Evolution of the Labor Productivity in the Economy of Kazakhstan

stan has been taking various measures intending to increase the labor productivity and these measures are rather successful in many terms. According to the latest available statistics of the Committee on Statistics of the Ministry of National Economy Kazakhstan, the overall labor productivity in the economy of the country increased by 210% between 2000-2016. Moreover, during the same period the labor productivity grew more in the production of goods reaching 238% compared to the services sector, which showed a 192% increase. As a result, in 2000 Kazakhstan ranked 93rd in terms of labor productivity measured as GDP per person employed whereas the country was the 69th in this list in 2016. Analyzing the evolution of the labor productivity between 2000-2016, significant changes had been observed. In this sense, the whole period can be analyzed in two sub-periods. The first sub-period lasted between 2000-2007 and characterized by a rapid growth that was largely based on the expansion of the oil sector of the economy. During this period, the growth of the labor productivity was almost as fast as the growth of the national economy. For instance, in 2006, which was the peak of the oil boom in the world, while GDP grew by 10.7% the labor productivity in the economy of Kazakhstan grew by 9.4%. Between 2000-2007, the overall labor productivity in the economy grew by 67.5%.

2008 global crisis, which was followed by a sudden downturn in oil prices caused a serious slowdown in the growth of labor productivity. As a result, the Government decided to reconsider the measures and approaches to increase the labor productivity, which made this issue one of the priorities in the industrial development strategy. The Strategy of Industrial and Innovation Development of Kazakhstan for 20032015, which was launched in May 17, 2003, has made less progress than expected in stimulating the labor productivity growth in manufacturing sector. It was too comprehensive and included a wide range of issues with poor goals and unclear strategies to reach these goals. This fact made the Government to reconsider the policy of industrial development and adopt the Program of Accelerated Industrial-Innovative Development of Kazakhstan for 2010-2014, which was launched in March 19, 2010, with a special emphasis on enhancing the competitiveness by increasing the productivity, industrial diversification and supporting medium and small businesses. Although the new program was unable to reach some of the specified goals (such as achieving a 50% increase in the labor productivity in manufacturing sector), the program was rather successful in upgrading the labor productivity rate in most non-oil sectors of the economy. Thus, between 2010-2016 the overall labor productivity in the domestic economy grew by 25.6%. During the same period, the growth of the labor productivity in services sector was 14.7%, while in the production of goods it reached 42.7%. In particular, during the reported period the labor productivity in construction and manufacturing sectors reached 8.3% and 15.9%, respectively, while in agriculture sector it grew by 105.5%. It is also worth mentioning that despite the calamities caused by the dramatic drop in oil prices in 20142015, Kazakhstan managed to maintain the growth of the labor productivity in 2015 and 2016 at 0.6% and 1.8% in the overall economy respectively. Moreover, the labor productivity in the production of goods in 2015 and 2016 was at 1.5% and 6.9% respectively. Another feature that marks the success of the current policy in the labor productivity is that between 2010-2014 the manufacturing sector maintained growth in the labor productivity while the labor productivity in the extractive sector constantly decreased at around 5%-7% per year. The positive dynamics in labor productivity in manufacturing during this period was maintained thanks to overall economic growth sustained mainly by high prices of primary commodities combined with supporting measures taken in regards to small and medium enterprises in the manufacturing sector.

The current State Program of the Industrial and Innovative Development of the Republic of Kazakhstan for 2015-2019, which was launched on August 1, 2014, in many terms is a conceptual continuation of the previously implemented programs with more emphasis on non-oil sectors of the economy and a 40% increase in the labor productivity in the manufacturing sector. The given program, which mainly consists of tax incentives for industries with high value added capacity, development of innovative clusters and supports small and medium enterprises, is implemented with a moderate success. For instance, in 20152016 Kazakhstan managed to maintain positive dynamics of the labor productivity in the whole economy, however, due to overall slowdown in the economic growth and decreasing consumption levels in the economy, the labor productivity dynamics in manufacturing sector turned out negative in 2015 and 2016 showing 2.2% and 2% decrease in real terms.

Over the last 16 years, the labor productivity in Kazakhstan has been growing rather rapidly. As a result, according to the data by the Ministry of Investment and Development, at the end of 2016, the labor productivity index in Kazakhstan increased to 131%. Actually, the growth in labor productivity has been observed for the last five years, which was a direct result of the implementation of the Industrial and Innovative Development Program. However, the gap in labor productivity between Kazakhstan and the advanced OECD countries is still high (66% in 2016). The Ministry of Investment and Development plans to reduce this gap to 32% by 2025. Thus, in the latest Presidential Address, which was made by the President of Kazakhstan, Nursultan Nazarbayev in January 2017, increasing the labor productivity is specified as one of the six steps to be achieved in order to implement the third modernization of Kazakhstan. In order to achieve this aim, he emphasized that there will be a transition to innovative system of development and within the five years period, over 300 new innovative entities will be constructed. He mentioned that until 2050 about 2 million workplaces will be established and by implementing General Professional Education Program, about 1 million qualified workers will be trained. With the measures to increase labor productivity and the emphasis of the President on the importance of this issue in the country’s economic development, Kazakhstan seems to achieve higher levels of labor productivity in near future.

Written by Kanat Makhanov, Eurasian Research Institute, Kazakhstan Politics, Foreign Foreign Affairs Affairs and and Security Security Politics,        According to the Interior Minister of Iran, Abdolreza Rahmanifazli, the incumbent President, Hassan Rouhani, was reelected with 57% of votes. It was noted that 41.2 million people participated in the election, which is 70% turnout. Hassan Rouhani got 23.5 million votes, while the second closest candidate, Ebrahim Raisi, got 15.8 million votes. During his official visit to Turkmenbashi, the President of Uzbekistan, Shavkat Mirziyoyev, and his Turkmen counterpart, Gurbanguly Berdimuhamedov, discussed further development of political and economic cooperation between the two countries focusing on regional and international issues of mutual interest.

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