Unemployment and its effect to Kazakhstan’s economics

Definitions of unemployment and others, which is connected with unemployment. Problem of unemployment in Kazakhstan and in the world. Analysis of unemployment in Kazakhstan. Realization of Program of employment - 2020 of the Government of Kazakhstan.

Рубрика Экономика и экономическая теория
Вид реферат
Язык английский
Дата добавления 08.12.2014
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Ministry of Education and Science of the Republic of Kazakhstan

Suleyman Demirel University

Economics Faculty

International relations

Project

"Unemployment and its effect to Kazakhstan's economics”

Made by: Imankulova Gulden,

Ishayeva Dinara, Ospanova Markhaba,

Rakisheva Akmaral.

Checked by: Adil Kassymov.

Almaty 2011

Content

  • 1. An Introduction to theme
  • 2. Definitions of unemployment and others, which is connected with unemployment
  • 3. An Introduction to unemployment in Kazakhstan and in the world
  • 3.1 Analysis of unemployment in Kazakhstan (2006-2009)
  • 3.2 How does unemployment affect the economy?
  • Economic costs of unemployment
  • Lost output of goods and services
  • Fiscal costs to the government
  • Deadweight loss of investment in human capital
  • Social costs of unemployment
  • The duration of unemployment affects the economic and social costs
  • The Government of Kazakhstan embarked on realization of Program of employment - 2020
  • Road map
  • Conclusion
  • Reference

1. An Introduction to theme

In this work, we present data on unemployment rate in Kazakhstan in different years.

The labour force is defined as the number of people employed plus the number unemployed but seeking work.

During the global recession, our economy has grown rapidly and is now growing at the level of seven percent per year. We were able to halve unemployment. And nowadays it is lower than in Great Britain, France, Germany and the USA. Kazakhstan's official statistics agency states that the unemployment rate currently stands at about 7%. The unemployment level in Kazakhstan has been decreased from 7.3 percent in 2007 to 5.4 percent in 2011. Prime Minister Karim Massimov has said it at the session of the parliamentary faction of Nur Otan People's Democratic Party. The average salary of newly employed people within the Program made KZT 41 thousand.

Kazakhstan has a workforce of roughly 8.8 million people. Some 27 percent of the labor force is occupied in industry, 23 percent in agriculture and forestry,20 percent in education, and the remaining 30 percent in the service sector and other sectors such as government and military. The unemployment rate was estimated to be 14 percent in 1998. Unemployment is much higher in rural areas than in urban areas, where the service sector has enjoyed robust growth in recent years. Employment by women in urban areas lags behind that of men by a considerable margin, reaching 20 percent.

"Most of the employment in Kazakhstan is in small and medium businesses - in the service sector or small shops," says Renaissance Capital's chief CIS economist, Ekaterina Malofeeva.

Government of Kazakhstan adopted the `Roadmap'-an action plan to support the regional employment and retraining of workers. The `Roadmap' would add about 140 billion tenge (around US$1 billion) to the national budget and will be co-financed from local budgets. The `Roadmap' emphasizes public investment and public works programs: construction and maintenance of piped water, electricity and gas, and sewage facilities; and highways and local roads, schools, hospitals, and other socially important facilities. The strategy also includes creating up to 63,100 `social jobs' (for a duration of six months, with wage subsidies of 50 percent of wage costs) plus 34,400 fully subsidized jobs for six months for graduates. In accordance with the information of the Ministry, 9.866 people have already passed their courses of professional training who were trained within the Business Road Map-2020 Program, 6.364 people are now employed.

Kazakhstan develops a new model of productive employment of the population. It provides for education and employment, assistance in starting own business at the place of the residence of a participant as well as the Program provides for assistance to residents in voluntary move from areas with low economic potential to centers of economic growth. Moreover, the Employment Program that was launched in the regions of the country in July this year has given first results.

Within the first direction of the Program - education and employment - the agreements on organization of professional training were signed with 443 educational institutions. 26.365 Kazakhstanis are currently embraced with professional training, 8.015 people have been sent for retraining and 1.125 people were sent for professional development courses.

Within the second direction of the Program - assistance in development of entrepreneurship in rural areas - the work has only begun. 323 people have passed the courses on entrepreneurship fundamentals since the launch of the Program.

Within the third direction of the Program - move from regions with low economic potential to centers of economic growth - the construction of 971 houses for 1.238 apartments and construction of 83 apartment-buildings for 2.218 apartments is planned in ten regions.

