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Economy

Kazakhstan Labor Ministry Increases Pressure on Employers Paying “Gray” Salaries

Kazakhstan’s Ministry of Labor and Social Protection has drafted legislation aimed at eliminating the widespread practice of paying employees off the books, known locally as “gray” salaries, Minister Svetlana Zhakupova announced this week. According to ministry estimates published earlier this summer, approximately 30% of Kazakhstan’s employed population fails to contribute to the Unified Accumulative Pension Fund (UAPF), a clear indicator that they may be receiving unreported wages. Data from the Bureau of National Statistics shows that in the second quarter of 2025, 9.3 million people were employed across the country. Of these, 7.1 million were salaried employees (76.8%) and 2.2 million were self-employed (23.2%). This suggests that more than 3 million workers may be receiving wages outside the official system, avoiding both income tax and social contributions. Targeting the Shadow Economy The ministry plans to focus first on those who make no contributions at all. “We have cases where highly qualified employees officially receive the minimum wage of 85,000 KZT (about $159),” Zhakupova said. “To avoid taxes, employers declare the minimum wage on paper and pay the rest in cash.” This practice, she added, creates striking wage disparities among employees with the same qualifications and roles. “In some instances, workers in identical positions earn between 229,000 KZT ($426) and 1.2 million KZT ($2,200), depending on the employer,” Zhakupova noted. These discrepancies are particularly acute in Kazakhstan’s mining and metallurgical sector. Digital Oversight and Industry Agreements To address the issue, the ministry is negotiating industry-wide wage agreements and requiring companies to declare their staffing structures. A digital tool for this purpose is available on the enbek.kz platform. “About 20 to 25 major organizations, including several under our jurisdiction, have already submitted their staffing schedules in a pilot project,” said Zhakupova. She believes the initiative will help ensure a more equitable distribution of company profits. “We’ve seen cases where salaries have risen, yet labor productivity has not. That contradicts basic economic logic. Our digital system identifies such ‘red zones’ for inspection,” she explained. Legislative Timeline The draft law is currently under interagency review and has received support from both the government and the presidential administration. It is expected to be submitted to Kazakhstan's parliament, the Mazhilis, for consideration in the near future. In the meantime, the ministry has begun flagging suspicious labor contracts, particularly those listing highly skilled workers, such as mechanical engineers, at or near the minimum wage. More than 1.1 million people in Kazakhstan currently earn wages at or below the legal minimum. “When we see such contracts, it's clear these companies are operating in the shadow economy,” Zhakupova said during a recent government briefing. “Inspectors are now actively working with such employers.” As The Times of Central Asia previously reported, the government has also decided to freeze the minimum wage in 2026, despite earlier pledges to raise it.

Economy

Tajikistan Raises Minimum Monthly Wage to $110 Amid Broad Income Hikes

Effective September 1, Tajikistan has implemented a nationwide increase in salaries, pensions, and scholarships, ranging from 10% to 30% across various sectors. The country’s minimum wage is now officially set at 1,000 Tajikistani somoni (TJS) per month, approximately $110. This marks a 25% increase from the previous rate of 800 TJS ($88). “This means that from September 1, 2025, the monthly salary of employees of all institutions, organizations, and enterprises, regardless of ownership, must not be less than 1,000 TJS,” the official decree states. The salary hikes apply broadly. Employees of kindergartens and general education schools will see a 30% increase. Teachers at universities and research institutions will receive a 20% raise, matching the increase granted to doctors, chief physicians, nurses, and other healthcare personnel. The same 20% boost also extends to social workers, including staff at elderly care homes and facilities for people with disabilities, as well as to cultural sector employees, such as those working in theaters, libraries, museums, media, and public broadcasting. Civil servants at all levels of government have also received a 20% salary increase. In parallel, insurance, labor, and social pensions have been increased by 10%. Scholarships, including presidential scholarships and other academic grants, have also been raised, with the exception of stipends for cadets in military universities and the Academy of the Ministry of Internal Affairs. The 2025 state budget includes provisions to finance these increases. Funding sources include surplus revenue collections, local taxes, free budget balances, the Social Insurance and Pension Fund, and reallocation of reserve and discretionary funds. Total budget revenues are projected at TJS 49.6 billion (approximately $5.45 billion), with around 65% expected to come from tax revenues. The government forecasts a 20.8% increase in tax collections compared to 2024. Spending on public sector wages, pensions, and scholarships now accounts for more than 35% of the national budget. In 2025, the total wage fund has reached nearly TJS 13 billion ($1.43 billion), marking a 35.7% rise year-on-year. Pension allocations total TJS 5.1 billion ($561 million), while benefits and scholarships are funded at TJS 350 million ($38.5 million) and TJS 280 million ($30.8 million), respectively, each reflecting a 25% to 26% increase over last year. Despite the official wage growth, low salaries remain a persistent issue for many Tajik citizens. As consumer prices continue to rise, the increases are widely viewed as a form of income indexation rather than a substantial improvement in living standards.

