Expansion of the middle
class in Uzbekistan.
MEANS Of Social
MOBILITY
Today in Uzbekistan, the middle class forms about 28–30% of the population.
For the social and economic development of the country, by 2030 this proportion
needs to double. Currently about 45–48% of the population can be considered
a “middle-class reserve” – people who under certain conditions could become
part of the middle class. To facilitate their transition into the middle stratum of
society, institutions providing the means for social mobility are needed.
Social mobility and social lifts
Uzbekistan
The up or down movement of
people in a social hierarchy takes
place through channels of social
mobility, so-called social lifts
The concept of “middle class” is closely linked to social mobility – the movement of people up (or down) in the social hierarchy. Such movement takes
place through social mobility channels, so-called social lifts – institutions
that provide opportunities for people to improve their social status. Such
institutions include education systems, political organizations, civil service,
the labour market and entrepreneurship, service in the armed forces, professional sports and show business, and informal social networks.
Individuals with certain characteristics generally choose social lifts that
provide them the necessary resources and opportunities to improve their
status in society. Each kind of social lift has both advantages and limitations
for being used in policies aimed at expanding the middle class. The main
advantages of social lifts are the fact that they are broadly within reach of
target groups, they enable speedy upward moves, and they are accessible
with regard to needed financial capital.
But there are also major limitations. No means of social mobility can guarantee higher status for all members of society. Any social lift expects individu-
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Expansion of the middle class in Uzbekistan. Means of Social Mobility
Table 1. Self-assessment of the material and social status of respondents 2004–2010, in percentage of the sample
Improved
Not changed
Worsened
Total
39,8
48,3
12,0
Men
41,2
47,4
11,4
Women
38,7
48,9
12,4
Cities
43,6
44,8
11,5
Urban settlements
40,9
46,3
12,8
Villages
37,9
50,1
12,0
Age 18-25 years
41,1
50,8
8,1
Age 26-35 years
40,7
47,7
11,7
Age 36-50 years
40,9
46,1
13,0
Age 51-59 years
31,4
52,7
15,9
Basic middle-school education (grades 7–8) or lower
28,7
52,8
18,5
General high-school education (grades 10–11)
31,3
55,6
13,1
Vocational education
43,7
44,6
11,7
Higher education
61,3
30,4
8,3
Total
27,5
65,6
6,9
Men
29,5
63,1
7,4
Women
26,0
67,6
6,5
Cities
32,9
60,1
7,0
Urban settlements
28,7
62,8
8,5
Villages
24,9
68,6
6,5
Age 18-25 years
34,0
62,1
3,9
Age 26-35 years
26,8
66,3
6,9
Age 36-50 years
26,4
66,2
7,3
Age 51-59 years
21,9
68,0
10,2
Basic middle-school education (grades 7-8) or lower
18,5
71,3
10,3
General high-school education (grades 10-11)
17,7
75,4
6,9
Vocational education
31,5
61,1
7,4
Higher education
50,3
44,5
5,2
ECONOMIC CONDITION(S)/INCOMES
SOCIAL POSITION (STATUS)
Source: Household Survey, 2009
In developed countries, the
middle class forms about 60% of
the population; to achieve this
level Uzbekistan must double the
size of its middle class
als to exert themselves and compete in order to rise up the social ladder.
And in transitional societies, it is possible that institutions providing social
lifts perform inadequately or not at all.
Cultivating a middle class is a complex developmental issue. It can be unclear what immediate efforts a state should undertake. The study “Household Assets Mobilization–2010” showed that about 28% of the population
in Uzbekistan can be considered part of the middle class, but this figure did
not include all the criteria needed for attributing a population to the middle
stratum. In addition to income and property, levels of education, consumer
behaviour and other indices must also be taken into account.
The so-called middle-class reserve constitutes the largest proportion of the
population (45–48%) in Uzbekistan. These are people who under certain
conditions could either become part of the middle class or drop into the
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Expansion of the middle class in Uzbekistan. Means of Social Mobility
The middle class is particularly
significant as a generator of demand for products of processing
industries
group of the poor. In developed countries, the proportion of population in
the middle stratum is about 60%. To achieve this percentage in Uzbekistan,
the number of persons in the middle class must double.
A key factor preventing households from entering the middle class is low
financial status and lack of property; this in turn is related to levels of income and consumption. A system of social mobility in Uzbekistan needs to
provide opportunities for improving the social status of those parts of the
population forming the middle-class reserve, as well as the needy and the
poor.
