Uzbekistan tries to solve youth unemployment

TASHKENT – Uzbekistan is easing laws and providing tax benefits to microenterprises and small businesses to create jobs for recent university, professional college and high school graduates.

Under a decree issued by President Islam Karimov July 28, small and medium private businesses (SMBs) can now exceed limits on the number of employees without losing their tax status if they hire university, professional college and high school graduates. These SMBs will also enjoy special tax breaks under the decree.

Previously, Uzbek law limited microenterprises to an average of 20 employees in the manufacturing sector, ten employees in service and non-production sectors and five in wholesale, retail and catering.

Small businesses were limited to a maximum annual average of 25 to 100 employees depending on the sector of operations.

“As such, the government is encouraging the development of industry, particularly for small businesses and private entrepreneurship,” said Tashkent District Tax Inspectorate Director Alim Faizibayev.

Tax police in each district have been trained on the decree and are now consulting employers, Faizibayev said.

“Each inspector contacts his assigned small businesses and private entrepreneurs and informs them about the new regulations and explains the content of the document,” said Tashkent District tax inspector Sukhrob Ibragimov.

Ferudin Yordoyev of the Labour Ministry predicted these measures will solve youth unemployment. “We have many young people straight out of school without work who can fall into the hands of bad people.

And, if a person works, he won’t find time for any sort of mischief.” Psychologist Galina Sergeyeva agrees. “Young people are very ambitious and impatient. Sometimes, if they have no income, out of their inexperience, — they may get involved in just about anything and even listen to extremists. But, if they have work, people are more balanced.”

Business owners are happy with the new decree. “In order to classify ourselves as a microenterprise and get certain tax deductions that are more favourable than the average business’s, I have to work with (only) five people or have undocumented labour,” said café owner Svetlana Bobkova. Now, she said, she can legally hire another employee after he verifies his diploma.

Clothing-store owner Zakir Toirov is delighted with the new presidential decree: “I will be able to hire new workers and remain under the old tax classification. I am happy to hire college graduates.”

The decree permits businesses to hire employees who have graduated from an institution of higher education within the last three years.

“The proportion of small business and private enterprises in Uzbekistan is growing every year, and without further development of this sphere… it is impossible to imagine the country’s economy developing further,” said Oliy Majlis Deputy Rahmatilla Karimov.

The presidential decree integrates the interests of private businesses and the government, which wants to create jobs and employment opportunities for the young, the lawmaker said.

“The document is not only socio-economically but also politically motivated, since if young people are working, then they don’t have the time or physical capability to engage in something illegal,” said Tashkent Paediatric Medical Institute High School Director Artikbaya Ishankulov.

“Modern life is full of temptations, and, during this special period of a young person’s life, it is important that he and his potential be in demand,” said Abdulla Kori, a mullah at one of Tashkent’s mosques, referring to extremist organisations’ recruitment of youth.

Psychologist Malika Ziyamova concurs: “Young people who do not get into the university come under much stress from the feeling of failure. For many, this is the first letdown in life … Some continue to study for entrance exams; others look for work. It is important that they have no other options, because when they do not have anything to do, society ends up with asocial phenomena such as drug addiction, prostitution and criminality.”

Some 600,000 students graduate annually from Uzbekistan’s universities, professional colleges and high schools. According to the Finance Ministry, 509,400 new jobs were created in the first half of 2010. A significant number of these jobs, 323,700 (63.5%), were in small businesses and private enterprises. Of these, more than 282,000 were jobs for the young. A Finance Ministry press release said active labour policies contributed to a 2.7% increase in employment in the first half of 2010.

“Tax breaks for SMBs will positively impact this year’s economic performance,” said Faizibayev.