212 employment centers in all the regions of Kazakhstan were established in the first half of the year. KZT 40.2 bln was allocated for the realization of `Employment-2020' in 2011. The implementation of the Program will be conducted in three directions: education and assistance in employment of self-employed, unemployed and low-income people, assistance in development of entrepreneurship in rural areas and increase of mobility of labor resources. It is planned that the measures taken within the Employment Program will embrace around 1.5 mln people by 2016. The realization of the projects of the Program will allow to reduce the poverty level to 6% and unemployment level is expected to be no higher than 5.5%.

unemployment kazakhstan economic

2. Definitions of unemployment and others, which is connected with unemployment

Unemployment is the state of an individual looking for a paying job but not having one.

Unemployment does not include full-time students, the retired, children, or those not actively looking for a paying job.

Unemployment occurs when a person who is actively searching for employment is unable to find work. Unemployment is often used as a measure of the health of the economy. The most frequently cited measure of unemployment is the unemployment rate. This is the number of unemployed persons divided by the number of people in the labor force.

Many different variations of the unemployment rate exist with different definitions concerning who is an "unemployed person" and who is in the "labor force." For example, the U. S. Bureau of Labor Statistics' commonly cites the "U-3" unemployment rate as the official unemployment rate but this definition of unemployment does not include unemployed workers who have become discouraged by a tough labor market and are no longer looking for work.

The various schools of economic thought differ on their explanation of the cause of unemployment. Keynesian economics proposes that there is a "natural rate” of unemployment because the skills of laborers and the positions available are slightly out of sync even under the best economic conditions. Neoclassical economics postulates that the labor market is efficient if left alone, but that various interventions, such a minimum wage laws and unionization, put supply and demand out of balance.

Being involuntarily out of work. The government defines unemployed as people who are jobless, looking for jobs, and available for work.

3. An Introduction to unemployment in Kazakhstan and in the world

As you can see in the table below, from 2000 year to 2009 year, the unemployment rate in Kazakhstan had decreased and even became lower than in the most developed countries

2001

2002

2003

2004

2005

2006

2007

2008

2009

USA

4,7

5,8

6,0

5,5

5,1

4,6

4,6

5,8

9,3

Great Britain

5,1

5,2

5,0

4,8

4,9

5,4

5,4

5,7

7,6

Germany

7,8

8,7

9,6

9,8

11,1

10,2

8,6

7,5

7,5

Russia

9,0

7,9

8,2

7,8

7,2

7,2

6,1

6,3

8,4

Kazakhstan

10,4

9,3

8,8

8,4

8,1

7,8

7,3

6,6

6,6

3.1 Analysis of unemployment in Kazakhstan (2006-2009)

The number of employed and unemployed population in the Republic of Kazakhstan in 2006

Quarter

employed population

in thousands

unemployed population

in thousands

unemployment rate

in %

I

7289,0

652,6

8,2

II

7427,0

623,3

7,7

III

7483,7

607,1

7,5

IV

7414,9

618,7

7,7

The number of unemployment in Republic of Kazakhstan in 2006 in %

Quarter

Unemployment

rate

Youth

unemployment rate

long-term

unemployment

I

8,2

14,7

4,3

II

7,7

11,9

4,0

III

7,5

11,0

3,8

IV

7,7

10,8

3,8

The number of unemployed in the second quarter of 2007 amounted to 601.8 thousand and decreased over the same period the previous year by 21.5 thousand persons or 3.4%

According to preliminary data in the national economy in the second quarter of 2007 7.6 million people were employed. This is more than in the corresponding period the previous year's 215.1 thousand persons or 2.9%. In the structure of employment share of employees was 64.8%, self-employed - 35.2%.

Key labor market indicators in the Republic of Kazakhstan in 2007

Population aged 15 and over

1st quarter

2nd quarter

Unemployed population, thousands of people

624,0

601,8

Unemployment, %

7,7

7,3

Unemployed aged 15-24, thousands of people

151,6

133,0

Youth unemployment (15-24), %

11,0

9,6

Long-term unemployment,%

3,5

3,3

Employed people, thousands of people

7491,

7642,1

Employment, %

64,1

65,4

Employees, thousands of people

4896,2

4953,4

Percentage of the employed population, %

65,4

64,8

Self-employed, thousands of people

2594,8

2688,7

Percentage of self-employed population, %

34,6

35,2

Economically active population, thousands of people

8115,0

8243,0

The level of economic activity

69,4

70,5

Economically inactive population, thousands of people

3573,6

3447,3

The level of economic inactivity, %

30,6

29,5

Number of unemployed (people who had no gainful employment, it actively sought and were ready for it) in the second quarter of 2007 amounted to 601.8 thousand and decreased over the same period the previous year by 21.5 thousand people or 3.4%. The unemployment rate has reached 7.3% (in the second quarter of 2006. - 7.7%).

