DISABILITIES This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Please cite this publication as: OECD (2017), Building Inclusive Labour Markets in Kazakhstan: A Focus on Youth, Older Workers and People with Disabilities, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264273023-en ISBN 978-92-64-27560-7 (print) ISBN 978-92-64-27302-3 (PDF) Photo credits: Cover Astana, Kazakhstan. 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FOREWORD – 3 Foreword The Kazakhstani economy and society underwent deep transformations in the last decades, passing from a period of economic unrest in the 1990s to a sustained period of rapid growth in the years 2000s. The most impressive achievement of this progress lies in the extent to which growth has been inclusive, witness significant improvements in the living standards of the population, declining poverty and income inequalities and growing employment. Looking forward, Kazakhstan is planning to become one of the 30 most developed countries worldwide by 2050. In order to achieve this objective, Kazakhstan will need first of all to promote economic diversification but also to build inclusive labour markets that help vulnerable groups to access productive employment opportunities. Within this context, the Government of the Republic of Kazakhstan has expressed an interest in the OECD carrying out a review on the labour market situation of disadvantaged groups, with a particular focus on youth, older workers and people with disabilities. The main objective of this collaborative project is to analyse the key challenges related to the access to good jobs of these population groups in Kazakhstan and identify suitable policy responses for improving their labour market and social outcomes. This work builds on the extensive reports and country reviews that the OECD has carried out previously on youth labour market and vocational education and training system (“Investing in Youth”, “Jobs for Youth”, “Learning for Jobs” and “Skills beyond School”); older workers’ participation in the labour market (“Working Better with Age” and “Live Longer Work Longer”); and the employment of people with disabilities (“Sick on the Job” and “Transforming Disability into Ability”). As highlighted in Building Inclusive Labour Markets in Kazakhstan: A Focus on Youth, Older Workers and People with Disabilities the main issue for Kazakhstan is not the lack of jobs, as such, since open unemployment tends to be low. Rather, it is the lack of quality jobs and opportunities for access to more productive employment opportunities that raises the greatest concerns. The OECD is proud to contribute to Kazakhstan’s endeavour to design and execute a comprehensive approach for improving sustainable economic growth objectives and support the employability of most vulnerable population groups. BUILDING INCLUSIVE LABOUR MARKETS IN KAZAKHSTAN: A FOCUS ON YOUTH, OLDER WORKERS AND PEOPLE WITH DISABILITIES © OECD 2017 4 – ACKNOWLEDGEMENTS Acknowledgments The work on this report was carried out in the Directorate for Employment, Labour and Social Affairs (ELSA). The report was prepared by Alessia Forti, Anton Nivorozhkin and Rienk Prins under the supervision of Alessandro Goglio. Valuable research and institutional support was provided by Alizhan Omarov (seconded to the OECD from the Ministry of Labour and Social Protection of the Republic of Kazakhstan). Andrea Bassanini calculated and provided the employment protection legislation indicators for Kazakhstan. Kristoffer Lundberg calculated and provided pension modelling results. The report also benefited from useful comments provided by Stéphane Carcillo, Anne Saint- Martin, and Christopher Prinz respectively on the youth, older workers, and people with disability chapters. Other useful comments were also provided by Stefano Scarpetta and Mark Pearson, Director and Deputy-Director of ELSA. Editorial assistance was provided by Marlène Mohier. To prepare the report, a team from the OECD Secretariat visited Astana in September 2015 and engaged in wide-ranging discussions with ministries, senior officials, experts, social partners and international organisations. The OECD Secretariat would like to thank the Ministry of Labour and Social Protection of the Republic of Kazakhstan for the excellent support in carrying out this project and for organising the initial fact-finding mission and two dialogue seminars. The OECD Secretariat would also like to thank all parties met during and after the fact-finding mission and at the seminars for their time and useful insights. The OECD Secretariat is grateful for the many replies to requests for additional information and comments on the report that were provided by many officials from both the Ministry of Labour and Social Protection of the Republic of Kazakhstan and other ministries and organisations in Kazakhstan. In particular, Birzhan Nurymbetov, Akmadi Sarbasov, Daulet Argandykov, Balzhan Shamenova, Mairash Kozzhanova, Aigul Tabergenova, Nurken Tleuov, Arman Umerbayev, Saltanat Mustafina, Nastya Kornilova and Dina Suleimanova deserve special thanks for their considerable contribution to providing research support and to ensuring a successful completion of this project. The OECD Secretariat would also like to gratefully acknowledge the comments and feedbacks received from Giovanni Capannelli, Country Director, Asian Development Bank; Alper Dincer, Principal Inclusion Economist, European Bank for Reconstruction and Development; Talgat Umirzhanov, International Labour Office National Coordinator, in Kazakhstan; and Naveed Naqvi, former Head of the programmes for job creation and development of human capital for Central Asia. BUILDING INCLUSIVE LABOUR MARKETS IN KAZAKHSTAN: A FOCUS ON YOUTH, OLDER WORKERS AND PEOPLE WITH DISABILITIES © OECD 2017 TABLE OF CONTENTS – 5 Table of contents Acronyms and abbreviations ............................................................................................................. 