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Kazakhstan’s Urban Development Struggles with Mono-cities

Samantha Brletich

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As Kazakhstan strives to be one of the most 30 developed nations by 2050, Kazakhstan struggles with transforming its economic system, dealing with regional issues including economic integration and terrorism, and with transforming Kazakhstan’s Soviet-era villages into modern day cities which will assist in Kazakhstan’s long-term development.

One of the main nine concepts of the Kazakhstan Strategy 2050 is industrialization which is required to exploit Kazakhstan’s natural gas and oil reserves. Industrialization and the implementation of Special Economic Zones (SEZs) will attract foreign investors boosting its economy and maintaining Kazakhstan’s relationships with companies and foreign nations.

Kazakhstan, within the history and context of the Soviet Union, was a dumping ground for the Soviet Union’s unwanted persons and used as a nuclear testing ground (specifically Semipalatinsk, now called Semey). Populations are scattered throughout Kazakhstan in large cities once populated by ethnic Russians who left once the Soviet Union disintegrated.

In Kazakhstan, a mono-city is defined by more than 20% of the population working in one industry. Mono cities were part of the planned and centralized economy and when Kazakhstan transitioned to a market economy and “many small and medium sized cities gradually started to fall into decline, which was caused mainly by low competitiveness of local enterprises.” Mono-cities still remained. “Mono-cities” were the industrial and economic backbone for municipalities. The mono-city is an urbanization pattern still prevalent in Russia that is vulnerable to economic shocks. If the company or industry falters or demand sharply drops for the product, the city experiences a sharp economic downturn which results in the loss of wages, jobs, and decline in the condition of living increasing social tensions and possibly violence. This was feared in the mono-city of Temirtau in 2015.

As the national population rose, the population(s) of mono-cities declined by 4% during the last ten years (2005-2015) and the elderly populations of mono-cities exceeded 18% which increases the need for pension funds, more healthcare and a declining population. In Kazakhstan, 9%-10% of the population lives in 27 mono-cities in ten different regions; ten mono-cities are in Karaganda Province alone. Citing statistics from UNESCAP , the mono-cities make up 16.8% of the country’s urban population. Most of the mono-cities are have populations below 50,000 with the exception of eight medium-sized cities with populations between 50,000-100,000, and four larger cities with populations over “100,000–Temirtau, Rudny, Zhanaozen, and Ekibastuzand one large city – Termirtau with population above 150,000.”

Workers at Temirtau, the location of Kazakhstan’s largest steelworks plant, were experiencing imminent wage cuts by 25% in July by the company ArcelorMittal Temirtau . This non-consensual wage decrease violated the country’s Labor Code which recognized the order to be ineffective. ArcelorMittal Temirtau was in a similar situation in February 2015 when the company had to pay wages as part of an agreement with Trade Union of Workers of Mining and Metallurgical Industries. The wages in Temirtau are impacted by Kazakhstan’s non-competitiveness in the steel industries and Russia’s 80% de-evaluation of the ruble according to Kazakh news agency , Tengrinews.

The mono-cities have been the subject of economic diversification by the Kazakh government within the framework of State Program of Regional Development 2020. The mono-cities make modicum contributions to economy as the Kazakh economy is focusing more on global services and natural gas. The State Program of Regional Development strives to “ remove social stress in the mono and small cities, to create the new centers of economic growth” Trade blocks are also causing Kazakhstan economic problems. The State Program on the Development of Mono-cities for 2012-2020 is the first urbanization program for mono-cities approved by the government in May 2012. By the end of the 2015, “141.3 billion KZT [(Kazakh tenge)] [will be spent] on this Program.”

The Development of Mono-cities Program has four goals as identified by the Eurasian Research Institute based in Almaty, Kazakhstan: make the size of the mono-city proportionate to the size of the population; diversify the economy with more SMEs; increase labor mobility in mono- cities; and attract infrastructural development. The program is expected to “increase industrial output by mono-cities by 20%” and reduce poverty and the unemployment rate. Increasing labor mobility would be difficult because of the very nature of mono-cities unless there is a transfer mechanism in place. According to the second phase of the project, focused on entrepreneurship and microloans , those who “willing and having the ability to start or expand their own business may participate in the second phase” and will be executed through employment centers in the mono-cities. The Fund for Financial Support of Agriculture will also assist in the development of the mono-cities. The State Program on the Development of Mono-cities plans to provide microloans worth 1.4 billion tenge.

The four mono-cities of Zyryanovsk, Kurchatov (one of the nuclear test sites, Semipalatinsk-21), Ridder (a mining site) and Serebryansk already have comprehensive programs for future development. Infrastructure was supplied to the Central Asia state by the Soviet Union but they are in disrepair. The infrastructure of the mono-cities should be provided by the government. Foreign direct investment would also increase infrastructure projects. An example would be China and its rejuvenation of the “Silk Road.” Transfers from the national budget development of social and engineering infrastructure supplied mono-cities received 5.5 % of 43.0 billion tenge.

