What is the Social Protection System Review of Kyrgyzstan?
The Social Protection System Review (SPSR) of Kyrgyzstan assesses the evolution of Kyrgyzstan’s social protection system; highlights its current and future challenges; and suggests a number of options for addressing them.
In the review, you will find:
The review is part of the EU Social Protection Systems Programme (EU-SPS), co-financed by the European Union, the OECD and the Government of Finland.
What are Kyrgyzstan's social protection needs?
Kyrgyzstan made a rapid transition to a market economy after the collapse of the USSR. Following a protracted period of political and economic upheaval, it has enjoyed a period of stability since 2010. Yet national poverty remains high (25.4% in 2016) and a large proportion of the population is vulnerable or poor (77%). About half of children live in poverty.
Social protection is at the heart of Kyrgyzstan’s development
Kyrgyzstan spends more on social protection than on any other area of public policy. However, fiscal constraints limit the coverage of social assistance and the sustainability of its pensions.
Social insurance, a legacy of the USSR, dominates the social protection system. It reaches 45.2% of families and spending on social insurance is five times higher than spending on tax-financed social assistance. Pensions, including non-contributory arrangements for military personnel, account for the majority of social insurance spending and are driving growth in total social protection expenditure (which stood at 10.7% of GDP in 2015). The pension system covers almost all seniors and 19% of people with disabilities. However, the value of benefits isn’t always a guarantee against poverty.
Social assistance predominantly targets children (41.3% of the population) or people with disabilities (0.9%). The largest programme is the Monthly Benefit for Poor Families with children (MBPF) which reaches around 5% of families. However, its restrictive selection criteria and low benefit levels, far below the extreme poverty line, limit its impact. Another important programme is the Monthly Social Benefit (MSB), which covers a range of vulnerable groups: 78.5% of beneficiaries are people with disabilities, of whom 45% are children. The MSB has increased its coverage to 1.3% of the population and its benefits are higher than MBPF benefits.
Kyrgyzstan provides social services to poor and vulnerable people. However, these are under-resourced and under-developed. Residential institutions remain the primary form of social service.
Despite improvements in labour market conditions, unemployment is high (8.5%), women are not actively participating (less than 50%) and productivity is low. Public work programmes are the largest labour market policy in terms of coverage and expenditure but even they operate at small scale. They are carried out at local level, without a national policy framework, and participants are not linked to other social protection instruments. An unemployment benefit exists but its low value and its very strict eligibility criteria lead to very low coverage: only 463 beneficiaries in 2015.
Not all social protection programmes are equally developed, leaving some groups, such as young people, labour migrants, urban poor and women, at risk of exclusion.
A social protection system under construction
The current social protection system is enshrined in the 2010 Constitution. Two social protection strategies, covering 2012-14 and 2015-17, have been published. A third strategy and a new development plan are under development.
For social protection to respond to the changing needs of the population, it will require a rebalancing between social assistance, social insurance and labour market policies. These reforms should take place within the broader objective of systematising social protection. The Ministry of Labour and Social Development (MoLSD) should drive this process. However, it should be restructured and improve its collaboration with local governments.
Did you know...?
The sustainability of the social insurance system is at risk. The number of beneficiaries is increasing much faster than the number of contributors. High levels of informality (71.8%) and migration (15% - 20% of the population) partially explain the problem. As a result, the system depends more and more on transfers from the national budget to meet its obligations. These transfers exceed tax-financed social assistance spending on all other items combined.
What can the government do?