By Alessia Forti
As argued in the OECD report Building Inclusive Labour Markets in Kazakhstan (OECD, 2017), investing in skills and human capital is crucial to tackle Kazakhstan’s strong dependence on natural resources and embark on a path of economic diversification. This report highlights how equipping the workforce with the right types of skills will help the country adapt to the megatrends of globalisation, technological progress and demographic change.
Investing in skills is also crucial to improve labour market prospects and job quality for Kazakhstan’s population. The country’s low-skilled are particularly struggling in the labour market. Those who have not completed high school are ten times less likely to be employed, over three times more likely to be unemployed, and over four times more likely to be inactive than people with tertiary education.
When working, their jobs are also likely to be of poor quality. Around 75% of the jobs held by the low skilled are informal, compared with 37% for those with secondary education and 13% for those with higher education. These informal jobs are typically of poor quality, e.g. they are low-paid, give limited access to training, and provide little social security coverage or protection. For instance – around 20% of informal and self-employed workers earn below the minimum wage – compared with only 1% among wage employees in formal jobs.
In this context, helping more young people complete secondary education should be a priority. Kazakhstan has made considerable improvements over the past decade. Educational attainment has increased substantially and many more young people go on to higher education than in the past. However, educational spending is still below the international average and much remains to be done to eliminate persisting inequalities in educational attainment.
Apart from access, the quality of initial education is also an issue. Results from the OECD Programme for International Student Assessment (PISA) show that around 80% of Kazakhstani 15 years-old students are low achievers (below level 2) in mathematics, reading and sciences – double the OECD average of around 40%.
While building generic skills early in life is essential, it is also important that skills are continuously updated during the working life. This is particularly important in a country like Kazakhstan, where the skills obtained prior to the independence from the Soviet Union (1991) reflected the needs of heavy manufacturing industries, including the military. The demand for these skills has since declined significantly, and many workers need up-skilling.
However, employers in Kazakhstan rarely invest in the training of their employees. Results from the World Bank Enterprise Survey shows that, in 2013, only 28.3% of firms offered formal training to their employees, compared with an OECD average of 44.6% and the average for Eastern Europe and Central Asian countries of 32.8% (see Figure). Kazakhstan is also at the bottom of the range when compared with other emerging economies such as the BRIICS (Brazil, Russia, India, Indonesia and South Africa), with the exception of Indonesia.
Recognising this challenge, the Kazakhstan government is implementing policies to encourage firms to invest in the skills of their workers. For example, employers can deduct costs related to the training of workers through available tax allowances and tax credits. The planned increase in the retirement age of women (from 58 to 63 years) is also expected to increase the incentives to firms to train (female) workers as average careers lengthen. Going forward, further efforts will also be needed to motivate adult workers to invest in their skills (e.g. through financial incentives and effective systems of Recognition of Prior Learning).
Another key challenge for Kazakhstan is to tackle skills shortages and better align education to labour market needs. Data from the Business Environment and Enterprise Performance Survey (BEEPS)[i] indicates that an inadequately educated workforce is one of the top constraints to the operation of Kazakh firms. Skills shortages partly reflect the fact that qualifications obtained in the education system often do not correspond to skills demanded in the labour market: for example, relative to the skill needs of firms, there are too many students graduating in social studies, law, and economics and too few students graduating in STEM subjects (science, technology, engineering and mathematics) given the country’s needs. This is partly the result of the lack of information about labour market prospects after graduation. Skills Assessment and Anticipation (SAA) exercises – i.e. tools used to generate information on current and future skill needs (see OECD, 2016) – are scant, and the system of forecasting the demand of labour is in its early stages of development. While steps in the right direction are being taken – e.g. the ongoing development of a National Qualification Framework; the production of medium-term labour demand forecasts by occupation – much remains to be done.
OECD (2017), Building inclusive labour markets in Kazakhstan: a focus on youth, older workers, and people with disabilities, OECD Publishing.
OECD (2016), Getting Skills Right: Assessing and Anticipating Changing Skill Needs, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264252073-e.
[i] This survey is conducted jointly by the European Bank for Reconstruction and Development and the World Bank Group.