With growth, the cities can begin to accommodate more than just one single dominant industry. Services such as technology and manufacturing are increasing and it would be beneficial to the mono-cities and the Kazakh government if these types of services were introduced into a mono-city. Kazakhstan’s Ministry of the Economy stated that in 2013 the budget of the State Program to Develop Mono-cities allocated 38.3 billion tenge “devoted to operating costs, demolition of empty buildings, and also on reconstruction and building of infrastructure objects, [and to] support of small and medium business.” Renovation of the mono-cities would make the mono-cities more modern, but fails to address their non-competitiveness.

The Government is already working with the United Nations Development Program and United Nations Children’s Fund (UNICEF) to assess the status of mono-cities and assist in development. The city of Ust-Kamenogorsk (or Oskemen) in Kazakhstan signed up for the UNICEF Program on making cities child friendly by “ improvement of quality of life of children by a way of providing social and legal guarantees.” Their goal is stop and alleviate the urban poverty that mono-cities create. The government has also begun geographic exploration near the mono-cities directed by the Ministry for Investment and Development in the Zhezkazgan, Satpayev, and Ulytau regions. The people in mono-cities would benefit from labor mobility or job placement programs, or job transfer programs. People outside of the mono-cities would benefit from working in the mono-cities. Exporting experts from the economic hubs in the country would also be helpful. The government, as it increases its focus on the information technology sector, should create a technology park near or in the mono-cities which requires updated infrastructure. Education grants and the ability to participate in state economic programs would also assist families in breaking the cycle of poverty.

Privatization of the mono-cities would help solidify Kazakhstan’s transition to the market economy. Another option would be to eliminate the urbanization pattern of mono-cities which privatization would achieve. This urbanization pattern is incongruent with Kazakhstan’s market economy. Understanding that most of the industries are state-owned in the mono-cities some industries and new economic initiatives in the industrial towns be backed by foreign investors. As Kazakhstan struggles with de-evaluation of their currency, and amid reports of food prices rising , the economic situation in the mono cities could become amplified for the Kazakh government posing new challenges and raising new questions about the vitality of these cities.

Samantha M. Brletich is a researcher and writer specializing in Central Asia and governance, security, terrorism, and development issues. She possesses a Master’s in Peace Operations Policy from George Mason University in Virginia, United States. She works with the virtual think tank Modern Diplomacy specializing in Central Asia and diplomatic trends. Her work has appeared in multiple publications focused on diplomacy and Central Asia respectively. She is currently an employee of the U.S. Federal Government.

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Kyrgyzstan: Looking for digital solutions to combat child labour

MD Staff

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A group of young digital specialists – supported by the ILO in Kyrgyzstan – was among the prize winners in a ‘Hackathon’ aimed at promoting children’s rights.

Following a marathon 48-hour event involving 18 teams of information technology experts and their mentors, they designed an innovative application that has the potential to monitor the incidence of child labour in communities.

The ILO Child Labour Project in Kyrgyzstan provided general guidance and mentoring to the team to ensure the conformity of the software to the operational mechanisms of the national child protection system in Kyrgyzstan.

Their design came second in the competition, “Central Asian Hackathon, Generation Z: Wellbeing of Children”, which was organized by the Central Asian Coalition on Promotion of the Rights of Women and Children and the “League on protection of Children Rights” Public Fund, in partnership with the ILO, UNICEF, UNODC, the Embassy of Netherlands, and public and business companies.

‘The application helps to conduct interviews with children, formulate recommendations and determine their status,’ said Victoria Petrova, business processes analyst of the ILO-supported IT team. ‘It will help officials to assess the situation of the child, determine whether the child is being exploited and what needs to be done to resolve the situation.’

“We are on constant search of new solutions and new partnerships,” explained Amina Kurbanova, ILO National Project Coordinator in Kyrgyzstan. “The Hackathon gave us a unique opportunity to establish partnership with a new group – young highly qualified IT professionals, and to develop an application that may greatly facilitate child labour monitoring process.”

The IT team, “Testovoe nazvanie”, collected USD 1,500 in prize money.  The ILO now plans to support pilot testing of the new software by the line ministries.

“We are grateful to the ILO for this support. It is obvious that the proposed technologies could be applied in the daily work of social workers, police inspectors, labour inspectors and social pedagogues. The Ministry will carefully study the results of the pilot testing and will closely work with the IT Team specialists during fine-tuning of the application,” says Jyldyz Polotova, Deputy Minister of Labour and Social Development of the Kyrgyz Republic.

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Productive Employment Needed to Boost Growth in Tajikistan

MD Staff

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Tajikistan will need to create enough jobs to maximize productivity of the country’s increasing working-age population and spur economic growth, says a new Asian Development Bank (ADB) report.

In its new Asian Development Outlook (ADO) 2018, ADB projects Tajikistan’s gross domestic product (GDP) growth to reach 6% in 2018 and 6.5% in 2019. GDP growth for the country stood at 7.1% in 2017. ADO is ADB’s annual flagship economic publication.

“Tajikistan has a young population and the percentage of working-age people is projected to continue rising to 2030. In many countries, this has led to higher growth from a ‘demographic dividend’,” said Pradeep Srivastava, ADB Country Director for Tajikistan. “But for Tajikistan to benefit from such a dividend, it needs to undertake structural reforms to improve the investment climate, increase human capital and skills, and let entrepreneurship flourish to create productive jobs for the workforce.”