9 Executive summary ......................................................................................................................... 11 Assessment and recommendations .................................................................................................. 13 Chapter 1. Key labour market challenges in Kazakhstan ........................................................... 39 Introduction ................................................................................................................................. 40 Economic and social indicators ................................................................................................... 41 The labour market situation in Kazakhstan ................................................................................. 46 Notes .......................................................................................................................................... 66 References .................................................................................................................................. 67 Chapter 2. Investing in Kazakhstani youth .................................................................................. 69 Introduction and key recommendations ...................................................................................... 70 Containing the cost of labour to encourage youth hiring ............................................................ 73 Revising the employment protection legislation to boost the demand of young workers ........... 79 More and better skills for Kazakhstani youth ............................................................................. 85 Delivering employment services that work for youth ................................................................. 89 Providing income support to youth through unemployment and social assistance benefits ..... 104 Strengthening family policies to help young women find a balance between work and daily living .......................................................................................................................... 109 Notes ........................................................................................................................................ 115 References ................................................................................................................................ 118 Annex 2.A1. Eligibility requirements for receiving unemployment benefits in Kazakhstan .... 123 Annex 2.A2. Family cash benefits in Kazakhstan ..................................................................... 124 Chapter 3. Working longer with age: Strengthening the labour market outcomes of older workers in Kazakhstan .................................................................................................. 127 Introduction and key recommendations .................................................................................... 128 Kazakhstan has a young population .......................................................................................... 131 Strengthening the employability of older workers in Kazakhstan ............................................ 135 Encouraging employers to hire and retain older workers .......................................................... 144 Making work rewarding for older workers in Kazakhstan........................................................ 146 Notes ........................................................................................................................................ 160 References ................................................................................................................................ 161 Annex 3.A1. Survivors’ benefits in Kazakhstan ....................................................................... 165 Chapter 4. Breaking down labour market barriers for people with disabilities ..................... 167 Introduction and key recommendations .................................................................................... 168 The labour market situation of people with disabilities ............................................................ 173 Economic and social determinants of low jobs for people with disability ................................ 176 Recent reforms have not gone far enough ................................................................................. 177 An holistic approach to foster the employability of people with disability .............................. 180 Notes ........................................................................................................................................ 