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UNCLAS SECTION 01 OF 02 ASTANA 000162 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB 
STATE PLEASE PASS TO USAID 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EAID ECON EINV ELAB SOCI KZ
SUBJECT:  KAZAKHSTAN:  LABOR MARKET CONCERNS TAKE CENTER STAGE AT 
MAZHILIS ROUNDTABLE 
 
ASTANA 00000162  001.3 OF 002 
 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  The Nur Otan National Democratic Party of 
Kazakhstan co-hosted a roundtable on January 19 at the lower house 
of parliament (Mazhilis) to discuss the legal definition of 
"self-employment" and how to implement policy mechanisms to address 
this discreet -- if not illegal -- form of entrepreneurship. 
Members of parliament were more concerned about the absence of 
quality vocational education and the inability of Kazakhstan to 
respond quickly to changes in the labor market.  END SUMMARY 
 
THE SELF-EMPLOYED IN KAZAKHSTAN 
 
¶3.  (SBU) The Ministry of Labor and Social Protection, together with 
the Presidential Commission on Women's Issues and Family 
Demographics, commissioned a local research institute to study 
"self-employment" in Kazakhstan.  The research, funded by the United 
Nations Development Fund for Women (UNIFEM), studied a sample of 300 
self-employed people in the city and oblast of Almaty. 
 
¶4.  (SBU) There is no official definition of "self-employment" in 
Kazakhstan.  This roundtable recommended that parliament agree on a 
legal definition and amend legislation regulating employment, the 
tax code, and licensing to formalize this informal sector of the 
labor market.  Some parliamentarians defined self-employment as 
working without declaration of income while failing to pay taxes and 
failing to contribute to the national pension fund.  (NOTE: The IRS 
defines self-employment as carrying on a trade or business as a sole 
proprietor.  END NOTE). 
 
¶5.  (SBU) The roundtable initiated a legislative dialogue on 
understanding and classifying self-employment, in order to usher the 
more than one-third of the Kazakhstani labor force (an estimated 3 
million citizens) into the legal licensing framework.  Social 
advocates at the roundtable saw this discussion as an opportunity 
for the government to take a more active role in fighting poverty 
and advancing the rights of women and families.  However, the 
discourse quickly became adversarial, with parliamentarians viewing 
the integration of the informal sector as a long over-due task of 
legal compliance. 
 
SIMPLIFY, INCENTIVIZE AND STIMULATE 
 
¶6.  (SBU) The roundtable participants suggested that the government 
simplify the registration (patents) procedure for the self-employed; 
enhance microcredit possibilities; offer tax incentives for labor 
legitimacy; retool the manner in which unemployment benefits are 
distributed; and stimulate the creation of women-owned and 
youth-owned businesses through the provision of technical assistance 
in business planning, access to finance, and retail consulting 
services. 
 
¶7.  (SBU) The roundtable concluded with a recommendation to appeal 
to international organizations (UNIFEM, UNDP, and the ILO were 
identified) for assistance to support and protect the self-employed 
in Kazakhstan. 
 
¶8.  (SBU) Advocates for the self-employed promoted mainstream labor 
market integration and support for those who wish to become or 
remain self-employed.  However, members of parliament accused the 
self-employed of bankrupting the social welfare system, by straining 
the services of the state for medical attention and failing to 
contribute to the "greater good" of society. 
 
SELF-EMPLOYMENT:  THE RESULT OF POOR LABOR MARKET ANALYSIS? 
 
¶9.  (SBU) According to several deputies in attendance, 
self-employment is on the rise because of Kazakhstan's inability to 
teach and train individuals to meet the demands of the labor market. 
 Deputy Svetlana Ferkho, for example, opined that university 
students pursue the wrong course of study.  Pointing to East 
 
ASTANA 00000162  002.3 OF 002 
 
 
Kazakhstan oblast, where thousands of students study engineering and 
economics, she exclaimed, "Do we really need this many engineers and 
bean-counters?"  She further lamented that "a specialized diploma in 
Kazakhstan is fast becoming a route to unemployment."  Ferkho said 
that too many Kazakhstani students pursue international relations 
degrees and added tersely, "How many people do we really need with 
this type of degree?  We have a diplomatic academy for international 
relations.  This field of study is strictly for diplomats, not for 
those entering the workforce."  (NOTE:  Another deputy echoed these 
comments and recommended students pursue jobs in high demand, such 
as pastry chefs and seamstresses.  END NOTE). 
 
¶10.  (SBU) The roundtable participants then discussed the ability of 
the Kazakhstani workforce to respond to the demands of the labor 
market.  Vladimir Nekhoroshev, Deputy Leader of Nur Otan, said that 
"no one in Kazakhstan effectively studies the demands of the labor 
market -- not the Ministry of Education, not the Ministry of 
Labor...  Kazakhstan requires a qualified cadre of specialists." 
His rhetorical questions resonated:  "How can we prepare students 
for jobs that are in high demand?  Even more important, how do we 
know what jobs in five to ten years will be in demand?" 
 
IS THE WORLD'S OLDEST PROFESSION CONSIDERED SELF-EMPLOYMENT? 
 
¶11.  (SBU) After initial constructive comments, Deputy Nekhoroshev 
proved to be a distraction.  Following a rant that official 
recognition of self-employment was "just a ploy to hide the true 
unemployment rate," he wondered if prostitutes would qualify as 
self-employed; and if so, "would 'ladies of the night' be given the 
same government support that this roundtable recommends?"  (NOTE: 
In December 2009 Nekhoroshev proposed a ban on advertisements of 
sexual services in the media and Internet.  He was unsuccessful in 
his bid, which garnered considerable media attention.  END NOTE). 
 
¶12.  (SBU) COMMENT:  The roundtable focused primarily on 
Kazakhstan's readiness to meet labor market demands, but did not 
address the more immediate and equally essential challenge of 
passing legislation to define and classify "self-employment." 
Development assistance to improve understanding of labor 
classification, labor market responsiveness, and the creation of a 
robust vocational education framework will likely be welcome at the 
Ministry of Labor and Social Protection and the Ministry of 
Education and Science.  These issues also touch on related issues of 
women's rights, rural development, and small business development, a 
niche for Kazakhstan NGOs.  END COMMMENT. 
 
SPRATLEN