The importance of the middle class in the context of development
The importance of a growing middle class in socio-political and socio-economic processes can be summarised in a few points. From the socio-political standpoint, the middle class, by generating demand for new, quality
institutions in various public spheres and in social life, becomes a catalyst
for change. From an economic point of view, the middle class generates demand for goods and services. As incomes rise, this demand becomes more
sophisticated and differentiated, which stimulates innovation. Moreover,
members of the middle class support values such as good education, hard
and honest work, saving for future investments and other things critical for
the sustainable development of the economy, the society and the state in
general.
With regard to the economic transformations underway in Uzbekistan, the
middle class is particularly important for generating demand for manufactured products, especially consumer goods. While the average national expenditure on food is relatively high (43–49% of earnings), the middle class
spends only about 34% of its income on food. A significant proportion of
the middle class income is used for non-food items, as for example, purchasing real estate (housing or land), improving living conditions (housing
construction and renovation), or buying non-food goods such as cars, appliances, furniture and other items.
However, only about 40% of total household consumption is accounted for
Fig. 1. Structure of household consumption, in percentage
Source: Calculated based on «Household Assets Mobilization – 2010» survey
Fig. 2. The aggregate demand structure by 2030, in percentage
of GDP
Source: Calculated based on data from World Development Indicators
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Expansion of the middle class in Uzbekistan. Means of Social Mobility
by the middle class; more than 50% of consumption falls to the middleclass reserve, low-income populations and the poor. A much larger share
of these populations’ expenditures goes to foodstuffs. They spend less on
non-food goods and non-consumer services.
By 2030 the per capita income
of the middle class is expected to
grow at least threefold, to about
US$5,500 per year
If economic growth continues at 8% per year, by 2030 the share of households generating total demand will decline slightly – up to 50% of the GDP.
With the gradual expansion of the middle class to 60% of the population, its
share in households’ actual consumption could reach about 65% by 2030.
From 2015 to 2030 this will represent a total of approximately US$585 billion. Thus, per capita income in the middle class will have to increase by
more than three times, to about US$5,500 per year.
Such shifts in social structures and, consequently, in consumer demand
can provide a significant impetus for development in domestic processing industries. From 2015 to 2030 the demand for light industry products
(clothes, shoes and various household appliances) has been estimated at a
total of about US$61 billion. In turn this will generate a multiplier effect in
other sectors. In monetary terms this will represent US$68 billion.
Although these calculations are approximate, they illustrate the role that a
growing middle class can play in the process of economic, social and political transformation in Uzbekistan. Shifting the focus from fighting poverty
to expanding the middle class in the broadest sense means changing socioeconomic policies.
The middle-class reserve
The middle class can be expanded by reaching out to members of the socalled middle-class reserve and enabling them to move to higher levels on
the social ladder. For this, it is important to describe the current status of the
middle-class reserve.
Growth in revenue does not fully
guarantee the development of
middle class, but it does create
the necessary economic basis
Approximately 65–70% of the middle-class reserve is between 26 and 50
years old, that is, an age group that is active and working. However, according to estimates from 2009–2010, the average per capita income of the middle-class reserve was about three times lower than that of the middle class.
About 70% of the members of the middle-class reserve live in villages or
small towns, where opportunities for employment in non-agricultural fields
are limited (in comparison to large or medium-sized cities).
A majority (57%) of the reserve has a basic middle-school education (grades
7–8) or a general high-school education (grades 10–11). Only about 33%
have formal vocational training, which has a negative impact on employment prospects.
Many people who form the middle-class reserve are workers with low qualifications who are employed in industries such as agriculture, construction,
trade and services, or work in unregistered businesses.
