2. Uzbekistan: context and development trends
Demographic situation Structural reforms
40 100 220.0 30.0
35 81.6 195.3 28.0
80 200.0
30 66.9 180.0
26.0
24.0
25 60 180.0 166.5 22.0
20 160.0 152.7 20.0
15 34.8 40 139.5 18.0
10 140.0 129.8
21.4 20 121.3
16.0
5 120.0 112.9 14.0
104.2 108.4 12.0
0 0
100.0 10.0
2010
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2011
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
GDP(2000=100) Poverty level, right scale
Birth rate, right scale
The ratio of employed population to the working-age population (%)
70 Fiscal space
Social structure of society 60 58.1
50 59
56.5
40 42.5
27.9 29
30 22.6 21.5 21.9 21.6 21.9 21.5
20
10
0
2000 2005 2010 2011
State budget revenues, % of GDP
State budget expenditures, % of GDP
Proportion of spending on the social sector and social protection
(in % of state budget expenditures)

3. Social protection profile
Social insurance:
• pension benefits (basic part and savings part);
• social support for the unemployed;
• sickness and disability care.
Targeted social support for socially vulnerable population categories:
• targeted support measures for specific population categories, based on
verification of need;
• social payments and benefits for specific population categories
regardless of need;
• social service for the public.

4. Sequencing : the evolution of social protection policies and schemes
Phases of the transformation of the state social support system
1991-1994 Social support for broad strata of Subsidized prices, payment of allowances and
the population compensation to all families
1994-1996 Introduction of targeted financial Limitation of subsidized prices and rates,
assistance for low-income targeted payment of financial assistance to
families families in need, continuation of universal
support for families with children
1996 -2002 Introduction of targeted social Cancellation of subsidies for prices and rates,
assistance for families in need pullback from universal social support for
with children families
2002 – Full transition to targeted social Replacement of specific preferences for the
present assistance for socially vulnerable population with cash payments, full transition
population groups to targeted social assistance for low-income
families

5. Cost efficiency of social protections programs
Spending on the social sector and social protection,
including targeted protection
65 2.0
1.5
1.7
1.8
1.7 Lack of methodological base to
60
1.7 1.5
1.4 1.3 1.3 1.3
1.3 1.5
evaluate the efficiency of social
55
1.0 protection programs.
50 59.4 60.2 61.2 58.2
56.5 58.5
0.5
45 49.0 48.5 49.0 49.3 49.9
40 0.0
The reasons are the following:
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Share of spending on the social sector and social protection (in % of the national
budget)
Spending on allowances for low-income families (% of GDP)), right scale • Budget process is not result, but
Spending on education and health care:
expenditures based.
International experience
35.0 33.3 • Evaluation and monitoring
30.0
25.0
mechanisms need to be
20.0 17.1
15.2 15.5
14.0
improved .
15.0 12.7 12.8
8.8 9.9
10.0
5.0
5.4 • Quality of statistics.
0.0
High income Lower middle Middle income Upper middle
income income
Uzbekistan • Lack of qualitative indicators.
Health expenditure, public (% of government expenditure)
Public spending on education, total (% of government expenditure)

6. Financing and fiscal sustainability: future
challenges
Social allowances as % to average wage
Economic, social and institutional
conditions are placing new demands on
the social-protection system. The
challenges are as follows:
 Despite the government’s growing
expenditures on the social sector and social
protection, the importance of social
allowances has gradually diminished.
Reduction of formal sector in total
employment accompanied by increase of
the share of pensioners will raise burden
per one employed.
Pensions are small and not related to
previous salaries. This increases the risk of
falling into the poverty after getting the
retirement age.

