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Two years after Kassym-Jomart Tokayev promised a “new” and “fair” Kazakhstan, analysts argue that the country’s economic model remains intact, inequality is deepening, and wealth is still concentrated in the hands of a narrow oligarchic class.

Vlast · By Алмас Кайсар · 17 December 2024 · read the original in KK →

On November 25, 2022, Kassym-Jomart Tokayev was re-elected president of Kazakhstan. At the time, he promised millions of Kazakhstanis a fair distribution of income and a fight against oligopolistic capitalism.

Analysts say that in the two years since the election, the country’s economic model has not changed, continues to contribute to rising inequality, and leaves resources largely in the hands of a small number of oligarchs.

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President Kassym-Jomart Tokayev was first elected in June 2019. Yet he only assumed real power after the events of Bloody January in 2022, during which, according to official figures, 238 people were killed.

After those events, Tokayev openly stated that although Kazakhstan’s economic system had produced strong overall GDP growth, the distribution of economic benefits remained “ineffective.”

“You understand and know this very well. The main benefits of economic growth are being enjoyed by financial-oligarchic groups,” Tokayev said.

He insisted that, during his first election, he had seen the causes of stagnation and had tried to undertake reforms, but that this displeased “a certain group in power.” Kazakhstan’s second president has never, anywhere, openly said who he meant.

After the January events, Tokayev proposed the project of a “new” and “fair” Kazakhstan, within which he promised that income would be distributed justly and citizens’ earnings would rise.

Before the 2022 election, he promised: “Anyone who wants to work and is able to work will find decent employment. Every person in need of assistance will receive support from the state and society.” In the election held in November 2022, Tokayev won, according to the official result, with 81.31% of the vote. International organizations, however, said it had been an election “without alternatives.”

The key elements of the “new” political course were supposed to be a progressive tax system, higher taxes on the rich, wage increases, reforms in health care and pensions, the return of assets illegally taken abroad, and various funds and initiatives such as “For the People of Kazakhstan” and “National Fund for Children.”

StagnationТоқырау

After criticism concerning the incomes of Kazakhstan’s population, the “Program to Increase People’s Incomes” was adopted. The program set the goals of raising labor’s share of GDP to 41.1% by 2029, from 30.1% in 2022, and providing employment for 3.3 million people.

Even now, this program is already lagging behind its targets. Under the program, labor’s share of GDP was supposed to rise to 36.4% in 2024. Yet according to the Bureau of National Statistics, in January-June the figure was only 32.3%.

Despite wage increases for public-sector employees, by 75% in 2022 and 100% in 2023, analysts at Halyk Finance show that wages in education, health care, and public administration have been declining since 2023.

As for the fight against unemployment, the Ministry of Labor reports each year that more than 900,000 new jobs are being created under regional employment maps. This year, however, it was stated in the Mazhilis that 87% of the new jobs are being created in low-productivity sectors and are temporary in nature.

Another unresolved problem is that only 9% of employees work in high-wage sectors, while in the budget sector, where more than 50% of workers are employed, wages are below average and, in reality, falling.

Economist Kuat Akizhanov, author of the book Financial Capitalism and Income Inequality in the Contemporary Global Economy, sees the persistence of low wages and unemployment as rooted in the political elite’s unwillingness to change the country’s economic model.

As Akizhanov explains, since the first years of independence the ideology of neoliberal capitalism has served as the guiding principle, and because the government has followed that program, it is unable to offer a “new paradigm of economic development.”

Galym Zhusipbek, a scholar of social theory, adds that the measure of low wages and other social rights should be “human dignity.” Their current state, however, shows that no social state has been established here.

Nevertheless, Tokayev continues to state that Kazakhstan’s economy must grow by 6% annually and reach $450 billion by 2029, compared with $261.4 billion in 2023.

“Making the doubling of GDP the main priority is itself wrong, because it does not lead to an improvement in people’s well-being or in the economy’s structural indicators. In this respect, there has been little change in 30 years. According to the World Bank’s classification, we belong to the group of upper-middle-income countries. But in real numbers, that is not the case at all. Here, around 100 people control a third of the economy. That is the reality,” Akizhanov says.

Tokayev, noting that GDP growth in 2023 was 5.1%, said the government had maintained the country’s “positive development dynamics.” Analysts at Halyk Finance, however, show that wage growth still has a weak connection to economic growth in many sectors.

“This is especially visible in construction, one of the sectors considered to have significant growth, while real wages have declined,” the analysts say.

As for a progressive personal income tax, state agencies are constantly debating it, saying the measure could open the way to the shadow economy. A wealth tax has still not been introduced, because adoption of the new Tax Code has been postponed until 2025.

“We see that the country’s very rich people want to preserve their status. They do not want to pay extra for driving Lamborghinis and living in penthouses. Yet progressive taxation exists in many developed countries; it is a normal mechanism of economic democracy,” Akizhanov says.

All these measures, which the authorities believed should increase citizens’ incomes, have been pushed into the shadow of other decisions, and in the end the purchasing power of the population is falling further.

In 2023 the budget deficit was around 2.2 trillion tenge, or 11.6 trillion tenge excluding transfers from the National Fund, and in response a policy of “tightening the reins” was launched: the state abandoned the setting of maximum prices for socially important food products and, at the request of big business, agreed to raise utility tariffs and fuel prices.