The share of unemployed men in the second quarter of year 2007 amounted to 40.5%, women - 59.5%. The number of unemployed women was formed in 357.8 thousand, 113.8 thousand to that (46.6%) than among men.

Unemployment rate in the second quarter of 2006-2007.

The second quarter of 2007

The second quarter of 2006

all

men

women

all

men

women

Unemployed population, thousand

601,8

244,0

357,8

623,3

262,0

361,3

Unemployment rate, %

7,3

5,8

8,8

7,7

6,4

9,1

Unemployed people aged 15-24 years, thousands of people

133,0

64,0

69,0

168,9

75,9

93,0

Youth unemployment rate,%

9,6

8,4

11,1

11,9

9,9

14,4

Long-term unemployment, %

3,3

2,2

4,4

4,0

2,9

5,0

The number of employed and unemployed population in the Republic of Kazakhstan in 2006 to 2007.

In the second quarter of 2007, the total number of unemployed youth share (aged 15-24 years) is 22.1%, or 133 thousand people. It's 35.9 million people (21.3%) than against the same period last year. Youth unemployment rate of 9.6% was formed, it is by 2.3 percentage points higher than its value on average in the country.

Long-term unemployment in the above period was 3.3%, or less than the same period in 2006 by 0.7 percentage points.

Unemployment rate in 2008

I quarter

II quarter

III quarter

IV quarter

Thousands of people

573,8

557,2

540,6

559,3

%

6,9

6,6

6,4

6,6

The unemployment rate in the first quarter of this year - 6.9% Unemployed young people aged 15-24 is 19%, while those aged 25-29 years - 19.8%, 30-39years - 24.6%, 40-44 years - 8%. Youth unemployment rate (15-24) was formed in 8.1%.comparing to Q1 2007 their number increased by 271.9 thousand persons or 3.6%. Number of employees in the period amounted to 5.1 million (66.2% of total employment), self-employed - 2.6 million (33.8%). Men - 231.6 thousand of people (40.4%), women - 342.3 thousand of people (59.6%), 5.5% and 8.3% respectively. Unemployed people living in urban areas 57%, living in rural area - 43%.

The unemployment rate in the second quarter of this year - 6.6% In the second quarter of 2008, the number of unemployed people (those aged 15 and older who had no gainful employment, it actively sought and were ready for it) - 557.2 thousand people. Unemployed population of young people aged 15-24 is 17.5%, while those aged 25-29 years - 22.1%, 30-39years - 24.6%, 40-44 years - 7 7%. Youth unemployment rate (15-24) was formed in 7.4%. Men - 228.7 thousand people (41%), women - 328.5 thousand people (59%), 5.4% and 7.9% respectively. Unemployed people living in urban areas - 57%, people living in rural areas - 43%.

In the third quarter of 2008, the number of unemployed people - 540.6 thousand and decreased over the same period last year by 43.3 thousand persons or 7.4%. The unemployment rate has developed in 6.4% (in the third quarter of 2007 - 7.0%). Men - 215 thousand (39.8%), women - 325.6 thousand (60.2%), 5.0% and 7.7% respectively. The structure of the unemployed population of young people aged 15-24 is 16.7%, while those aged 25-29 years - 22%, 30-39 years - 25.1%, 40-44 years - 7.7%, 45-54 years - 19.6%. Youth unemployment rate (15-24) was formed in 7.0%. Unemployed young people aged 15-24 is 16.7%, while those aged 25-29 years - 22%, 30-39 years - 25.1%, 40-44 years - 7.7%, 45-54 years - 19.6%. Youth unemployment rate (15-24) was formed in 7.0%.

In the IV quarter of 2008, the number of unemployed amounted to 559.3 thousand, or 18.7 million people (3.5%) than in the previous quarter. The unemployment rate has developed in 6.6% (in the III quarter 2008 - 6.4%). Officially registered in employment offices as unemployed at the end of December, 48.4 million people (0.6%).

In January 2009, the unemployment rate was 6.9% (estimate), and the proportion of registered unemployed - 0.7%.

