ALMATY, KAZAKHSTAN — Economic analysts in Kazakhstan say the government is using a formulation for setting the poverty line that fails to capture the number of people living below a humane standard of living. The result, they say, lowers the amount of assistance provided to the poor.
Kazakhstan sets the poverty line at about $70 a month, slightly over $2 a day. That results in an official poverty rate of 5.1% of the population. The World Bank, in a March report, More, Better and Inclusive Jobs in Kazakhstan, said that using its poverty line of $3.65 a day for lower middle-income countries (although the World Bank actually classifies Kazakhstan as upper middle-income) puts the poverty rate at about 10% in 2018.
Meruert Makhmutova, an economist and director of the Almaty-based Public Policy Research Center, said Kazakhstan should adopt the World Bank standard, which she said would result in more people receiving government assistance.
“The switch to $3.65 a day would automatically increase the number of the poor and the government would have to provide targeted social assistance to a greater number of people,” Makhmutova said. “As a result, the government, failing to admit the real scale of poverty, reduces budget spending on social assistance to poor citizens.”
The official Kazakh poverty level is close to the World Bank’s extreme poverty line of $2.15 a day, but Andrey Chebotarev, an Almaty-based economist and director of the Alternativa center for topical research, told VOA that figure is not applicable in Kazakhstan because of climate.
“It’s hard to just survive on the street in Kazakhstan in winter because the weather and climate make it impossible,” he told VOA, referring to winter temperatures that could drop to minus 30 degrees Celsius.
“We need to assess poverty differently,” he said.
Makhmutova also disputed methods authorities use to set the minimum wage and gauge the unemployment level.
Until recently, the minimum wage has been set arbitrarily without consideration of personal incomes or the real cost of living in the country. It was set around $190 a month for 2024, even though the average monthly wage was $890 at the end of last year.
“The government doesn’t use the average wage for setting the minimum wage, that’s why the minimum wage doesn’t grow substantially and its growth in the past few years doesn’t even match the inflation rate,” Makhmutova said.
Baglan Kasenov, the head of the Kazakh Labor and Social Protection Ministry’s department for labor and social partnership, told VOA the Kazakh government had adopted a new methodology to set the minimum wage starting next year. It conforms to International Labor Organization recommendations, he said, and will be based on the median wage and productivity, reaching 50% of the median wage in future. The median wage, where half of workers receive less than that and half receive more, was about $560 a month last year.
The joblessness rate is another contentious issue in Kazakhstan, as authorities, Chebotarev said, now categorize people, for example, farming their kitchen gardens and working without pay in family businesses as “self-employed,” which is new.
Makhmutova said the move “masks unemployment”; the number of jobless has been constant at around 450,000 people or under 5% in the past few years, whereas the number of self-employed is around 2.1 million, according to the government.
“As for unemployment, it’s a Kazakh invention of global scale because we have invented 2 million self-employed and blame everything on them,” Chebotarev said. “Our estimates of unemployment should be revised … but no one in government wants to consider self-employed as jobless.”
World Bank report questioned
Use of the government figures has resulted in criticism of the World Bank report, which claimed that despite declining economic growth, Kazakhstan’s poverty rate had dropped.
Makhmutova questioned the World Bank’s report because it based its analysis on “irrelevant” official Kazakh income and unemployment statistics – figures that are derived from the wrong method to assess poverty as well as being out of date.
She told VOA the report “is not objective in the first place because it relies on statistics provided by the labor ministry which avoids the assessment of the real scale of poverty and unemployment.”
In addition, although the report was published this year, “the latest statistical data on poverty is from 2018, which is why it is irrelevant for the assessment of the current situation,” she said, citing the COVID-19 pandemic and high inflation after Russia invaded Ukraine as having worsened living standards and increased poverty in Kazakhstan since 2018.
In response to Makhmutova’s criticism, the World Bank said it welcomes “critique and debate” over its reports, adding that the report “used the latest available data as is standard in World Bank reports for analysis.”
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