Uzbekistan: context and development trends Demographic situation Structural reforms40 100 220.0 30.035 81.6 195.3 28.0 80 200.030 66.9 180.0 26.0 24.025 60 180.0 166.5 22.020 160.0 152.7 20.015 34.8 40 139.5 18.010 140.0 129.8 21.4 20 121.3 16.0 5 120.0 112.9 14.0 104.2 108.4 12.0 0 0 100.0 10.0 2010 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 GDP(2000=100) Poverty level, right scale Birth rate, right scale The ratio of employed population to the working-age population (%) 70 Fiscal space Social structure of society 60 58.1 50 59 56.5 40 42.5 27.9 29 30 22.6 21.5 21.9 21.6 21.9 21.5 20 10 0 2000 2005 2010 2011 State budget revenues, % of GDP State budget expenditures, % of GDP Proportion of spending on the social sector and social protection (in % of state budget expenditures)
Social protection profileSocial insurance:• pension benefits (basic part and savings part);• social support for the unemployed;• sickness and disability care.Targeted social support for socially vulnerable population categories:• targeted support measures for specific population categories, based on verification of need;• social payments and benefits for specific population categories regardless of need;• social service for the public.
Sequencing : the evolution of social protection policies and schemesPhases of the transformation of the state social support system1991-1994 Social support for broad strata of Subsidized prices, payment of allowances and the population compensation to all families1994-1996 Introduction of targeted financial Limitation of subsidized prices and rates, assistance for low-income targeted payment of financial assistance to families families in need, continuation of universal support for families with children1996 -2002 Introduction of targeted social Cancellation of subsidies for prices and rates, assistance for families in need pullback from universal social support for with children families2002 – Full transition to targeted social Replacement of specific preferences for thepresent assistance for socially vulnerable population with cash payments, full transition population groups to targeted social assistance for low-income families
Cost efficiency of social protections programs Spending on the social sector and social protection, including targeted protection65 2.0 1.5 1.7 1.8 1.7 Lack of methodological base to60 1.7 1.5 1.4 1.3 1.3 1.3 1.3 1.5 evaluate the efficiency of social55 1.0 protection programs.50 59.4 60.2 61.2 58.2 56.5 58.5 0.545 49.0 48.5 49.0 49.3 49.940 0.0 The reasons are the following: 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Share of spending on the social sector and social protection (in % of the national budget) Spending on allowances for low-income families (% of GDP)), right scale • Budget process is not result, but Spending on education and health care: expenditures based. International experience35.0 33.3 • Evaluation and monitoring30.025.0 mechanisms need to be20.0 17.1 15.2 15.5 14.0 improved .15.0 12.7 12.8 8.8 9.910.0 5.0 5.4 • Quality of statistics. 0.0 High income Lower middle Middle income Upper middle income income Uzbekistan • Lack of qualitative indicators. Health expenditure, public (% of government expenditure) Public spending on education, total (% of government expenditure)
Financing and fiscal sustainability: future challenges Social allowances as % to average wageEconomic, social and institutionalconditions are placing new demands onthe social-protection system. Thechallenges are as follows: Despite the government’s growingexpenditures on the social sector and socialprotection, the importance of socialallowances has gradually diminished.Reduction of formal sector in totalemployment accompanied by increase ofthe share of pensioners will raise burdenper one employed.Pensions are small and not related toprevious salaries. This increases the risk offalling into the poverty after getting theretirement age.
Key lessons learned and recommendations The model of social protection developed in the 1990-s proved its validityby preventing a sharp drop in living standards and ensuring that socialsupport was targeted the most needed.As the processes of transformation and modernization of the economy,society and institutions have sped up in the recent years, it is time to take anew look at the future of the social-protection system.The focus should be on promotive and transformative functions of socialprotection. The social protection policies should be implemented in complex witheconomic and institutional reforms .In order to minimize risks and costs of transformation of the system thepreparatory stage should be implemented by creating effective instruments,piloting a new initiatives and institutes, developing mechanisms ofmonitoring and assessment etc.
Formation of the New Model for Uzbekistan: To what extent foreign models could be applied? Taxes and Social Payments, % of GDP Government Budget Expenditures, % of GDP 70 60 56,056,458,1 60 52,7 50 49,747,9 50 41,7 43,9 40 40 34,4 32,7 30 30 21,6 20 19,1 20 11,5 10 10 0 0 Social protection Education Healthcare Public services National defence National security GDP per capita & Economic Growth rate Option 1: focus on safety net functions; generous 60000 12 social system redistribution and fiscal burden 50000 10,4 10 8,5 Option 2: reduced social spending, incentives for 40000 8 private sector; relieved tax wedge; 30000 5,6 6 20000 3,69 3,73 4 Various models applied at various stages 3 10000 2,09 2,3 2 1,48 1,3 Neither of the foreign models fully fit into a 0 0,67 0 transforming Uzbekistan economy Uzbekistan needs to select its own path and develop the new specific model GDP per capita PPP, USD Economic growth rate, %
Formation of a New SP Model in Uzbekistan: Developing the overall framework• Conventional approach to SP should be broadened by: – Involving not only protective and preventive, but also promotive and transformative functions; – Integrating and consolidating fragmented policies in various sectors (labor market policies, promotion of entrepreneurship, governance reformation).• The new SP model should provide incentives for and be in line with structural and social transformation and needs to: – Provide assistance to adapt to structural transformations and get ready for the changes beforehand; – Create social lifts and incentives for social mobility
Project on Transformative Social Protection: Scope of the Research Allowances PensionsLabor market policies Rural infrastructure Education Healthcare Food Security Institutions
Central question: How to assess the promotive and transformative effects?Policies & QuestionsMeasures What is the effect of allowances on consumption, poverty reduction and welfare improvement? What is optimum amount of allowances, that will improveAllowances the welfare and not contribute to parasitism? Does the income and social status of recipients of allowances change as time passes? Which social programs contribute to such changes? How pensions affect the welfare of people? Do pensions prevent from poverty? Pensions How pension expectations affect the employment of people at the working age?
Central question: How to assess the promotive and transformative effects? Policies & Measures Questions Which of the programs is the most effective in the terms of welfare improvement and poverty Labor market programs reduction?1) Generation of jobs;2) Providing favorable Which of the programs is the most effective inbusiness-climate, credits.; the terms of social mobility?3)Improving education andtrainings;4) Expansion and creation of Which of the programs are the most effective innew industries and enterprises the terms of changing values, transforming behavioral stereotypes? What is the transformative impact on the qualityPrograms on construction of of life, behavioral stereotypes, consumptionrural housing and improving pattern? living conditions
Central question: How to assess the promotive and transformative effects?Policies & Measures Questions What is the effect on the quality and access to education and healthcare? Education and What is the impact on enthusiasm, values and stereotypes? Healthcare What is the impact on the quality of human capital? Does the design of the system fit in the new requirements? Do the principles of work of the system conformQuality of institutions with the new requirements? Do the existing mechanisms of monitoring and assessment conform with the new requirements? What are the costs and benefits of introduction of the new institutions?
Issues to be discussed:• Are we on the right path?• Are the research questions posed properly?• Will we succeed employing these strategies?• What approaches, methods and indicators need to be revised?• What dimensions are omitted? Please, advise!