Transformation of Social Protection in a Transforming Economy and Society of Uzbekistan
Transformation of SocialProtection in a Transforming Economy and Society of Uzbekistan Kamila Mukhamedkhanova Center for Economic Research www.cer.uz
Uzbekistan: SP context and development trends Demographic trends Economic transformation40 100 220.0 30.035 81.6 195.3 28.030 66.9 80 200.0 26.0 180.0 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 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.
Evolution of social protection in Uzbekistan Period Phases of transformation Policy instrumentsEarly 1990-s Universal social support - Subsidized prices, - Allowances and compensation to all familiesMid 1990-s – Introduction of targeted - Reduction and elimination of priceEarly 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
Social policies and social protection profile Spending on the social sector and social protection, including targeted protection65 1.7 1.8 1.7 2.0 1. Macrolevel - social policies: Education 1.560 1.7 1.5 1.4 1.3 1.3 1.3 1.3 1.5 & healthcare,55 1.0 Targeted national programs50 59.4 60.2 61.2 58.2 56.5 58.5 0.545 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 specific35 33.3 population categories based on needs3025 verification; 17.120 12.7 15.2 15.5 14.0 12.8 • social payments and benefits for15 9.910 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)
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
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
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
Assessment of effectiveness of SP policies: Scope of the Research Allowances PensionsLabor market policies Rural infrastructure Education Healthcare Food Security Institutions
Impact assessment of SP policiesPolicies & QuestionsMeasures What is the effect of allowances on consumption, poverty reduction and welfare improvement? What is optimum amount of allowances, that willAllowances 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?
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? programs1) Generation of jobs; Which of the programs is the most effective2) Providing favorable in the terms of social mobility?business-climate, credits.;3)Improving education andtrainings; Which of the programs are the most effective in the terms of changing values,4) Expansion and creation transforming behavioral stereotypes?of new industries andenterprises What is the transformative impact on thePrograms on construction quality of life, behavioral stereotypes, of rural housing and consumption pattern? improving living conditions
Impact assessment of SP policiesPolicies & 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 systemQuality 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?
Preliminary results: How to improve the SP Structure1. Assign social allowances based on the expected effects of socialprograms: employment programs, rural housing construction.2. Strengthen the link between salaries and pensions by improvingthe methods of accounting to create incentives for productiveemployment.3. Expand active policies on labor market (improvingeducation, special trainings, favorable business opportunities) tocontribute to welfare improvement, social mobility, changing of valuesand stereotypesMinimize the programs on generation of jobs.4. Proceed on the programs on construction of rural housing to havethe positive impact on the quality of life, lifestyle, behavioralstereotypes, consumption pattern and even gender stereotypes.
Preliminary results: How to improve SP institutions1. 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.
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?
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