Economy

Kazakhstan Tops Central Asia for GDP per Capita, Surpassing Russia and China

Kazakhstan has emerged as the regional leader in gross domestic product (GDP) per capita, overtaking both Russia and China, according to the International Monetary Fund (IMF). IMF data shows that in 2025 Kazakhstan’s GDP per capita reached $14,770, compared to $14,260 in Russia and $13,690 in China. Within Central Asia, Turkmenistan followed with $13,340, while Uzbekistan posted $3,510, Kyrgyzstan $2,750, and Tajikistan $1,430. Kazakhstan also leads among Commonwealth of Independent States (CIS) members, ahead of Georgia ($9,570), Armenia ($8,860), Moldova ($8,260), Belarus ($7,880), Azerbaijan ($7,600), and Ukraine ($6,260). Only the Baltic states recorded higher figures: Estonia ($32,760), Lithuania ($30,840), and Latvia ($24,370). Ireland remained Europe’s leader with $108,920 per capita. The IMF calculates GDP per capita at current prices, offering a snapshot of purchasing power and overall economic wellbeing. Its analysts attribute Kazakhstan’s strong performance to vast mineral resources, with energy and mineral exports continuing to drive growth. Recent years have also seen expansion in raw material processing and production of high value-added goods. The report cites ongoing business reforms, foreign investment inflows, and infrastructure upgrades as key factors enhancing competitiveness. Significant spending is going into transport, logistics, technology, education, healthcare, and social services, bolstering domestic demand and labor productivity. Kazakhstan’s strategic position on trade routes linking Europe and Asia, participation in the Belt and Road Initiative, and active engagement with Russia, China, the EU, and other partners are also seen as growth drivers. The IMF notes that macroeconomic stability is supported by low inflation, a steady tenge exchange rate, and a balanced budget. “The policies of the National Bank and the government are helping to maintain economic stability even amid global challenges,” the report states. The Times of Central Asia previously reported that, according to IMF forecasts, Central Asian economies are expected to grow faster than the global average in 2025.

economic slowdown

Kazakhstan Faces Turbulence as External Pressures Mount

Kazakhstan, Central Asia’s largest economy, is facing a convergence of pressures that President Kassym-Jomart Tokayev and National Bank Chairman Timur Suleimenov must now manage simultaneously, from currency depreciation and geopolitical turmoil to volatile oil markets and contentious fiscal reforms, that are testing its economic resilience. Geopolitical Pressures Escalate By mid-2025, it had become increasingly apparent that Kazakhstan has limited capacity to influence global geopolitical dynamics. Like many “middle powers,” the country must adapt to the actions of larger states, whose unpredictable decisions continue to exert downward pressure on the tenge and fuel inflation. On July 28, U.S. President Donald Trump shortened a previously issued 50-day ultimatum to Russian President Vladimir Putin, giving him just 10-12 days to agree to a peace deal with Ukraine. This development added to the mounting uncertainty already impacting Kazakhstan’s economy. As previously reported by The Times of Central Asia, analysts warn that Trump’s secondary sanctions, 100% tariffs targeting Russia’s trading partners, could potentially be extended to Kazakhstan and other Central Asian economies. Though Kazakhstan is not among Russia’s largest trading partners, its economic links to Moscow are still substantial. The country relies heavily on imports from Russia, including electricity, gasoline, food, and medicine. Adding to the pressure, on July 7, Trump announced a 25% tariff on Kazakhstani goods, effective August 1, 2025. While $1.8 billion of Kazakhstan’s $2 billion in exports to the U.S. (mostly oil, metals, and rare earth elements) are exempt, the move has nonetheless rattled Kazakhstan’s already fragile industrial sector and spooked investors. Oil price instability, largely driven by Western efforts to curtail Russian exports, also poses a major risk. Oil revenues make up the bulk of Kazakhstan’s export income and are a key source of budget financing. Further complicating matters, new Russian restrictions require foreign tankers to obtain Federal Security Service (FSB) approval before accessing key Black Sea ports. This affects the Caspian Pipeline Consortium (CPC), which handles more than 80% of Kazakhstan’s oil exports and is partly owned by U.S. firms Chevron and ExxonMobil. Reuters estimates the new rules could disrupt over 2% of global oil supply. Tenge Hits Historic Low As of July 28, the tenge dropped to a record low of 544.87 per U.S. dollar. The depreciation is driving up the cost of imports, an acute problem in an import-dependent economy, pushing more families to spend over half their income on food. Companies with debt obligations in U.S. dollars are also seeing their liabilities grow, worsening the investment climate and prompting firms to scale back on planned expansions. Central Bank Warns Against Intervention National Bank Chairman Timur Suleimenov cautioned against government intervention in currency markets, a position supported by President Kassym-Jomart Tokayev, who has repeatedly cautioned against short-term administrative measures that can destabilize the economy. Suleimenov noted that past attempts to control the exchange rate led to abrupt and damaging devaluations. Suleimenov attributed the tenge’s vulnerability to rising fiscal injections and an 18% increase in the money supply, stressing that without parallel growth in GDP and industrial output,...

