Kazakhstan : COVID-19 Solidarity Fund for Kazakhstan

Education / Education sector development - social protection initiatives - Technical and vocational education and training

Industry and trade / Small and medium enterprise development

1.Kazakhstan is facing tremendous challenges created by the COVID-19 pandemic and the concurrent plummeting in oil prices started in early 2020, which have jointly contributed to creating an economic and social crisis of unprecedented dimensions. Despite the adoption of government programs aimed at diversifying the economy, Kazakhstan remains heavily dependent on extractive industries as more than 70% of export revenues derived from basic commodities, especially oil and gas. Such production structure, which is typical of countries affected by the so-called "Dutch disease", creates pronounced economic vulnerabilities amplifying the impact of the ongoing crisis.

2.At the end of March 2020, the government of the Republic of Kazakhstan requested the Asian Development Bank (ADB) to provide support in the establishment of a COVID-19 Solidarity Fund for Kazakhstan to complement the government's efforts made in fighting the COVID-19 pandemic, The authorities' request has been motivated by the need to mitigate the impact of the ongoing health and economic crisis on the most vulnerable part of the population and preparing for the post-crisis socio-economic development. In such context, the Ministry of National Economy (MNE) and the Ministry of Labor and Social Protection of the Population (MLSPP) requested the ADB to partner with the United Nations Development Programme (UNDP) and the World Bank (WB) in the creation and management of the Solidarity Fund (SF).

3.Based on the MNE's proposal, which was further elaborated through a series of informal meetings among prospective partners, and the subsequent support provided to Kazakhstan during March-August 2020 by ADB, UNDP, WB, and other development partners, the SF will focus on delivering training programs to assist workers who lost their jobs due to the pandemic finding new jobs in the post-COVID-19 economy. Initially, the SF was supposed to also assist with the provision of material relief to the population (i.e. food, medicines) and the creation of an online platform for the provision of public services to small and medium-sized enterprises (SMEs). However, these initiatives were covered by Asia Pacific Disaster Response (APDRF) and other government programs which was not anticipated at the time of initial negotiations. The updated request from the government is for the SF to focus on retraining and upgrading of skills for developing capabilities and expertise in industries and sectors expected to provide opportunities for business development in a post-COVID-19 environment. Joint financing and management of TA activities by ADB, UNDP, and the WB in collaboration with the government is expected to produce relevant synergies and complementarities between ADB operations and government development needs.

4.The ongoing economic crisis in Kazakhstan takes its toll on business activities, especially those of micro and SMEs, with the services sector contracting by 5.6% in the first half of 2020. While the full impact on employment is yet to be assessed, but pandemic-induced quarantine measures caused 45.7% of the labor force to be temporarily suspended or laid off in March and April, according to MLSPP. Also, a survey conducted by the local entrepreneurs' association (Atameken) suggests that local firms will likely dismiss more than 50 percent of their employees as a result of the COVID-19 pandemic. Assessments prepared on the impact of the crisis on local employment vary, but based on recent announcements made by government agencies, on a broader scale, out of 8.5 million employed people, over 2 million are expected to temporarily or permanently lose their jobs. Besides, over 3.7 million people are expected to end up with reduced or no income in the coming months and will receive social payments from the government.

5.With an increasing amount of the work force being laid off from work, social unrest and fragmentation are expected to increase, as the most vulnerable part of the population will feel the negative economic impact of the prolonged containment measures.

6.The social distancing and quarantine measures introducing by the government are also imposing substantial transformation to the labor market. Several professions are struggling from the reduced demand of traditional skills and the ongoing significant transformation in working arrangements, with the largely increased use of the remote modality, leading to a surge in unemployment. Services and manufacturing production have taken a hit, resulting in massive layoffs. The tourism industry has been heavily affected as countries closed borders and blocked movements of people to contain the spread of COVID-19. Increasing displacements in the labor market and low capacity of the labor force to adapt to new job opportunities will likely lead to a deep social and economic impact pushing more people into poverty.

7.Through the training programs and subsequent increase of labor force capacity in the country, the TA will assist Government to achieve targets set in President Tokayev's state of the nation address of 1 September 2020, such as (i) increase SMEs contribution to GDP to 35% by 2025 and the number of people employed to 4 million.

Supporting measures and new economic strategy introduced by the Government to respond to COVID-19 challenges.

Government provides timely anti-crisis support measures to the labor market caused by COVID-19 pandemic.

Report on emerging professions for Kazakhstan prepared

Training programs for skills development delivered (January 2021 - December 2022)

Training programs for SMEs to enter emerging industries delivered.