Uzbekistan, with its over 33 million inhabitants, plays a key role in the economic development of Central Asia. Over the past few decades, the double-landlocked country has undergone a remarkable transition from a former Soviet state to a market-based economy. A new administration in 2016 initiated systemic reforms to further improve lives and foster an enabling environment for businesses that would create quality jobs.
While the economy grew steadily and the country graduated to lower middle-income country status, this progress has not yet fully translated into job creation. And the needs for jobs are clear: in 2017, around 72 percent of the country’s inhabitants belonged to the working age population. By 2030, Uzbekistan will have the fifth largest labor force in the Eastern Europe and Central Asia region. As one of the youngest countries in Asia, Uzbekistan needs to create many jobs quickly to absorb the economically active population and prevent a brain-drain of talented Uzbeks emigrating to more advanced economies.
Currently, most jobs are in agriculture and state-owned enterprises. However, these two have neither the need for a particularly skilled workforce nor the appetite to employ additional workers. The onus for quality job creation now rests on fast-growing medium-sized companies, but these enterprises are likely to experience difficulties in finding workers with the right skillsets.
Mind the gap
Realizing that this mismatch has been a barrier for private sector growth and economic diversification, the government of Uzbekistan requested support from ADB. Progress has been made in education reform, but some weaknesses remain, including that professional training centers and technical and vocational educational (TVET) institutions are often small, widely dispersed, and lacking in modern equipment.
Through a $900,000 technical assistance (TA) grant approved in December 2016, ADB helped assess Uzbekistan’s skills development and labor market system, identifying areas for enhancing competitiveness and boosting inclusive growth through market-relevant skills development.
This included analyzing skills demand and supply in three geographic areas—Navoi region because of its free economic zone with a high demand of skilled labor force, Andijan region as it is the most densely populated region in the country, and Angren district of Tashkent region which has the largest industrial capacity in Uzbekistan. The technical assistance, which was executed by the Uzbek Ministry of Employment and Labour Relations (MOELR), also identified priority economic sectors such as construction, textiles and garment, and agro-processing, and initiated a pilot skills monitoring system model to address emerging job demands.
“Uzbekistan has significant potential to drive economic growth and create jobs but a lack of skills has been a critical constraint for private sector growth and economic diversification,” said ADB Senior Social Sector Specialist Xin Long. “This project will play a significant role in helping to boost employment in Uzbekistan, particularly for young people, and will help students and job seekers pick up the relevant skills they need to thrive in the job market of the 21st century.”
Following the completion of the assessment in November 2020, the Skills Development for a Modern Economy Project was approved with $93 million in ADB financing to ensure market-driven skills are learned by the youth and job seekers.
“It has been about 13 years since Uzbekistan completed the last ADB-financed project in the sector. The approval of the skills development project for Uzbekistan signals the country’s commitment to and ownership of TVET sector development,” said Rie Hiraoka, Director of the Social Sector Division in ADB’s Central and West Asia Department. “This project combines labor market intervention with skills development, to shape the market relevance of the to-be-developed skills.”
Enter the Celtic Tiger
Help came from Ireland, which has also had its fair share of economic ups and downs. For centuries its economy was focused only on agriculture, with little room for innovation. In the 1950s, Ireland was the only country in Europe, apart from the German Democratic Republic, that saw its population decline because of massive emigration.
From the 1960s, Ireland began to climb out of poverty thanks to low-wage manufacturing. The Emerald Isle also invested heavily in public education. As a result, Ireland’s economy changed rapidly; in the mid-1990s it became a popular place for foreign investment which promoted growth and created jobs. Technical colleges were created throughout the country, whose graduates met the requirements of foreign investors.
The Celtic Tiger was born: in 2013, Ireland was named by Forbes as the best place to do business in Europe. With the economic changes, Ireland no longer suffers from critical brain-drain but has turned into a popular destination for skilled workers, including huge parts of its returning diaspora.
In May 2017, the Irish AARC Consultancy was awarded a contract of around $620,000 to help assess skills demand and supply in Uzbekistan. AARC developed a questionnaire to conduct a Skills Needs Analysis survey among 150 enterprises in selected sectors in the three geographic areas, with a focus on private micro and small enterprises. The AARC team also reviewed the existing labor market statistical and administrative systems, including discussions with public employment services in various regions about existing practices like mediation. Further discussions were held with staff of the Ministry of Employment and Labor Relations, the State Committee on Statistics, and the eGovernment System Development Center about future models for labor market information systems. In addition, AARC prepared a TVET sector assessment covering the country context and potential areas for improvement.
AARC presented its survey results to government agencies, donors and representatives from the private sector. They also prepared and delivered workshops for government officials, development partners, TVET institutes and the private sector to introduce recent thinking on skills determination and development as well as international best practices for the delivery of initial TVET.
“Our experience under this TA was exciting as our engagement started during the heated period for reforms under the new government in Uzbekistan, says AARC Associate Director Omon Narzikulov. “The continued support from ADB and commitment from the government enabled the AARC team to implement the technical assistance effectively and achieve the core objectives. We believe the approved loan project will go in sync with the new skills development trajectory set by the government and will result in skilled professionals for the labor market.”
Onwards and upwards
At least 60,000 people, including 48,000 unemployed job seekers and 500 people with disabilities will benefit from the project. The project will also benefit industries seeking skilled workers and returning migrants who pursue reskilling or recognition of prior learning. With the right reforms and investments in place, Uzbekistan is ready to face a bright future.
ADB, Uzbekistan and Europe
Uzbekistan joined ADB in 1995. Since then, ADB has committed loans, grants and technical assistance amounting to $8.67 billion for Uzbekistan. The blueprint for ADB’s operations in Uzbekistan, the Country Partnership Strategy (2019-2023), endorsed in May 2019, focuses on supporting private sector development, reducing economic and social disparities, and promoting regional cooperation and integration.
ADB’s European Representative Office, based in Frankfurt, Germany works with companies and governments across ADB’s 17 European member countries to facilitate the application of European expertise in ADB projects in its developing member countries.