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Kazakhstan: The Chronic Problem Of Unpaid Pensions And Wages

Prague, 8 April 1997 (RFE/RL) -- One of the most difficult and potentially explosive problems in many of the countries of the former Soviet Union is the huge backlog of unpaid wages and pensions.

The problem is at its worst in those states which have been slow to reform, or those that have become bogged down in an incomplete transition. Millions of people have been plunged into poverty by the inability of the authorities to meet their payment commitments.

Old people are among the groups hardest hit, and their plight is well illustrated by events in the biggest of the Central Asian states, Kazakhstan. In common with most other countries, the Kazakh leadership has issued a storm of directives designed to solve the problem. But throwing words at the crisis instead of money has changed nothing.

By the beginning of this year, the debt of the Kazakh government to retired elderly people was almost $500 million (37,000 million tenge). In February, Kazakh President Nursultan Nazarbayev met regional chiefs and warned them to have the problem in hand by this week, April 10, or their jobs were at risk.

That warning obviously had some impact, because the latest figures available in Almaty today -- two days before the deadline -- list the debt as having sunk to about $345 million (26,000 million tenge).

An RFE/RL correspondent notes that according to official data provided by the Kazakh Ministry of Finance, the state treasury is capable of streaming some $105 million (8,000 million tenge) to the pensions fund monthly. Our correspondent calculates that in real terms, if the Kazakh treasury allocates all available monthly finances to the pensions fund, the arrears will be cleared up in about a year from now. This week's deadline cannot be met, at any rate.

To pressure the authorities, impatient pensioners have sometimes adopted methods usually associated with younger and hotter heads, such as organising demonstrations and pickets. In the eastern Oskemen City, a crowd of pensioners late last month encircled the regional administration building demanding their long overdue payments. The rattled administration felt compelled to call out police forces to control this "grey menace".

In another case, impatient pensioners in the southern Moiynkum region pushed their way into the local administration's building and vociferously demanded the ousting of regional Governor Baglan Qarasholaqov.

The problem has been further complicated by the incomplete transition process in Kazakhstan as in many former republics of the USSR. Joining the state as a provider of wages and future pensions are the companies which have taken over privatised enterprises.

The state is more than willing to hand over its responsibilities to these other providers, but many outside businessmen have been unwilling to pick up the bill for past wages and pensions. They say that it's not the role of a functioning business to honour old obligations which the government and enterprise managements have failed to fulfill.

There is also the question of regional differences which are reflected in an uneven pattern of payment. Industrial areas with big plants, factories and other facilities generate more revenue to send to the centre, and are therefore able to get back money from Almaty to quickly turn into wages and pensions. Mainly agricultural area do not have the capacity to generate revenue, and pay-outs are correspondingly more difficult.

For instance in the capital Almaty, there are many foreign companies, joint ventures and other private companies, all paying taxes, which means in effect that pensions arrears are only about one month in this area. Regions with oil wealth also do well, such as the western Mangystau region. By contrast in Taldy-Qorgan, a largely rural area, some elderly people have been living without payments for up to eight months.

At a special central government session on March 10, the former governor of Semey Region, Galymjan Jakiyanov, called for at least a partial decentralisation of pension funding. He said that that if funding was directly in the hands of local authorities, the problem could be cleared up relatively easily in a number of areas.

As to wages, President Nazarbayev on March 10 issued a decree which added several new points to the country's labour code. One was that every working person has the right to be paid twice a month for doing his job. Another was that officials who break this rule regularly will be ousted, fined, and barred from working in official positions for five years.

No one in Kazakhstan however will be particularly surprised if things go on exactly as they did before.