The document discusses the transformation of Uzbekistan's social protection system as the country's economy and society change. It analyzes demographic and economic trends, the evolution of social protection policies, challenges facing the current system, and ways to develop a new model. Preliminary results suggest strengthening links between salaries and pensions, expanding active labor market policies, and revising social protection institutions and assessment mechanisms. The researcher seeks feedback on research questions, approaches, and how to account for omitted dimensions.

1. Transformation of Social
Protection in a Transforming
Economy and Society of
Uzbekistan
Kamila Mukhamedkhanova
Center for Economic Research
www.cer.uz

2. Uzbekistan: SP context and development trends
Demographic trends Economic transformation
40 100 220.0 30.0
35 81.6 195.3 28.0
30 66.9 80 200.0 26.0
180.0
24.0
25 60 180.0 166.5 22.0
20 160.0 152.7 20.0
15 34.8 40 139.5 18.0
10 140.0 129.8 16.0
21.4 20 121.3
5 112.9 14.0
104.2 108.4
120.0
12.0
0 0
100.0 10.0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
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 (%)
Demographic trends:
Social structure of society - accelerated population growth
- accelerated growth of labor force
Economic transformations:
- Early 90-s – adverse effects of transition
- Mid 1990s - mid-2000-s – moderate
economic growth, private sector
development
- Since mid-2000-s – rapid economic
growth, accelerated structural changes
Social transformations: expansion of the middle
class; large share of the middle class reserve.

3. Evolution of social protection in Uzbekistan
Period Phases of transformation Policy instruments
Early 1990-s Universal social support - Subsidized prices,
- Allowances and compensation to all
families
Mid 1990-s – Introduction of targeted - Reduction and elimination of price
Early 2000-s financial assistance for subsidies,
the vulnerable - Introduction of targeted financial
assistance to low-income families
(1994-1996),
- Introduction of targeted support for
families with children (1996-2002).
Early 2000-s Further transition to - Replacement of specific preferences for
–Present targeted social the population with cash payments,
protection policies - Employment of makhallas for
assignment of SP allowances
- Further transition to targeted social
assistance for low-income families

4. Social policies and social protection profile
Spending on the social sector and social protection,
including targeted protection
65
1.7 1.8
1.7
2.0 1. Macrolevel - social policies: Education
1.5
60
1.7 1.5 1.4 1.3 1.3 1.3
1.3 1.5 & healthcare,
55
1.0
Targeted national programs
50 59.4 60.2 61.2 58.2
56.5 58.5
0.5
45 49.0 48.5 49.0 49.3 49.9 2. Microlevel - social protection:
40 0.0
Social insurance:
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
• pension benefits;
Share of spending on the social sector and social protection (in
% of the national budget) • social support for the unemployed;
Spending on allowances for low-income families (% of
GDP)), right scale • sickness and disability care.
Targeted social assistance:
Spending on education and health care:
International experience • targeted support for specific
35 33.3 population categories based on needs
30
25
verification;
17.1
20
12.7
15.2 15.5 14.0 12.8 • social payments and benefits for
15 9.9
10 5.4
8.8 specific population categories
5 regardless of need;
0
High income Lower middle Middle income Upper middle Uzbekistan • social service for the public.
income income
Health expenditure, public (% of government expenditure)
Public spending on education, total (% of government
expenditure)

5. Social protection in Uzbekistan:
Major challenges
• The basic principle of the current system - to counter the
shortage of financial means for a decent existence.
• Key problem – the current model is not sustainable in the long-
term.
– Preservation of the current safety net SP system will add to the fiscal
burden and pose a threat for the fiscal sustainability
– No comprehensive policies on creating opportunities and
mechanisms for the vulnerable to be involved into the mainstream
and effective economic activity
•  The existing SP model will not perform its four major functions
efficiently and ensure economic resilience in the long term.
•  New SP model needs to be developed

6. Formation of the New Model for Uzbekistan:
To what extent foreign models could be applied?
 Option 1: focus on safety net functions; generous
social system  redistribution and fiscal burden
 Option 2: reduced social spending, incentives for
private sector; relieved tax wedge;
  Various models applied at various stages
  Neither of the foreign models fully fit into a
transforming Uzbekistan economy
 Uzbekistan needs to select its own path
and develop the new specific model

7. 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

8. Assessment of effectiveness of SP policies:
Scope of the Research
Allowances Pensions
Labor market policies Rural infrastructure
Education Healthcare
Food Security Institutions

9. Impact assessment of SP policies
Policies & Questions
Measures
What is the effect of allowances on consumption,
poverty reduction and welfare improvement?
What is optimum amount of allowances, that will
Allowances improve 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?

10. Impact assessment of SP policies
Policies & Measures Questions
Which of the programs is the most effective
in the terms of welfare improvement and
Labor market poverty reduction?
programs
1) Generation of jobs;
Which of the programs is the most effective
2) Providing favorable in the terms of social mobility?
business-climate, credits.;
3)Improving education and
trainings; Which of the programs are the most effective
in the terms of changing values,
4) Expansion and creation
transforming behavioral stereotypes?
of new industries and
enterprises
What is the transformative impact on the
Programs on construction quality of life, behavioral stereotypes,
of rural housing and consumption pattern?
improving living
conditions

11. Impact assessment of SP policies
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
Quality of institutions conform 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?

12. Preliminary results:
How to improve the SP Structure
1. Assign social allowances based on the expected effects of social
programs: employment programs, rural housing construction.
2. Strengthen the link between salaries and pensions by improving
the methods of accounting to create incentives for productive
employment.
3. Expand active policies on labor market (improving
education, special trainings, favorable business opportunities) to
contribute to welfare improvement, social mobility, changing of values
and stereotypes
Minimize the programs on generation of jobs.
4. Proceed on the programs on construction of rural housing to have
the positive impact on the quality of life, lifestyle, behavioral
stereotypes, consumption pattern and even gender stereotypes.

13. Preliminary results:
How to improve SP institutions
1. Develop the legal framework for social standards and norms & revise the
methodology for identification of the vulnerable in line with the new
social protection framework.
This will make the system more formalized and easy to follow.
1. Reconsider the functions of various agencies, implementing social
policies to avoid duplicating and ensure the high rate of efficiency.
2. Improve the mechanisms of monitoring and assessment of the system’s
effectiveness :
- Implement the transition from the expenditure-oriented
approach to the results-based approach.
- Develop qualitative indicators, illustrating qualitative
changes, triggered by social policies and introduce the new system
of SP monitoring and assessment.

14. Issues to be discussed:
• Are we on the right path?
• Are the research questions posed properly?
• What approaches, methods and indicators need to
be revised?
• What dimensions are omitted?

15. Thank you!
If you have any comments or questions,
please, write to the e-mail:
kamila.muhamedhanova@cer.uz
You can also leave your comments on the paper here:
http://transformation.cer.uz/2012/09/how-to-assess-the-
promotive-and-transformative-effects-of-social-protection/