194 References ................................................................................................................................ 196 BUILDING INCLUSIVE LABOUR MARKETS IN KAZAKHSTAN: A FOCUS ON YOUTH, OLDER WORKERS AND PEOPLE WITH DISABILITIES © OECD 2017 6 – TABLE OF CONTENTS Figures Figure 1.1. Real GDP growth, Kazakhstan, 1990-2015 ................................................................... 42 Figure 1.2. Poverty headcount ratio at national poverty lines in Kazakhstan .................................. 43 Figure 1.3. Poverty headcount ratio (2011 PPP), Kazakhstan, Asian, BRIICS and OECD countries, 2013 ......................................................................................................... 43 Figure 1.4. Unemployment rates, Kazakhstan and OECD, 2000-15 ................................................ 44 Figure 1.5. Inequality in Kazakhstan, 1996-2014 ............................................................................ 45 Figure 1.6. Gini coefficient at market income and disposable income, 2013 .................................. 45 Figure 1.7. The Kazakhstani population structure, 2015 and 2050 .................................................. 46 Figure 1.8. Activity status by age and gender, Kazakhstan, 2014 .................................................... 47 Figure 1.9. Key labour market indicators of total population (over 15) in Kazakhstan, neighbouring countries, OECD, BRIICS, 2007-15 (or latest year available) ............................. 49 Figure 1.10. Incidence of long-term unemployment (one year or more), Kazakhstan, OECD and BRIICS, 2015 ........................................................................................................... 50 Figure 1.11. Labour market outcomes by socio-demographic characteristics, Kazakhstan, 2015 ... 51 Figure 1.12. Key labour market indicators for youth (15-24), Kazakhstan, OECD and BRIICS, 2015 ....................................................................................................................... 53 Figure 1.13. Youth not in employment, education or training (NEET) rates, Kazakhstan, OECD and BRIICS, 2015 ........................................................................................................... 54 Figure 1.1.4. Youth (15-29) NEET rates by socio-demographic characteristics, Kazakhstan, 2014 ........................................................................................................................ 54 Figure 1.15. Key labour market indicators for older workers (ages 55-64), Kazakhstan, OECD and BRIICS, 2015 ........................................................................................................... 56 Figure 1.16. Key labour market indicators for people aged 65-69, Kazakhstan, OECD and BRIICS, 2015 ....................................................................................................................... 57 Figure 1.17. Incidence of informality, Kazakhstan and selected emerging economies ................... 59 Figure 1.18. Incidence of informality by key worker characteristics ............................................... 60 Figure 1.19. The incidence of low paying jobs, Kazakhstan and selected countries, 2013 (or latest year) ............................................................................................................................. 61 Figure 1.20. Incidence of temporary employment by age, Kazakhstan, OECD countries, and selected non-OECD countries, 2015 .................................................................................... 62 Figure 1.21. Incidence of part-time employment, Kazakhstan, OECD and selected non-OECD countries, 2015 ............................................................................................................................ 63 Figure 1.22. Incidence of very long hours, Kazakhstan, OECD and selected non-OECD countries, 2014 (or latest year) .................................................................................................... 63 Figure 1.23. Job satisfaction and availability of good jobs, Kazakhstan, OECD, BRIICS and neighbouring countries, 2012 ............................................................................................... 65 Figure 2.1. The decomposition of the tax wedge, Kazakhstan and OECD average, 2015 ............... 75 Figure 2.2. Monthly real minimum wages and subsistence minimum in Kazakhstan, 1994-2016 ...... 77 Figure 2.3. Minimum wages relative to average wages, Kazakhstan, OECD and emerging countries, 2015 ............................................................................................................................ 78 Figure 2.4. Employment protection legislation on regular employment (individual dismissal), Kazakhstan, BRIICS and OECD countries, 2013 .................................. 80 Figure 2.5. Employment protection legislation on temporary contracts, Kazakhstan, BRIICS and OECD countries, 2013 ......................................................................................................... 81 Figure 2.6. Key labour market indicators for youth (15-28) by level of education, Kazakhstan, 2012 ........................................................................................................................ 87 Figure 2.7. Registration with PES, Kazakhstan and OECD countries, 2014 ................................... 