7. Key lessons learned and recommendations
 The model of social protection developed in the 1990-s proved its validity
by preventing a sharp drop in living standards and ensuring that social
support was targeted the most needed.
As the processes of transformation and modernization of the economy,
society and institutions have sped up in the recent years, it is time to take a
new look at the future of the social-protection system.
The focus should be on promotive and transformative functions of social
protection.
 The social protection policies should be implemented in complex with
economic and institutional reforms .
In order to minimize risks and costs of transformation of the system the
preparatory stage should be implemented by creating effective instruments,
piloting a new initiatives and institutes, developing mechanisms of
monitoring and assessment etc.

8. Further Steps:
Formation of the New SP Model

9. Formation of the New Model for Uzbekistan:
To what extent foreign models could be applied?
Taxes and Social Payments, % of GDP Government Budget Expenditures, % of GDP
70 60
56,056,458,1
60 52,7 50
49,747,9
50 41,7 43,9 40
40 34,4 32,7 30
30 21,6 20
19,1
20 11,5 10
10
0
0
Social protection Education Healthcare
Public services National defence National security
GDP per capita & Economic Growth rate
 Option 1: focus on safety net functions; generous 60000 12
social system  redistribution and fiscal burden 50000 10,4 10
8,5
 Option 2: reduced social spending, incentives for 40000 8
private sector; relieved tax wedge; 30000 5,6 6
20000 3,69 3,73 4
  Various models applied at various stages 3
10000 2,09 2,3 2
1,48 1,3
  Neither of the foreign models fully fit into a 0 0,67 0
transforming Uzbekistan economy
 Uzbekistan needs to select its own path and
develop the new specific model
GDP per capita PPP, USD
Economic growth rate, %

10. Formation of a New SP Model in Uzbekistan:
Developing the overall framework
• Conventional approach to SP should be broadened by:
– Involving not only protective and preventive, but also
promotive and transformative functions;
– Integrating and consolidating fragmented policies in
various sectors (labor market policies, promotion of
entrepreneurship, governance reformation).
• The new SP model should provide incentives for and be
in line with structural and social transformation and
needs to:
– Provide assistance to adapt to structural transformations
and get ready for the changes beforehand;
– Create social lifts and incentives for social mobility

11. Project on Transformative Social Protection:
Scope of the Research
Allowances Pensions
Labor market policies Rural infrastructure
Education Healthcare
Food Security Institutions

12. Central question: How to assess the promotive
and transformative effects?
Policies & Questions
Measures
What is the effect of allowances on consumption, poverty
reduction and welfare improvement?
What is optimum amount of allowances, that will improve
Allowances the welfare and not contribute to parasitism?
Does the income and social status of recipients of
allowances change as time passes? Which social programs
contribute to such changes?
How pensions affect the welfare of people? Do pensions
prevent from poverty?
Pensions
How pension expectations affect the employment of
people at the working age?

13. Central question: How to assess the promotive
and transformative effects?
Policies & Measures Questions
Which of the programs is the most effective in
the terms of welfare improvement and poverty
Labor market programs reduction?
1) Generation of jobs;
2) Providing favorable
Which of the programs is the most effective in
business-climate, credits.;
the terms of social mobility?
3)Improving education and
trainings;
4) Expansion and creation of Which of the programs are the most effective in
new industries and enterprises the terms of changing values, transforming
behavioral stereotypes?
What is the transformative impact on the quality
Programs on construction of of life, behavioral stereotypes, consumption
rural housing and improving pattern?
living conditions

14. Central question: How to assess the promotive
and transformative effects?
Policies & Measures Questions
What is the effect on the quality and access to
education and healthcare?
Education and What is the impact on enthusiasm, values and
stereotypes?
Healthcare
What is the impact on the quality of human
capital?
Does the design of the system fit in the new
requirements?
Do the principles of work of the system conform
Quality of institutions with the new requirements?
Do the existing mechanisms of monitoring and
assessment conform with the new
requirements?
What are the costs and benefits of introduction
of the new institutions?

15. Issues to be discussed:
• Are we on the right path?
• Are the research questions posed properly?
• Will we succeed employing these strategies?
• What approaches, methods and indicators need to
be revised?
• What dimensions are omitted?
Please, advise!