Economy

Kazakhstan’s Economy Posts Fastest Growth in 14 Years

Kazakhstan’s economy expanded by 6.2% in the first half of 2025, marking the country’s fastest growth rate since 2011. The data was announced by Deputy Prime Minister and Minister of National Economy Serik Zhumangarin during a government meeting. Zhumangarin noted that a similar level of growth was last recorded in the first half of 2011, when GDP increased by 7.1%, eventually reaching 7.5% for the full year. Since then, annual growth rates have rarely surpassed 6%. By comparison, the economy grew 4.8% in 2024. “The current figure is 0.2 percentage points higher than the growth recorded in the first five months of this year and is the highest in the last 14 years. For context, growth during the same period in 2024 was just 3.2%,” Zhumangarin said. He cited the real sector (+8%) and the services sector (+5.2%) as the primary drivers. Key Growth Sectors Transport (+22.7%) and construction (+18.4%) led the surge, driven in part by a 35.2% increase in grain and flour exports, which totaled 11.8 million tons. The mining industry also posted steady gains, with oil production rising 11.6% and coal production up 11.7%, contributing to overall mining growth of 8.4%. Manufacturing expanded by 5.5%, buoyed by strong performances in machinery (+11.1%), food production (+10%), oil refining (+9.6%), metal products (+14.6%), construction materials (+8.6%), and chemicals (+7%). Agricultural output rose by 3.7%. Trade and Investment Outlook From January to May 2025, Kazakhstan’s foreign trade turnover reached $53.5 billion. Exports stood at $29.8 billion, including $10.2 billion in high value-added products. Imports rose by 2.2% to $23.8 billion, resulting in a positive trade balance of $6 billion. Prime Minister Olzhas Bektenov reaffirmed the government’s ambition to double Kazakhstan’s GDP by 2029, a goal originally set in 2023. “Last year, our GDP was $286 billion. This year, we expect to surpass the $300 billion mark. If current growth rates hold, we are capable of reaching $450 billion by 2029,” Bektenov stated at a press briefing. He emphasized that the government is investing in industrial development, economic diversification, and high value-added production to ensure that the majority of national revenue and profits remain within Kazakhstan. Diverging Forecasts Earlier this year, the Eurasian Development Bank forecast Kazakhstan’s GDP growth at 5.5% for 2025, with similar rates expected for 2026 and 2027. However, the European Bank for Reconstruction and Development (EBRD) recently downgraded its 2025 forecast from 5.2% to 4.9%, citing potential risks to oil output.

Remittance

Russian Inflows Drive Kyrgyz Remittance Surge

Kyrgyzstan recorded a sharp increase in remittance inflows during the first five months of 2025, reaching USD 1.367 billion —a 16% rise compared to the same period in 2024, according to data from the National Bank of the Kyrgyz Republic (NBKR). The increase was particularly notable in April and May, traditionally high-transfer months ahead of the summer season. In May alone, remittances totaled USD 299 million, up from USD 253 million in May 2024. Russia remains the dominant source of remittances, accounting for 94% of total inflows between January and May. The NBKR reported USD 1.2 billion in transfers from Russia during this period, reflecting a year-on-year increase of USD 188 million. This growth comes despite a significant drop in the officially registered number of Kyrgyz labor migrants in Russia from 650,000 in previous years to around 350,000 in 2025. Unofficial estimates, however, suggest the actual figure may exceed one million. The higher remittance volume suggests increased per-capita transfers or improved earnings among Kyrgyz migrants. In 2023, remittances from Russia stood at USD 2.532 billion. Even as the migrant workforce declined sharply in 2024, total transfers from Russia rose by USD 34 million, indicating persistent reliance on income from abroad. Other countries contributed relatively little to Kyrgyzstan’s remittance inflows. Transfers from the United States edged up to USD 27.6 million in the first five months of 2025, an increase of USD 600,000 from the previous year. In contrast, remittances from South Korea and Turkey declined sharply. Transfers from South Korea fell from USD 28.2 million to just USD 1 million, while Turkey’s contribution dropped from USD 6.9 million to USD 4 million. Remittances continue to play a central role in Kyrgyzstan’s economy, historically making up more than 30 percent of GDP. Yet the country’s ongoing reliance on Russia for these financial inflows highlights its exposure to external risks such as geopolitical tensions, currency fluctuations, and changes in foreign labor market policies. Looking ahead, the NBKR expects the upward trend in remittances to persist through 2025. However, long-term sustainability may hinge on diversifying migration destinations and strengthening domestic employment opportunities.