Policy Recommendations on Informal Employment in Kyrgyzstan

Aizhan works as a cutter in a garment factory in Lebedinovka, a town on the way from Bishkek to Kant. Like 71.8% of Kyrgyz citizens, she works in the informal sector, which is commonplace in both the garment industry and construction: 62% of workers in construction and garments (N=800) stated that they have no formal work agreement. 

At a roundtable organized to discuss the second part of the study on the informal economy - “Labor market informality in the construction and garment industries of Kyrgyzstan” - the Friedrich Ebert Foundation presented policy recommendations on informal employment in the country.

The roundtable, conducted on the 10th of March 2022, presented an opportunity to government officials, trade unionists, the business community, NGOs, international organizations and independent experts to not only share their perspectives on the FES’ policy recommendations, but also to discuss their concerns regarding informality in the labor sector.

The informal economy in Kyrgyzstan has been a consistent economic phenomenon for the last 30 years, as it comprises up to 50% of the national economy. The informal economy is inextricably linked with the informal labor market, which covers 71.8% of all employment in the country. 

In 2021, FES commissioned two studies on the informal economy,  both of which were conducted by Dr. Kanat Tilekeev, a senior research fellow of the Institute of Public Administration and Policy at the University of Central Asia. 

The purpose of the first study - "Understanding Informal Economy in Kyrgyzstan,"- was to improve social justice for workers and sustainability for the country and the second study - “Labor Market Informality in the Construction and Garment industries of Kyrgyzstan," - aimed to reveal the informality of the workforce for better labor protection and sustainable economic growth.

In general, the studies analyzed the impact of the informal economy in various spheres by interconnecting it with different aspects, such as workers’ rights, social security, taxation system, economic development, and so on.

FES’ policy suggestions were based on the findings of these studies. Here are some of them:

• Increase the role of and support for trade unions who can increase the general awareness of labor rights, organize monitoring and partly control labor safety, and provide positive dialogue between the business and workers.
• Reform the role of labor inspection so as to fulfill Labor Code norms. 
• Implement fair and transparent reform of the tax payments and social security, with equality in mind. Special awareness programs are needed so as to motivate workers to move away from the informal labor market. Separate incentive programs need to be designed for business people. A different campaign of social security reform is required to increase the transparency of collected pay. 

In order to get access to policy briefs on the impact of the garment sector’s labor informality, labor informality in construction, labor informality and gender issues, please contact our trade union expert Ilias Satybaldiev.