Kazakhstan: Whither the middle class?
The average Kazakh family spends almost all its earnings on food, utilities and paying off loans.
For Anara Smagulova, the weekly trip to a Magnum supermarket in Almaty has become an ordeal.
On one recent outing, she spent more than 40,000 tenge (around $100) on food.
“I didn’t really buy anything, only the bare necessities,” Smagulova, 38, told Eurasianet. “The prices are terrible, and they keep on soaring into space.”
There was a time when Smagulova, the founder and manager of her own travel agency, might have aspired to describe herself as a member of Kazakhstan’s middle class. But her business is faltering, and she is struggling to raise her three children alone. More than half her take-home pay, which ranges from the equivalent of $430 to $650, is spent on food. Most of the rest goes on utilities and clothes. Her older brother helps with other expenses. She owns an apartment, but that was bought for her by her parents.
That so many in Kazakhstan are in a similar boat represents a dismal result in the pursuit of a goal often voiced by the country’s leaders.
In a speech like one he delivered often, former President Nursultan Nazarbayev spoke in December 2010 how Kazakhstan needed to develop a strong middle-earning demographic.
“If at least 60 percent of the country's economy is made up by small and medium-sized businesses, it will be possible to say that we have created a powerful middle class. That our country has become stable. This middle class has something to lose: a house, a car, the education of their children. They will defend this state, they will defend stability," he said.
Speaking on this topic in June, Prime Minister Alikhan Smailov invoked parameters similar to those listed by Nazarbayev. He also referred to a definition used by the Organization for Economic Cooperation and Development which states that “middle-income class refers to households with income between 75 percent and 200 percent of the median national income.”
Petr Svoik, an economist with a long history of criticizing government policy, argues that no more than 15 percent of Kazakh citizens meet these criteria. As for added treats like holidays abroad, that is something only a minority can dream about, he said.
Home ownership data offers a mixed picture. Otbasy Bank, a state-backed mortgage lender, estimates that 6.3 million Kazakhs own property.
“If our population of economically active people is around 10 million, it turns out that around 60 percent are homeowners. This is a good result for 30 years of independence,” Otbasy chairwoman Lyazzat Ibragimova said at a conference in November.
The quality of the housing stock is highly variable, however. Around one-third of residential properties in Kazakhstan are more than 50 years old, making them assets of dubious value.
As Aiman Zhussupova, a sociologist and project manager at a consulting company, explained to Eurasianet, “possession of property in Kazakhstan has for decades remained a foundational and necessary attribute for well-being.”
But an aging and crumbling home, especially one located in a low-demand area, can often be more of a liability than an investment.
The rental market is not great either. Zhussupova notes how the monthly rent of a two-bedroom apartment in Almaty, the business capital, exceeds the size of the national average salary.
According to official data from late last year, the nominal average monthly salary in Kazakhstan stood at around 300,000 tenge ($650). But the median salary, which might be a more useful indicator for evaluating the population’s standard of living in Kazakhstan, given that even the authorities admit that growing economic inequality has become unsustainable, was closer to 190,000 tenge.
Working off those figures, Svoik, the economist, finds that the average Kazakh family spends almost everything they earn on food, utilities and paying off loans.
“As a result, families like this manage to save about 7,000 tenge ($15.50) every month. That's the middle class for you,” Svoik said.
Public policy advocates argue in contrast with this glum view that the cost of paying for basic necessities – be it food, mobile telecommunications or public transportation – is far lower than it is in more developed economies. At the same time, however, in-demand items like clothing, smartphones and high-tech in general are almost all imported. A cascade of tenge devaluations over the past decade have helped put those things out of easy reach for most Kazakhs. Smagulova says she has not changed her phone in four years, and her children rely on hand-me-down clothes from older cousins.
Things got only worse after the COVID-19 pandemic struck.
The Strategy Center for Social and Political Research, a think tank, found in its annual well-being survey at the start of 2021 that the proportion of respondents who admitted that they had trouble finding enough money for groceries had increased to 13 percent, up from 2 percent a year earlier. The proportion of respondents who described their families as “poor” or “quite poor” increased to 26 percent from 8 percent in 2019.
“This phenomenon was not observed in any of the earlier crises, which makes the impact of the pandemic and its attendant quarantine restrictions on the financial situation of households unprecedented,” the think tank concluded.
Zhussupova said COVID-19 gravely exposed the precarious state of Kazakhstan’s middle class.
“Amid deteriorating living standards, many lost their middle-class [status],” she said.
To their credit, officials do not pretend the problem does not exist.
An income-boosting strategy adopted last year and amended earlier this week focuses on broad objectives like creating jobs in the regions, implementing projects to enhance rural incomes, optimizing welfare support and increasing salaries for state employees.
“Implementation of this comprehensive plan will lead to the employment of more than 3.3 million people, including 2.3 million young people, by 2029, an increase in the share of wages as a proportion of gross domestic product to 41.1 percent (from 30.1 percent), a decrease in the poverty rate to 5 percent (from 5.3 percent), and unemployment to 4.6 percent (from 4.9 percent),” according to the strategy.
But what were the changes adopted this week? Writing on his Telegram account, political commentator Daniyar Ashimbayev offered a pithy summary.
“The comprehensive plan known as the ‘Program for increasing the income of the population through to 2025’ (adopted on April 14, 2022) has now become comprehensive plan known as the ‘Program for increasing the income of the population through to 2029,’” he wrote. “All indicators are respectively being postponed to a brighter future.”
Almaz Kumenov is an Almaty-based journalist.
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