As for public demands, such as abolishing the recycling fee, lowering the retirement age, raising wages, and amending the Labor Code, the state either pretends to be working on them or simply does not listen to them at all.

The president, meanwhile, has returned to conservative rhetoric, shifting responsibility for the state of the labor market and the economy onto the population itself.

“By providing social assistance to the population, we have, to be honest, allowed a psychology of dependency to take root in society,” Tokayev said.

Moreover, according to experts, trade unions are an important instrument for achieving social justice; they should not be limited to defending workers’ interests at the enterprise level, but should also work in this direction at the state level. In Kazakhstan, however, trade unions still operate under state control, while independent organizations are persecuted.

“I think our problem arises from the structural system of this regime. Here, trade unions and social policy are treated as obstacles. In reality, they are important tools for carrying out progressive social policy and protecting fundamental rights in the country,” Galym Zhusipbek believes.

As a result, according to the National Bank, the situation with in-work poverty in Kazakhstan remains unchanged. Nine out of ten residents of Kazakhstan have monthly incomes of no more than 151,000 tenge. Statistics show that nearly 1 million Kazakhstanis live at the poverty line, with incomes of less than 45,000 tenge, or $90. Some experts believe the share of poor people in the country is much higher, arguing that the state’s calculation of the poverty threshold is incorrect.

Forbes Kazakhstan’s data also contradict the talk of fair income distribution. In May this year, the publication reported that the total wealth of the country’s 75 richest businessmen had increased by $8.2 billion, reaching $46.63 billion.

Halyk Finance analysts show that income is concentrated in the hands of 10% of the population, who hold roughly 25% of total earnings, while the income of 50% of the population does not exceed the 2023 minimum wage of 70,000 tenge.

In addition, even in sectors considered high-paying, such as oil and gas, labor disputes and protest actions continue unabated.

Halyk Finance analysts also say that the current statistics on income inequality are “highly questionable.” “The statistics are compiled on the basis of survey results, while we have no statistics on wealth inequality at all. The only source showing unequal distribution of wealth is external data,” the specialists say.

The specialists note that in the Inequality Transparency Index, developed by the UN to assess the quality of data on the distribution of income and wealth, Kazakhstan received a score of 3 out of 20.

The System Has Not ChangedЖүйе өзгерген жоқ

“Poverty is increasing, and most people in Kazakhstan’s poor strata are left outside the state’s social protection programs. In my observation, although things have been said, there have been no significant changes in social policy in the years after the January events. When Tokayev came to the presidency, people expected major socioeconomic change, but I think that hope has not been fulfilled,” Anceschi says.

He also believes that the relationship between the government and Kazakhstan’s oligarchic groups has not changed.

“In Nazarbayev’s final years in leadership, there was a kleptocratic system far removed from democracy. That same system continued after 2019. The only thing that changed was the appearance of new people and new clients,” he says.

Anceschi believes that the attempt to move away from “Nazarbayevism” merely led to some businessmen being brought down from their thrones and new oligarchic groups rising to the surface.

“Of course, the state seemed to take certain actions, but they had no effect,” says Dosym Satpayev. “In Tokayev’s system, slogans still prevail over concrete deeds. The president has not solved the biggest problem left by Nazarbayev: the current economy is not in the hands of Kazakhstanis. It remains in the grip of the oligarchs.”

Akizhanov believes the situation in the economy will worsen. He says people’s incomes will continue to decline “as a result of the National Bank’s policy of constantly raising interest rates and crippling domestic production, and because of relentless devaluation.”

“This will lead to growing property polarization,” he says. “The political system will undergo changes in response to the situation that has developed. The current authoritarian kleptocracy will turn into a plutocracy, that is, rule by the rich. For example, I think that in the next decade parliament will be occupied only by millionaires and by the henchmen of billionaires.”

Galym Zhusipbek believes the root of the problem lies in the absence in Kazakhstan of any debate about “human dignity,” the methods of protecting it, and the ways of influencing it.

“Every person has dignity; it is neither lower nor higher than anyone else’s. Social rights themselves, in a social state, mean the protection of human dignity. Yet here, social policy is viewed not from the standpoint of human rights, but from the standpoint of neoliberalism. And under neoliberalism, social policy is unnecessary; it is an extra burden on the state,” he says.

Anceschi says the population’s attitude toward rising poverty and inequality is expressed through tragic events, for example the 2019 fire in Astana, after which Nazarbayev was forced to replace the government, or sudden incidents such as the 2022 protests in Zhanaozen against rising liquefied gas prices. The latter became the beginning of the January events.

“Because the regime has eliminated the opposition and persecuted dissenters in the country, Kazakhstani society expresses its disagreement with socioeconomic policy through such local forms of resistance,” the researcher says.

Satpayev believes that because the problems that triggered the 2022 protests have not been resolved, such events may happen again.

“Protest in Kazakhstan has not disappeared anywhere. It is simply absent from the agenda of political opposition parties and movements. All local protests, whether in Zhanaozen, Shanyrak, or the land rallies, show that the authorities are unaware of the situation, and that the authorities live in their own space while the people live in another world. Tokayev inherited the country’s leadership. But the causes that gave rise to social inequality have not disappeared,” the political scientist says.

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