Uzbekistan makes effort to reduce poverty

Uzbekistan makes effort to reduce poverty

Large-scale tasks of improving the living standards of people and fighting against poverty were emphasized in the President's Message dated January 25, 2020. “We will rapidly continue large-scale social reforms to radically improve the living standards of the people, which have been carried out over the past three years on the basis of the principle “Human interests are above all,” said the leader of the country in his Message to Parliament.

Among the tasks are the development of the Poverty Reduction Program and the formation of modern business skills among the population. In 2020 the government was faced with a task of creating 500 thousand jobs within the framework of state programs. It was necessary to develop an effective system of working with the elderly, especially with the lonely, by increasing the amount of social benefits allocated to them, as well as a program of social adaptation for the children of the Orphanage Houses, including provisions of job to them and housing in the future. Increases in wages, pensions, scholarships and benefits ahead of inflation are investigated and ways of increasing the coverage of benefits for low-income families are emphasized.

Social measures during the pandemic

Addressing the tasks set last year was significantly complicated due to pandemic and the quarantine restrictions associated with it. The volume of production has decreased, the number of unemployed has increased, and a much larger number of people has become in need of state social support. And this support was immediately provided by the Anti-Crisis Fund which was immediately created in the amount of 10 trillion soums and the fund was primarily directed to financially support the healthcare system, social infrastructure, population and enterprises.

Through these and other funds raised during the year, more than 500 thousand entrepreneurs and over 8 million citizens were provided with benefits in the amount of about 34 trillion soums, and an additional amount of 2.6 trillion soums were allocated to increase the volume of social benefits, material assistance and increase the level of employment.

Particular attention was paid to low-income families. According to the results of home visits, 840 billion soums were allocated to support more than 2.5 million members of over 590 thousand families. Employment to able-bodied members of more than 300 thousand families has been ensured. The initial payments for housing were paid for more than a thousand women in difficult life situations. More than 13 thousand citizens received new apartments within the framework of the State Program on the basis providing the population with affordable housing.

In Uzbekistan there is an informal sector of the economy and labor migration is developed. Populations associated with these sectors are also in a very difficult situation due to the coronavirus. However, it is difficult for the state to provide them with direct support due to the lack of transparency in their income. Nevertheless, the necessary assistance was provided to support these groups, which are essentially self-employed. The self-employed were allowed to run all types of entrepreneurial activities not prohibited by law, a new mechanism for their notification registration was introduced, and representatives of more than 60 self-employed professions were exempted from paying income tax.

Another support option was also found. The government began to stimulate business and provide appropriate support to citizens through benefits and preferences in taxes, leasing, loans, access to necessary resources, that is, by reducing budget revenues.

In the President's Message dated December 29 last year, it was said: "2020, without exaggeration, has become a turning point in the field of social protection." Having recognized the existence of poverty in the country, Uzbekistan began to take structural measures to reduce it. A new system of targeted work with low-income families was introduced everywhere, thanks to which 527 thousand people were employed in a short period. As a new form of ​​social support for the rural population, 300 billion soums of soft loans and subsidies were allocated for the development of farms and household plots. 3 trillion soums were allocated to improve centralized drinking water supply, which is five times more than in 2016, and the level of provision of the population with clean drinking water reached 73 percent. Over the year, the number of recipients of social benefits doubled (up to 1.2 million people), and funds allocated from the budget for their support was five times more than in 2016.

Extreme circumstances are usually a kind of test of the strength of both people and states. In this regard, the pandemic clearly confirmed Uzbekistan's commitment to a strong social policy. Social support in the context of the reduction in state budget revenues due to the pandemic not only did not weaken, on the contrary, it significantly increased, moreover, in relation to those categories of the population that were most severely affected by the pandemic. And in such difficult conditions a purposeful and consistent course towards poverty reduction was taken.

Tasks of the current year

The consistency of this topic is most clearly evidenced by the President's Message to the Oliy Majlis of December 29, 2020, in which the issues of poverty reduction were one of the central points to be solved out.

If last year the emphasis of governmental policy was placed on the provision of social benefits, housing, loans, then this year comprehensive approaches and new non-standard methods will be introduced to reduce poverty. “This requires a comprehensive solution to issues related to education, health care, professional training, access to clean drinking water, energy resources and road infrastructure,” the President stressed.

The main focus will be given on defining the basic needs of the poor. Actually, work in this direction began earlier. To identify who actually needs help and organize targeted work with the most vulnerable segments of the population, an "iron notebook" was introduced. In the same year, the "Social Register" was introduced, which will contain all information about families in need and will allow them to provide more than 30 types of social services in electronic form.

Another important area of ​​social protection and poverty alleviation is the determination of the minimum consumer spending of the population, which will be announced in March 2021. Its effect is difficult to overestimate in terms of strengthening the level of social protection.

The minimum consumer spending of the population is the cost of the minimum set of products, goods and services necessary for human life. It includes the cost of food products necessary for good nutrition, non-food products: clothing, footwear, basic necessities, medicines, cultural, household and household goods, as well as the cost of utilities, transport, communication, cultural and educational services.

It should be kept in mind that the minimum consumer spending is not only different in individual countries, but can also be different in different regions of the republic, as they are made up of the price level characteristic of local markets. In addition, in world practice, such indicators are developed for three main socio-demographic groups: the working-age population, pensioners and children, since the needs of these groups are somewhat different. The able-bodied population spends more on transport, pensioners - on medicines, and children - on education.

Determining the minimum consumer spending is a very difficult and time-consuming task. Its solution will bring a huge social effect, since the minimum consumer spending is based on the calculations of setting the minimum wage and pensions, basic social benefits: unemployment benefits, child care, loss of breadwinner, scholarships and others. Rising prices in the markets will lead to a revision and a corresponding increase in all these payments. In this regard, the government was instructed to systematize social guarantees and develop a program of measures gradually for basing the provision of these payments at the level of minimum consumer spending.

The President's Message also provides the introduction of another new mechanism to reduce poverty, based on the principle of "motivation, skills and financial support", which is focused on helping people seeking to master a profession and expand their economic activity.

In this sense, it is planned to create more than a thousand professional training centers in makhallas, which will allocate up to 1 million soums for each trainee and in total 100 billion soums will be directed from the budget for this purpose. People who left these centers and want to start their own business will be able to receive subsidies in the amount of up to 7 million soums. Families involved in agriculture will be allocated up to 1 hectare of land, depending on the capabilities to be carried on the ground.

The coronavirus pandemic has negatively affected the economy and social sphere of Uzbekistan. In this regard, the President said in his Address: "We cannot allow people who have lost their jobs due to the pandemic to become poor." Therefore, this year, a threefold increase in the amount of temporary unemployment benefits is envisaged, and the previously existing procedure for submitting six documents for receiving such benefits has been canceled. It is planned to allocate 500 billion soums from the funds for promoting employment and public works to ensure employment of the needy segments of the population. Poverty reduction programs will be developed in all districts and cities, and the implementation of these programs will be the main task of all leaders and a key criterion for evaluating their work.

Thus, the President's Address contains clear tasks. And this year, a comprehensive system and mechanisms for reducing poverty should be formed based on advanced foreign practices and requirements, ensuring an increase in the level of social protection especially for vulnerable groups of the population.

Obid Khakimov

Director at the Center for Economic Research and Reforms

Translated by Musharraf Mir Akhmadova, Center for Economic Research and Reforms

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