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Another Crack In Uzbekistan's Economic Success Story

  • Bruce Pannier

Uzbek President Islam Karimov has predicted that GDP growth will hit 7.8 percent in 2016.

Uzbek President Islam Karimov has predicted that GDP growth will hit 7.8 percent in 2016.

A new group of people is joining the ranks of the unemployed in Uzbekistan. And for those already out of work and seeking new jobs, the new arrivals are a very bad sign.

The newcomers are from the Ministry of Labor and Social Security, the ministry tasked with helping create jobs. President Islam Karimov signed an order on February 22 to reorganize the ministry and redistribute some of its duties to the Health and Finance ministries.

It appears there will be no need to transfer additional personnel to these two ministries. By some accounts, nearly half the workers from the former Ministry of Labor and Social Security are slated to be laid off.

For these now-former employees of the ministry, the situation became even worse when they discovered they would not receive any severance pay. As some of them told RFE/RL's Uzbek Service, known locally as Ozodlik, the bad news didn't stop there. It turns out many were not paid for their work in March, and it seems they won't ever be paid for that work. Apparently their employment at the Ministry of Labor and Social Security was officially terminated at the end of February and no one told them.

There have been some questions about the health of Uzbekistan's economy despite the World Bank's rosy forecast of 7.5 percent GDP growth for the Central Asian country this year and the even rosier prediction by Karimov that GDP growth would hit 7.8 percent in 2016.

These bright economic outlooks have come despite information from inside Uzbekistan that the situation is far from well.

For more than a year, people inside the country have been telling Ozodlik that prices are rising, the real value of their salaries is decreasing, the black market rate for the national currency -- the som -- is more than twice the official rate, and that some people, including state employees, are not even receiving wages on time.

A group of employees from the Customs Committee in Uzbekistan’s eastern Andijon Province told Ozodlik their wages were reduced by 15 percent starting in March and said that, generally, wages were not being paid on time.

Ozodlik contacted Jamshid Rahmedov, an accountant at the Customs Committee. Rahmedov confirmed the reduction in pay but said employees had been receiving a 15 percent bonus every year for several years automatically but that that policy has now changed. Rahmedov said bonuses based on performance would continue to be paid.

Rahmedov also admitted there are wage arrears. He blamed a shortage of cash in Uzbekistan’s banks for the delayed payments.

There are long lines at petrol stations and chronic shortages of gas -- sometimes, a total suspension of supplies -- in homes around the country during winter. That despite the fact that Uzbekistan is a gas exporter.

However, gas exports have dropped and the price of gas on world markets has dropped to less than half what it was a few years ago. Uzbekistan will sell some 3 billion to 4 billion cubic meters (bcm) of gas to Russia this year after selling about 1 bcm to Russia last year. In 2009, Uzbekistan shipped 15 bcm to Russia.

Uzbekistan has an agreement to sell China 10 bcm annually. But the General Administration of Customs of the People’s Republic of China said in March 2015 that China had not imported gas from Uzbekistan since early that year. In September, an official at Uzbekistan’s state oil and gas company, Uzbekneftegaz, told Ozodlik that between 2012 and 2015 China had purchased 6.5 bcm of gas in total.

And although it's not officially part of the country’s GDP, remittances from Uzbekistan’s migrant workers in Russia amounted to some $6.633 billion for 2013 but dropped to $3.05 billion for 2015.

RFE/RL's Uzbek Service contributed to this report

About This Blog

Qishloq Ovozi is a blog by RFE/RL Central Asia specialist Bruce Pannier that aims to look at the events that are shaping Central Asia and its respective countries, connect some of the dots to shed light on why those processes are occurring, and identify the agents of change. Content will draw on the extensive knowledge and contacts of RFE/RL's Central Asian services but also allow scholars in the West, particularly younger scholars who will be tomorrow’s experts on the region, opportunities to share their views on the evolving situation at this Eurasian crossroad. The name means "Village Voice" in Uzbek. But don't be fooled, Qishloq Ovozi is about all of Central Asia.