Basic labor market

Indicators for 2009

I quarter

II quarter

III quarter

IV quarter

In a year

economically

active population

8413,5

8464,8

8490,9

8469,2

8459,6

employed

population

7830,4

7896,6

7955,2

7937,4

7940,9

employees

5199,1

5209,7

5266,4

5282,3

5240,1

self-employed

2631,4

2687,0

2688,8

2688,8

2664,8

unemployed population

583,1

568,1

535,7

531,8

554,2

unemployment

rate in %

6,9

6,7

6,3

6,3

6,6

youth unemployment rate,% (15-24 years)

7,7

7,2

5,9

6,0

6,7

long-term unemployment,%

2,7

2,6

2,5

2,3

2,5

economically inactive population

3548,8

3497,7

3468,7

3489,3

3501,1

The economy of the country in November 2009. (estimated) were employed 7.9 million people. In the same period last year, their number increased by 15.7 thousand persons or 0.2%. Number of employees in the period amounted to 5.2 million (66.2% of total employment).

3.2 How does unemployment affect the economy?

Some of the well-known effects of unemployment on the economy are:

Unemployment financial costs The government and the nation suffer. In many countries the government has to pay the unemployed some benefits. The greater the number of the unemployed or the longer they are without work the more money the government has to shell out.

Therefore, the nation not only has to deal with the lost income and decreased production but also with additional cost.

Spending power The spending power of an unemployed person and his/her family decreases drastically and they would rather save than spend their money, which in turn affects the economy adversely.

Reduced spending power of the employed Increased taxes and the insecurity about their own work may affect the spending power of the working people as well and they too may start to spend less than before thus affecting the economy and also the society in a negative manner.

Recession With the increase rates of unemployment other economy factors are significantly affected, such as: the income per person, health costs, quality of health-care, standard of leaving and poverty.

All these affect not just the economy but the entire systems and the society in general. Here are some aspects of the impact of unemployment on our society.

As it said in another source:

Economic costs of unemployment

Most economists agree that high levels of unemployment are costly not only to the individuals and families directly affected, but also to local and regional economies and the economy as a whole. We can make a distinction between the economic costs arising from people out of work and the social costs that often result.

Lost output of goods and services

Unemployment causes a waste of scarce economic resources and reduces the long run growth potential of the economy. An economy with high unemployment is producing within its production possibility frontier. The hours that the unemployed do not work can never be recovered.

But if unemployment can be reduced, total national output can rise leading to an improvement in economic welfare.

Fiscal costs to the government

High unemployment has an impact on government expenditure, taxation and the level of government borrowing each year

An increase in unemployment results in higher benefit payments and lower tax revenues. When individuals are unemployed, not only do they receive benefits but also pay no income tax.

As they are spending less they contribute less to the government in indirect taxes.

This rise in government spending along with the fall in tax revenues may result in a higher government borrowing requirement (known as a public sector net cash requirement)

Deadweight loss of investment in human capital

Unemployment wastes some of the scarce resources used in training workers. Furthermore, workers who are unemployed for long periods become de-skilled as their skills become increasingly dated in a rapidly changing job market. This reduces their chances of gaining employment in the future, which in turn increases the economic burden on government and society. See the revision page on long term unemployment

Social costs of unemployment

Rising unemployment is linked to social and economic deprivation - there is some relationship between rising unemployment and rising crime and worsening social dislocation (increased divorce, worsening health and lower life expectancy).

Areas of high unemployment will also see a decline in real income and spending together with a rising scale of relative poverty and income inequality. As younger workers are more geographically mobile than older employees, there is a risk that areas with above average unemployment will suffer from an ageing potential workforce - making them less attractive as investment locations for new businesses.

The duration of unemployment affects the economic and social costs

It is clear therefore that unemployment carries substantial economic and social costs. These costs are greatest when long-term structural unemployment is high. Indeed many government focus their labour market policies on improving the employment prospects of the long-term unemployed.

The Government of Kazakhstan embarked on realization of Program of employment - 2020

Today, on July 11, the government of Kazakhstan adopted a Programme of employment, designed until 2020.

As stated by minister of labour and social protection of population, Gulshara Abdykalikova, it is planned that, by 2015, the program will cover 1.5 million people, the level of poverty will fall to 6 percent, and the unemployment rate will not exceed 5.5 per cent.

Total 40 billion kzt from the republic budget were allocated to the employment Program in the pilot mode in the current year, It is planned to cover measures of the state support of more than 100 thousand people. The minister also noted that the new program takes its start already this month.

"The money will be directed to education, employment, self-employment of the unemployed, low-income citizens, " - said Abdykalikova. She said that urban population was previously employed on the Road map, and now it will cover villagers. The second direction of financing will be a micro-credit. It is planned to be issuance of up to three million. "It is the smallest of the loan, which is in the republic by the size, but at the same time, it will be easy on the order of granting of, "the minister said.

