WB: Tajikistan’s economy shifts away from agriculture and industry toward services
7 February 2015
DUSHANBE, February 5, 2015, Asia-Plus -- A new World Bank study analyses the links between education, skills, and labor market outcomes in Tajikistan, and suggests specific policy goals for the development of job-relevant skills.
For almost two decades, Tajikistan's economy has enjoyed robust annual economic growth, thanks to a favorable external environment, relative political stability, and high prices for its main exports. Recently, however, growth has started to moderate, with a slow-down in activity across almost all sectors and burgeoning challenges related to job creation and competitiveness.
Despite the temporary slow-down, the government of Tajikistan has set ambitious development targets for 2020: to double GDP, to significantly reduce poverty, and to expand the middle class. With a young and rapidly growing population – 40 percent of which is under the age of 17 – job creation and productive employment are critical to achieving these development goals.
But, an important question faces policy makers: are workers in Tajikistan adequately trained and skilled to meet the needs of the country’s labor market? A new World Bank report, The Skills Road: Skills for Employability in Tajikistan, addresses this question, drawing upon a survey that includes large-scale assessments of cognitive (such as literacy, numeracy, and memory) and non-cognitive (such as extraversion, conscientiousness, openness to experience, agreeability, and emotional stability) skills of working age adults.
Tajikistan’s economy is undergoing significant structural changes – specifically, it is shifting away from agriculture and industry toward services. The country faces important challenges in meeting its rapidly changing labor market needs.
First, formal sector job creation has not kept pace with population growth and hence jobseekers have sought work abroad (almost one-in-three young men migrate abroad for employment purposes) and in the informal sector. A majority of workers (60 percent) is engaged in the informal sector, where job quality is a concern and where workers perform repetitive tasks without learning new skills.
Second, productivity has risen significantly, but wage growth has outstripped productivity increases, raising concerns about competitiveness.
Third, a large share (over 15 percent) of youth in Tajikistan are discouraged – meaning that they are not looking for a job because they do not believe they can find one.
Finally, weak labor market systems hinder job searches and skills signaling, limiting the extent to which the supply of skills is effectively matched with employer demand in Tajikistan.
As in many other parts of the world, there is an increasing demand for “new economy” skills in Tajikistan. New economy skills are strong analytical and organizational skills, including non-routine cognitive analytical and interpersonal skills. Although there are competing explanations for this trend – including technology advances and globalization – it is clear that Tajikistan is at the early stages of modernizing its economy and experiencing a growing demand for new economy skills.
The report presents robust evidence that cognitive and non-cognitive skills are important factors for employability in Tajikistan. Individuals with better skills are not only more likely to be employed – they also typically have more desirable jobs in the formal sector, with labor law protection and access to certain benefits.
The report argues that there are weaknesses in the way skills are formed in Tajikistan. Crucially, large variations in observed skills among people with the same level of educational attainment indicate that formal education is failing too many people. While skills are developed during different stages in the life cycle and a host of actors are involved—families, for example, play a central role—the education and training system has a mixed record in skill formation. The report’s conclusion is that the government could shift the focus from providing access to educational institutions and instead focus on providing the skills (cognitive, non-cognitive, and technical) to students who need to succeed as adults.
The government can also do more to get children off to the right start by investing in early childhood development programs, where rates of return to investment are generally very high and important soft skills are learned.
Finally, more can be done to match worker skills with employer demand by improving the use of information in matching skills to jobs in the labor market.