One in three working Kazakhstanis engages in informal employment, exposing themselves to associated risks such as the lack of social guarantees, protection of labor rights, and future pension security, reports inbusiness.kz citing Energyprom.
These are the findings of the study "Features of the Labor Market and Employment in Kazakhstan," conducted by analysts from Adam Research. According to survey results, 36.4% of respondents with income reported having informal employment. This indicator is higher among men (37.6%) and slightly lower among women (34.9%).
The presented figure is referred to by the authors as the cumulative index of informality. It sums three subcategories of those engaged in the informal economy: workers without employment contracts in "grey" employment; entrepreneurs who conceal their income from the state; and underemployed individuals without formal documentation. The most significant contribution to the index of informal employment comes from workers receiving "envelope" salaries, accounting for 16.6%. This rate remains high regardless of gender. The proportion of respondents indicating they engage in shadow entrepreneurship is only slightly lower at 13.6%. However, the share of those without permanent work, relying on informal jobs without documentation, is much lower at 6.2%. A large portion of these informally employed individuals consists of youth and retirees.
The Adam Research study was conducted from June 12 to August 21, 2024, using telephone surveys based on a randomly generated sample of mobile numbers among the population of Kazakhstan aged 18 and older. The survey encompassed 17 regions and 3 cities of republican significance. The sampling error is less than 4%.
The study results highlighted regions with higher levels of informal employment. This assertion is particularly applicable to the southern part of the country — Turkestan and Almaty regions, as well as Shymkent. The share of workers within the shadow economy there exceeds 30% of the region's population. The lowest rates of informal employment are observed in East Kazakhstan (14.8%), Ulytau (19%), and Aktobe (20.4%) regions.
"Southern regions are characterized by developed agriculture, cross-border trade, and a significant share of ethnic minorities. Here, the informal economy has a 'traditional' nature, historically inherent in certain employment sectors. Economically developed regions — Astana, Almaty, Atyrau, and Pavlodar — show a level of informal economy slightly above average, despite a high overall level of employment. In these regions, choosing informal employment can be viewed as a rational strategy for generating additional income," the study notes.
As for the western regions, they exhibit some of the highest indices of shadow entrepreneurship. In the western part of the country, informal employment of this type can serve as a compensatory mechanism for individuals trying to find official work.
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The socio-demographic characteristics of respondents engaged in informal employment allowed for the construction of a profile of a Kazakhstani working in the shadow economy. They may live in either urban or rural areas, possess vocational or only secondary education, and work outside the specialty for which they were trained. The personal income of those informally employed is modest: up to 100,000 tenge. However, this aspect is ambiguous: those working in "grey" employment or relying on side jobs often report low salaries. Conversely, shadow entrepreneurs tend to have above-average incomes: 20.5% of respondents in this category earn 600,000 tenge or more.
Here’s how informally employed Kazakhstanis describe their family’s financial situation. According to the survey, 26.8% of those receiving "envelope" salaries find their income insufficient even for basic necessities. Far fewer, only 9.4%, report that such "grey" income covers their essential needs and allows for savings. Among shadow entrepreneurs, the situation is better: 19.7% of respondents in this group stated they live without denying themselves anything, and an additional 13.9% manage to save aside from their basic expenses. Among the most vulnerable group of individuals with casual jobs, there are very few financially secure citizens: just 5%.
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According to official data from the information-analytical system "Taldau" of the Bureau of National Statistics (BNS) of the Ministry of Labor and Social Protection of the Republic of Kazakhstan, last year there were 1.2 million informally employed Kazakhstanis. Of these, the majority — 682.5 thousand people — worked in the formal sector of the economy, meaning they were employed by legal enterprises but without a labor contract, based on verbal agreements. Compared to 2022, this group increased by 3.6%. A smaller portion of shadow economy workers — 473.2 thousand individuals — belonged to the informal labor sector. This group included those working for employers without a patent, license, or registration, or providing services or producing goods without paying taxes on such activities. BNS experts estimate the share of such workers at 12.8% of the total employed population.
The Minister of Labor and Social Protection of the Republic of Kazakhstan Svetlana Jakupova considers informal employment to be the second key issue in Kazakhstan's labor market, following the insufficiently active creation of jobs by businesses. During a government hour in the Mazhilis of Parliament, the head of the ministry reported significant discrepancies in official data on the wage fund and the actual amounts of pension contributions made. For example, last year the BNS reported a wage fund of 38 trillion tenge for Kazakhstanis, while pension contributions indicated that officially, Kazakhstanis received only 20 trillion tenge for their labor. A similar situation was observed in the country in 2022. The largest discrepancies were noted in the sectors of trade, agriculture, and real estate operations.
"Wages in the GDP structure (by the income method — editor's note), account for 30%, while 60% is attributed to the gross profit of businesses. This is the opposite of what is happening in OECD countries. There, the situation is such that the wages of hired workers exceed 50%, while business income accounts for 20% to 30%," the labor minister noted.
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