The population of Uzbekistan has quite low geographic mobility – only a
small portion of the population relocates in their lifetime. Although members of the middle-class reserve and the poor are sometimes mobile when
searching for work (whether domestically or abroad), they usually do not
change residence for reasons of employment. Moving one’s domicile requires investments that many people simply cannot afford, or do not want
to make. They may have inadequate savings or low incomes, or live in housing that is inexpensive. As a result, the majority of people in the middle-class
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Expansion of the middle class in Uzbekistan. Means of Social Mobility
Fig. 3. Change in the society’s social structure, in millions of
people
Source: Based on data from the Ministry of Economy and the survey
«Household Assets Mobilization – 2010»
Fig. 5. Actual final household consumption in groups of higher
and middle classes, in billions of US dollars
Fig. 4. Actual final household consumption, in billions of US
dollars (based on expanding the middle class to 60% of the
population)
Source: based on data from World Development Indicators and the «Household
Assets Mobilization - 2010» survey
Fig. 6. Multiplier effects of middle class consumer spending
for individual industries and the overall economy, in billions of
US dollars*
Source: based on data from World Development Indicators and the
«Household Assets Mobilization - 2010» survey
A majority of members of the
middle-class reserve are still tied
to their original place of residence
and social environment, as well
as their current employment opportunities
*Cumulative total for the period of 2015-2030
Source: CER calculations
reserve, as well as the needy and the poor, are tied to their original place of
residence and social environment, as well as to their current employment
possibilities.
Main directions for expanding the middle class
A strategic goal is to increase the proportion of the population’s middle class to 60%
by 2030. This means that the middle class will increase by approximately 14 million
people. Most of this increase will be people moving from the middle-class reserve to
the middle class proper. In turn, members of the so-called lower (low-income) class will
also rise up the social ladder, becoming part of the reserve and thereby one step closer
to entering the middle class.
A key challenge in the medium term will be to increase incomes, especially the incomes
of those who are part of the middle-class reserve. To do this, structural economic reforms must continue. A business environment needs to be created that is favourable
to private sector development. This will lead to increases in the number of jobs and in
income levels needed for maintaining middle class living standards.
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Expansion of the middle class in Uzbekistan. Means of Social Mobility
Income growth and higher economic status are part of the necessary economic framework for expanding the middle class, but this does not fully address the issue. Among
other parameters, the middle stratum of society is characterised by education levels,
professional standing, consumer culture and life style.
Efforts to promote entrepreneurship and the labour market as the main means of facilitating income growth should be supplemented by developing the education system
and increasing opportunities for geographic mobility.
1. Increasing education levels and professional qualifications
The most important long-term task for expanding Uzbekistan’s middle class is to improve the professional qualifications of members of the middle-class reserve and the
needy. The current middle class has a much higher proportion of people with vocational or higher education and thus with professional qualifications. Such people are
more likely to find well-paid and long-term jobs.
Lifelong behaviours are shaped by people’s qualifications, the industry in which they
work and their position and salary, and the environment (professional as well as social)
in which they live.
Lifelong behaviours are shaped by
the individual, but they are also
influenced by the environment
in which the individual lives and
works, including his or her job
and position
To stimulate processes of upward mobility, it is critical to create possibilities for training
or re-training young people and adults that are separate from compulsory education.
Involving the middle-class reserve in the education social lift will require some effort,
since members of this part of the population often do not see the advantages of additional education or are unable to get it.
By 2030, at least 6 million more people will need professional education, including
about 4.5 million people who are now already of working age and have only a high
school education. About 3 million people of working age will have to obtain higher education (or equivalent levels of knowledge and skills outside universities). Reforms to
the education system should be made so that lifelong vocational and higher education
is possible. Particular attention should be given to adults, creating training opportunities or re-training for new jobs.
Vocational and higher education through intensive courses and evening classes must
be developed to make it more accessible to a wider range of people. It should be
noted, however, that such education will be sought mainly by people who already have
a profession and some work experience, since they often better understand the benefits of additional education.
The system of state standards in the education sector, including professional and
higher education, should be more flexible. Standards must ensure that specialists are
trained with knowledge and skill sets that are specifically needed by the economy today, or will be needed in the future. So that these standards do not need to be reviewed
every three to five years, it is necessary to: (1) change the contents and set standards
so that these can be self-administered by schools; (2) develop alternative forms of
education, including in non-public institutions, in order to reach more people who want
to upgrade skills or learn new ones.
It seems advisable to organize training in professional colleges in disciplines that
are currently offered only at universities. While restraining the demand for university
education, this would nevertheless increase the number of specialists with expertise
relevant to the labour market. According to entrepreneurs, there is a shortage of specialists with higher education and a surplus of labourers with vocational education. In
the private sector, relevant knowledge and skills are more highly valued by employers
than diplomas.