Despite Tajikistan’s economy growing at an average of about 7.2% from 1997 to 2016, the country is not creating enough productive jobs for its growing working-age population, which grew by 3% annually from 1991 to 2016. However, employment only rose by 0.7% annually over the same period. The report notes the need for structural reforms to improve the country’s business climate—for example, reducing and consolidating the number of inspection bodies, creating a healthier banking sector to facilitate lending, and streamlining procedures for issuing construction permits, paying taxes, and enforcing contracts.

The report also highlights the importance of strengthening local value chains and helping small and medium-sized enterprises improve their productivity and earnings to promote job creation. Assessing demand for various skills and using that information to improve job training can match workforce skills to market demand.

ADB’s growth forecasts for Tajikistan in 2018 comes on the back of expected fiscal tightening from the government to address the high ratio of public debt to GDP, which will likely constrain public investment, and a weak banking sector curbing private investment. The slight recovery in growth projection in 2019 is based on expected gains in the country’s manufacturing and mining sectors, as well as strengthened remittances.

Inflation is forecast to accelerate to 7.5% in 2018—reflecting higher liquidity spurred by potential sizable bank recapitalization, public salary and electricity tariff hikes, and modest somoni depreciation—before easing back to 7.0% in 2019. In 2017, inflation reached 6.7%.

ADB is celebrating 20 years of development partnership with Tajikistan in 2018. To date, ADB has approved around $1.6 billion in concessional loans, grants, and technical assistance to the country. ADB and Tajikistan’s development partnership, which began in 1998, has restored and built the country’s new transport and energy infrastructure, supported social development, expanded agricultural production, and improved regional cooperation and trade.

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ILO Reports Important Progress on Child Labour and Forced Labour in Uzbek Cotton Fields

MD Staff

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A new International Labour Organization report to the World Bank finds that the systematic use of child labour in Uzbekistan’s cotton harvest has come to an end, and that concrete measures to stop the use of forced labour have been taken.

The report Third-party monitoring of measures against child labour and forced labour during the 2017 cotton harvest in Uzbekistan is based on more than 3,000 unaccompanied and unannounced interviews with a representative sample of the country’s 2.6 million cotton pickers. It shows that the country is making significant reforms on fundamental labour rights in the cotton fields.

“The 2017 cotton harvest took place in the context of increased transparency and dialogue. This has encompassed all groups of civil society, including critical voices of individual activists. This is an encouraging sign for the future. However, there is still a lag between the sheer amount of new decrees and reforms being issued by the central government and the capacity to absorb and implement these changes at provincial and district levels,” says Beate Andrees, Chief of the ILO’s Fundamental Principles and Rights at Work Branch.

The ILO has been monitoring the cotton harvest for child labour since 2013. In 2015, it began monitoring the harvest for forced labour and child labour as part of an agreement with the World Bank.

Interviews carried out by the monitors took place in all provinces of the country and included cotton pickers and other groups which are directly or indirectly involved in the harvest such as local authorities, education and medical personnel. In addition, a telephone poll of 1,000 randomly selected persons was conducted. Before the harvest, the ILO experts organized training for some 6,300 people directly involved with the recruitment of cotton pickers.

The results confirm that the large majority of the 2.6 million cotton pickers engaged voluntarily in the annual harvest in 2017 and that there is a high level of awareness in the country about the unacceptability of both child and forced labour. The report confirms earlier findings that the systematic use of child labour in the cotton harvest has ended though continued vigilance is required to ensure that children are in school.

Instructions have been given by the Uzbek national authorities to local administrations to ensure that all recruitment of cotton pickers is on a voluntary basis. In September 2017, an order was given withdrawing certain risk groups (students, education and medical personnel) from the harvest at its early stage.

Moreover, cotton pickers’ wages have been increased in line with recommendations by the ILO and the World Bank. The ILO recommends that the government continues to increase wages and also addresses working conditions more broadly to further attract voluntary pickers.

Last September, Uzbekistan President Shavkat Mirziyoyev spoke before the United Nations General Assembly in New York where he pledged to end forced labour in his country and underscored his government’s engagement with the ILO. In November 2017, at the Global Conference on the Sustained Eradication of Child Labour in Argentina, Uzbekistan also pledged to engage with independent civil society groups on the issue.

The ILO Third-Party Monitoring (TPM) project in Uzbekistan will now focus on the remaining challenges, particularly the need for further awareness raising and capacity building, which varies between provinces and districts. It will ensure that all those involved in recruitment will have the information and tools needed to ensure that cotton pickers are engaged in conformity with international labour standards.

The monitoring and results from a pilot project in the area of South Karkalpakstan also show that cotton picking economically empowers women in rural areas. The cotton harvest provides many women with a unique opportunity to earn an extra cash income which they control and can use to improve the situation of their families.

The ILO TPM Project is funded by a multi-donor trust fund with major contributions by the European Union, United States and Switzerland.

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