Economic pressures are prompting older workers in Kazakhstan to stay on the job beyond the official retirement age — currently 63 years for men, 58 for women. But changes to the country’s Labor Code may mean many of those older workers will be forced to give up their jobs.
Kazakhstan’s new Labor Code, which came into force 1 January 2016, contains a provision that gives private-sector employers the ability to sack retirement-age workers with as little as one month’s notice and one month’s severance pay, and it does not give workers an avenue for appealing forced retirement decisions.
The retirement clause is one of many business-friendly provisions in the Labor Code increasing the leverage of employers over employees. The code was reworked mainly to give businesses greater flexibility to cut costs and stimulate production during stormy times for the economy.
Kazakhstan is facing an economic recession, driven by a steep decline in energy export revenue and by a series of recent currency devaluations that has seen the value of the tenge decline against the US dollar by 22 percent in 2009, 19 percent in 2014, and more than 50 percent over the course of 2015-2016.
A complicating factor for Kazakhstan’s labor picture is the country’s aging population — citizens of pension age currently make up 10.6 percent of the population, and by 2030 they are projected to comprise 14 percent. Further, more employees are continuing to work beyond the official age of retirement. In 2005, the government estimated that 83,000 individuals of retirement age or above were still in the workforce, but by 2015, that number had ballooned to 210,000.
Although there are no data available on the exact causes of the growing number of older workers, demographics alone do not account for the increase, experts believe. It is likely that the strained economic environment is causing older workers to delay retirement.
Another factor prompting older workers to delay retirement may be concern about the value of pensions. Since 1997, the country’s pension system has experienced stress as a result of reorganizations, poor performance, and scandals that have undermined the confidence of retirees. Various surveys indicate that a large number of the country’s employees plan to work after retirement, and believe that their pensions alone will not be sufficient to provide for an adequate standard of living.
Authorities also reworked retirement provisions in the Labor Code with an eye toward stimulating youth employment. In a March 2016 speech, President Nursultan Nazarbayev emphasized the need to get more young people working. And Vice Minister of Health and Social Development Birzhan Nurymbetov, whose ministry was responsible for drafting the new Labor Code, has publically stated that the employment of older workers comes at the expense of younger employees, particularly in times of economic recession.
Kazakhstan’s youth unemployment rate is not particularly bad. In 2010, the youth rate matched the general unemployment rate at 6.6 percent. Since then, official figures have shown a downward trend, with the latest data showing a youth unemployment rate of 4.3 percent, which was slightly better than the overall unemployment rate.
More than the unemployment data, the government stance on youth employment appears to be connected with concern that idle youngsters could possibly drift toward Islamic radicalism. Kazakhstan recently has grappled with alleged radical-instigated violence, most notably in the western city of Aktobe.
Some observers express concern that the revised Labor Code marginalizes older workers, and does not adequately account for the social implications of depriving them of the ability to earn income so they can remain economically independent. As such, the government, in amending the Labor Code, may be creating a socio-economic time bomb.