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Expansion of the middle class in Uzbekistan. Means of Social Mobility
Fig. 7. Age structure of the middle-class reserve,
in percentage
Source: based on data from World Development
Indicators and the «Household Assets
Mobilization - 2010» survey
Fig. 8. Changes in the age structure of the population of Uzbekistan by 2050
Source: based on data from the World Population prospects, UNDESA
2. Increasing employment and higher incomes
The education system should
provide access to vocational and
higher education for both young
people and adults
Currently, members of the middle-class reserve lack, above all, stable and
substantial incomes. If their incomes were better, this would increase consumption, raise living standards and change the social status of these people. Productive employment can be approached in two ways – either “jobs
coming to the labour force” or “the labour force going to the jobs”.
In Uzbekistan, “jobs coming to the labour force” primarily involves development in the country’s different regions, with the creation of jobs in nonagricultural sectors in rural areas. While increasing agricultural products for
export markets is a promising step, expanding manufacturing and service
industries is also important.
However, small manufacturing plants – due to various major barriers such as
difficulties accessing foreign markets or introducing innovations, high business risks, etc. – are often unable to offer better employment opportunities
on their own. It is necessary for large and medium-sized enterprises to build
production chains involving small businesses, assisting them in financing,
marketing, logistics, innovation and other matters.
In turn, developing consumer services increases the population’s financial
resources and changes consumer habits. Developing services involves the
diversification of industrial and agricultural output, with more specializa-
Fig. 9. Level of education of the middle class and middle-class reserve, in percentage
Source: based on data from World Development Indicators and the «Household Assets Mobilization - 2010» s urvey
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Expansion of the middle class in Uzbekistan. Means of Social Mobility
tion and division of labour.
This will involve: (1) reallocating resources to ensure adequate financing
of projects that create new industries; (2) substantial infrastructure investments, including electricity, gas and water supplies, and transport and
communications. In the development of the various regions, infrastructure
should be built up to levels meeting the current needs of industrial enterprises, but there should also be clear long-term plans.
In the private sector, relevant
knowledge and skills are more
highly valued by employers than
diplomas.
The approach “labour force going to the jobs” involves concentrating jobs in
particular places and creating conditions that allow more geographic mobility of the population, especially people of working age and their families.
This will require:
•• developing urban areas, including new industrial plants and service
businesses;
•• developing existing infrastructure (both for goods and people) in large
and medium-sized cities, which should be seen as “points of growth”;
•• developing the housing market, especially leasing possibilities, simplified procedures for temporary and permanent residence registration,
and ensuring employment and access to health services and education,
also for family members;
•• developing transport communications, particularly in metropolitan areas, to provide cheap, fast and convenient transportation from workers’
domiciles to their place of work.
The flow of population from rural
to urban areas does not only
involve a change of residence, but
also social and economic transformation
In general, the labour force should move from agriculture, construction and
self-employment to “new” industries and service sectors. Shifting how economic growth is supported will contribute to this. Emphasis should shift
from supporting certain industries to the development of regions, including cities and urban areas.
3. Settlement patterns
Increases in the proportion of the population living in urban areas is an inevitable result of economic development. In turn, population concentration
in urban areas drives economic growth.
Economic growth in Uzbekistan, as in many other developing countries, is
accompanied by the movement of population from rural to urban areas.
The magnitude of such movement is based on many factors.
Important to note is that such movement not only involves a change of
residence, but also economic, social and political transformation. Changing residence forms a social lift for certain parts of the population: it has a
decisive influence on how and where they earn their incomes, their level of
education and skills, their life style, and their values and political beliefs.
Increasing the middle class by nearly 14 million people by 2030 is a very
ambitious goal. At least 5 million villagers and 2 million urban community
residents (given the current trends of middle class resettlement) will become beneficiaries of development programmes allowing them to become
strong members of the middle class. Such programmes aim at expanding
productive employment, making living conditions in the countryside and in
cities more similar, and promoting the migration of villagers to urban areas
and residents of small towns to larger cities.
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Expansion of the middle class in Uzbekistan. Means of Social Mobility
Fig. 10. Place of residence of middle class and middle-class reserve, in percentage
Source: based on data from World Development Indicators and the «Household Assets Mobilization - 2010» survey
This will not only require large-scale investments to create conditions for
economic development in towns and villages. It will also mean building
new spatial frameworks, including networks of transport communications
(including integration with the economies of neighbouring countries and
access to world markets) and new schemes for deploying productive forces
in administrative, managerial and economic centres.
Center for Economic Research
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