90 Figure 2.8. Stress test of the Kazakhstani PES, 2014 ....................................................................... 92 Figure 2.9. Expenditures on ALMPs, Kazakhstan and OECD countries, 2014 ............................... 96 BUILDING INCLUSIVE LABOUR MARKETS IN KAZAKHSTAN: A FOCUS ON YOUTH, OLDER WORKERS AND PEOPLE WITH DISABILITIES © OECD 2017 TABLE OF CONTENTS – 7 Figure 2.10. Targeting of ALMPs on the Kazakhstani regions, 2014 .............................................. 97 Figure 2.11. Participants of ALMPs and distribution of participants by programme, Kazakhstan and OECD-European countries, 2013 ..................................................................... 98 Figure 2.12. Educational attainment of participants in employment subsidy programmes, as of 1st September 2015 .......................................................................................................... 102 Figure 2.13. The generosity of unemployment benefits, Kazakhstan and OECD countries, 2014 ........................................................................................................................................... 105 Figure 2.14. Income levels provided by social assistance benefits, 2014 ...................................... 108 Figure 2.15. TSA benefits recipients, by regions, Kazakhstan, 2014............................................. 108 Figure 3.1. Demographic dependency ratios, Kazakhstan and OECD countries, 2015 and 2050...... 131 Figure 3.2. Life expectancy at birth, Kazakhstan, OECD countries and the BRIICS, 1990-2014 ................................................................................................................................. 132 Figure 3.3. Fertility rates, Kazakhstan, OECD and European Union, 1960-2014 ......................... 132 Figure 3.4. Active life expectancy at birth by gender, 2015 .......................................................... 133 Figure 3.5. Older women who are single, divorced, or widowed by age group, Kazakhstan and selected OECD countries, 2011 ...................................................................... 134 Figure 3.6. Fatal accidents at work, OECD-EU and Kazakhstan, 2014 ......................................... 136 Figure 3.7. Annualised adjusted change across PISA assessments, Kazakhstan and OECD, 2009-12 .................................................................................................................. 138 Figure 3.8. Formal training, Kazakhstan, OECD, BRIICS, and other regions, 2013 ..................... 139 Figure 3.9. Number of older participants and share of older workers among participants of ALMPs, 2013 ........................................................................................................................ 142 Figure 3.10. Real wages and productivity growth in Kazakhstan, 1999-2014 ............................... 145 Figure 3.11. Pension modelling results: Kazakhstan in 2057, retirement at age 63 ....................... 152 Figure 3.12. Net replacement rates at retirement age, Kazakhstan, OECD and selected non-OECD countries ................................................................................................................. 153 Figure 3.13. Percentage of people (aged 15 or more) who save for old age, Kazakhstan, OECD countries and the BRIICS, 2014 .................................................................................... 154 Figure 3.14. Retirement age for a person who entered the labour force at age 20, 2014 ............... 158 Figure 4.1. Percentage of people with a disability in EU member states and Kazakhstan as a percentage of the total population (aged over 16 years), 2011 .......................................... 173 Figure 4.2. Considerable heterogeneity across people with disability in Kazakhstan, 2011-14 .... 174 Figure 4.3. Employment rate of disabled people, Kazakhstan and OECD-EU countries, 2011 .... 176 Tables Table 1.1. Average duration of school to work transitions, Kazakhstan, OECD and other selected countries, 2011 .............................................................................................................. 55 Table 2.1. Personal income tax and social security contributions in Kazakhstan, 2017 .................. 74 Table 3.1. Key features of the recent old-age pension reform ....................................................... 149 Table 3.2. Calculation of the state basic pension based on contribution history ............................ 149 Table 3.3. Phase-in of increased retirement age for women, Republic of Kazakhstan, 2018-2027 ................................................................................................................................. 150 Table 3.4. Baseline scenario: legislation scenario (current policy indexation of safety-nets schemes) .................................................................................................................................... 152 Table 4.1. Disability assessments, 2014 ......................................................................................... 182 Table 4.2. Key features of the quota systems in selected OECD countries ................................... 189 BUILDING INCLUSIVE LABOUR MARKETS IN KAZAKHSTAN: A FOCUS ON YOUTH, OLDER WORKERS AND PEOPLE WITH DISABILITIES © OECD 2017