The third direction - mobility of human resources. As reported Abdykalikova, in accordance with the programs of industrial development, workers, who acquire professions needed by the program, will be attracted.

Let's remind, in February of 2011, during the 13TH congress of "Nur Otan "party, President of Kazakhstan, Nursultan Nazarbayev, instructed the government to start realization of the new program of employment of the country's population.

Road map

"All goals and targets that are set out by the strategy of regional employment and retraining (the "Road Map") in 2009-2010, carried out successfully”, - said Minister of Labour and Social Protection of Kazakhstan Gulshara Abdykalikova. This writes the "Kazakhstan's true”.

The budget allocated for the program 191.5 billion tenge ($ 1.2 billion) in 2009 and 150.6 billion tenge ($ 1 billion) in 2010.

391,000 jobs in the nearly 9 thousand new projects are created in two years. "If the share of Kazakhstan's unemployed at the beginning of 2009 was 6.6 percent (557,800 people) of the economically active population, in the third quarter of 2010, the unemployment rate fell to 5.6 percent (481.7 thousand Kazakhs)" - told the Minister, referring to the state agency for statistics.

As part of the "road map"Government was able to repair 1360 housing facilities, to solve many problems in other areas. "Schools, hospitals, cultural centers and other buildings were insulated, renovated. In two years of the program covered repairs for almost a quarter of all schools and more than 9 percents of all health facilities," - said Abdykalikova.

"We have constructed 70 kilometers of new roads, and carried out major repairs about 5000 kilometers, the maintenanced almost 3 million square meters of coverage of local roads," - added the Minister.

The "road map" has increased the scope of "youth practices" by 20 times in comparison with 2008. About 90.000 young graduates are employed. In 2011, the Ministry of Labor plans to use a "youth practices" about 10 thousand persons under the "Business Road Map 2020".

Thus the implementation of the "road map" is completed. However, as Minister promised, it will not bring serious negative social consequences. "Active business development will create new permanent jobs and wages there will be much higher," - said Abdykalikova.

"Today, when the most difficult stage of the crisis is overcome and economic growth is renewed, there are new challenges of modernization. They will be solved by the business", - concluded the head of the Ministry of Labour.

Conclusion

Main conclusion from this research: Kazakhstan managed to reduce the level of unemployment through conducting various state social programs. At this point the goal of our state is to establish a lower unemployment rate for achieving a high level of living standards of the population. This is necessary so as unemployment does affect a lot especially on the economy of the country.

Let's make conclusion on each part of our project:

1. Introduction:

From introduction we can see that nowadays situation of Kazakhstan isn't so bad, but it's reached through governmental projects, created by president or government's departments. They really help to decrease level of unemployment, especially "Road map”. We considered three directions of it. We came to the conclusion that it's really possible that realization of this program will reduce the poverty level to 6% and unemployment level is expected to be no higher than 5.5%.

Knowing definitions helped us to understand value of unemployment and initial reasons of it. After introduction to unemployment in Kazakhstan and in the world it became clear that our county is in a good level of employment, because as we can see from the table, which was under this header ("An introduction to unemployment in Kazakhstan and in the world) the unemployment rate in Kazakhstan had decreased and even became lower than in the most developed countries.

2. Main body:

After making research on tables we noticed that:

Average level of unemployment in Kazakhstan in 2006 was 7,775 %. In 2007 It became like 7, 5 %. Average level of unemployment in Kazakhstan in 2008 was about 6,625 %. Finally in 2009 it decreased to 6, 56 % of unemployment rate. This average statistics of unemployment rate was calculated through researched rates of unemployment in each quarter of each year (2006-2009). And there again we observe that unemployment in our country was decreasing during these years (2006-2009).

3. Unemployment's influence on Kazakhstan's economy: there are few points in this item:

Influences on finance, society, brings recession, waste of scarce economic resources and e. t. c

4. In the end of our project we considered governmental program "Road Map" as a solution for the situation with unemployment in Kazakhstan. Our government believes that it's possible to hold level of unemployment in the same rate and even to decrease it to less level.

Reference

1. http://tengrinews. kz/kazakhstan_news/192390/

2. http://economics. about.com/od/economicsglossary/g/unemployment. htm

3. http://www.investorwords.com/5144/unemployed.html

4. http://www.indexmundi.com/kazakhstan/unemployment_rate.html

5. http://internationalbusiness. wikia.com/wiki/Kazakhstan_-_Unemployment

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