transformation of social protection in a transforming economy and society of uzbekistan
TRANSCRIPT
Transformation of Social Protection in a Transforming
Economy and Society of Uzbekistan
Kamila MukhamedkhanovaCenter for Economic Research
www.cer.uz
Uzbekistan: SP context and development trendsEconomic transformation
Social structure of society
19911993
19951997
19992001
20032005
20072009
201105
10152025303540
0102030405060708090
34.8
21.4
81.666.9
Demographic trends
Birth rate, right scaleThe ratio of employed population to the working-age population (%)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010100.0
120.0
140.0
160.0
180.0
200.0
220.0
10.012.014.016.018.020.022.024.026.028.030.0
104.2 108.4 112.9121.3
129.8139.5
152.7
166.5
180.0
195.3
GDP(2000=100) Poverty level, right scale
Demographic trends: - 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.
Period Phases of transformation Policy instruments
Early 1990-s Universal social support - Subsidized prices, - Allowances and compensation to all families
Mid 1990-s – Early 2000-s
Introduction of targeted financial assistance for the vulnerable
- Reduction and elimination of price subsidies,
- Introduction of targeted financial assistance to low-income families (1994-1996),
- Introduction of targeted support for families with children (1996-2002).
Early 2000-s –Present
Further transition to targeted social protection policies
- Replacement of specific preferences for the population with cash payments,
- Employment of makhallas for assignment of SP allowances
- Further transition to targeted social assistance for low-income families
Evolution of social protection in Uzbekistan
Social policies and social protection profile
Spending on education and health care:International experience
1. Macrolevel - social policies: Education & healthcare,
Targeted national programs
2. Microlevel - social protection:Social insurance:• pension benefits; • social support for the unemployed;• sickness and disability care.Targeted social assistance:• targeted support for specific
population categories based on needs verification;
• social payments and benefits for specific population categories regardless of need;
• social service for the public.
Spending on the social sector and social protection, including targeted protection
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201040
45
50
55
60
65
0.0
0.5
1.0
1.5
2.0
49.0 48.5 49.0 49.3 49.9
56.5 58.5 59.4 60.2 61.258.2
1.71.5
1.51.4 1.3 1.3 1.3 1.3
1.71.8
1.7
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
High income Lower middle income
Middle income Upper middle income
Uzbekistan0
5
10
15
20
25
30
35
17.1
5.48.8 9.9
12.812.715.2 15.5 14.0
33.3
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
34,441,7 43,9
49,747,9
56,056,458,152,7
11,5
19,121,6
32,7
0
10
20
30
40
50
60
70
Taxes and Social Payments, % of GDP
0
10
20
30
40
50
60
Social protection Education HealthcarePublic services National defence National security
Government Budget Expenditures, % of GDP
32,09
3,69
1,482,3
1,3
5,6
0,67
3,73
10,4
8,5
0
2
4
6
8
10
12
0
10000
20000
30000
40000
50000
60000
GDP per capita PPP, USD
Economic growth rate, %
GDP per capita & 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
Assessment of effectiveness of SP policies: Scope of the Research
Allowances
Labor market policies
Pensions
Rural infrastructure
Education
Institutions
Healthcare
Food Security
Impact assessment of SP policies
Policies & Measures
Questions
Allowances
What is the effect of allowances on consumption, poverty reduction and welfare improvement?
What is optimum amount of allowances, that will 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?
Pensions
How pensions affect the welfare of people? Do pensions prevent from poverty?
How pension expectations affect the employment of people at the working age?
Impact assessment of SP policies
Policies & Measures Questions
Labor market programs
1) Generation of jobs;
2) Providing favorable business-climate, credits.;
3)Improving education and trainings;
4) Expansion and creation of new industries and enterprises
Which of the programs is the most effective in the terms of welfare improvement and poverty reduction?
Which of the programs is the most effective in the terms of social mobility?
Which of the programs are the most effective in the terms of changing values, transforming behavioral stereotypes?
Programs on construction of rural housing and
improving living conditions
What is the transformative impact on the quality of life, behavioral stereotypes, consumption pattern?
Impact assessment of SP policies
Policies & Measures Questions
Education and Healthcare
What is the effect on the quality and access to education and healthcare?What is the impact on enthusiasm, values and stereotypes?What is the impact on the quality of human capital?
Quality of institutions
Does the design of the system fit in the new requirements?
Do the principles of work of the system 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 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.
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.
2. Reconsider the functions of various agencies, implementing social policies to avoid duplicating and ensure the high rate of efficiency.
3. 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?
Thank you!
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