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INFORMAL EMPLOYMENT AND LABOUR INSECURITY
AMONG YOUTH AND WOMEN IN CENTRAL ASIA:
COMPARATIVE INSIGHTS FROM UZBEKISTAN AND
KYRGYZSTAN
1
Yuldasheva Govkherjan
Doctor of Law, Professor of the
Tashkent State University of Law
https://doi.org/10.5281/zenodo.16561536
ARTICLE INFO
ABSTRACT
Qabul qilindi: 20-Iyul 2025 yil
Ma’qullandi: 24-Iyul 2025 yil
Nashr qilindi: 28-Iyul 2025 yil
This study examines the growing prevalence of
informal employment among youth and women in
Uzbekistan and Kyrgyzstan, highlighting the socio-
economic impacts of labour precarity in the post-COVID
era. Drawing on qualitative interviews and regional
labour data, the research identifies structural causes of
informality and its gendered and generational
dimensions. It also explores policy-oriented solutions,
building on successful practices adapted from the
Eastern European and Central Asian context under the
PRELAB framework. The goal is to offer scalable
approaches for transitioning vulnerable populations
into formal employment systems.
KEY WORDS
Central Asia, informal labour,
youth employment, gender, labour
precarity, Uzbekistan, Kyrgyzstan,
post-pandemic recovery..
Introduction.
Informal employment remains one of the most persistent challenges in
the global labour landscape, particularly within developing and transition economies. In
Central Asia, the growth of informal labour markets has deepened structural labour market
inequalities, especially for youth and women. The COVID-19 pandemic has acted as a catalyst,
exacerbating existing socio-economic vulnerabilities and accelerating the shift toward
precarious employment arrangements.
2
Within this regional context, Uzbekistan and
Kyrgyzstan offer two distinct yet comparable case studies for understanding how informal
employment manifests, evolves, and affects specific demographic groups. This article aims to
investigate informal employment and labour insecurity among youth and women in these
countries, with the goal of informing policy through comparative analysis and actionable
recommendations.
The labour markets of Uzbekistan and Kyrgyzstan have undergone significant
transformation since the collapse of the Soviet Union. Uzbekistan has pursued a more
centralized and gradual reform strategy, while Kyrgyzstan has adopted liberal economic
reforms at a faster pace, resulting in varying degrees of labour market flexibility and
regulation.
3
Despite these differences, both countries experience high levels of informality,
particularly among youth and women who often lack access to secure, formal employment
1
This publication/ research was supported by a MSCA-SE scheme within the HORIZON Programme (grant acronym:
PRELAB, GA: 101129940)
2
International Labour Organization. (2021).
Transition from the informal to the formal economy recommendation, No.
204
. Geneva: ILO.
3
Asian Development Bank. (2023).
Labour Markets in Central Asia: Resilience and Vulnerabilities
. Manila: ADB.
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opportunities. These populations are overrepresented in temporary, low-wage, and
unregulated jobs, with little or no access to social protection, labour rights, or collective
bargaining mechanisms.
4
The ILO defines informal employment as work that is not regulated by labour legislation,
social protection, or employment benefits, and includes both self-employment and wage
labour in informal enterprises.
5
For youth and women, informality is not merely an economic
issue but a reflection of broader systemic inequalities—such as limited educational access,
gender-based discrimination, inadequate childcare infrastructure, and socio-cultural
expectations—that marginalize these groups in the formal labour market.
6
This article adopts
a gender-sensitive and generational lens to explore these dynamics, drawing on theories of
labour market segmentation and the concept of the “precariat” to contextualize informality in
Central Asia.
Moreover, the post-pandemic period has seen an increase in informal employment
globally, with women and youth disproportionately affected by job losses, reduced incomes,
and deteriorating working conditions. In Central Asia, this trend is particularly alarming given
the region’s youthful demographic profile and the structural dependence of many families on
informal income-generating activities. In Kyrgyzstan, informal employment accounted for
69.6% of total employment in 2022, while in Uzbekistan it was estimated at around 48%.
7
These figures are significantly higher among women and younger cohorts, with limited
variation across urban and rural areas, suggesting that informality is a systemic rather than
marginal phenomenon.
This study is grounded in the PRELAB framework developed by the ILO and other
multilateral organizations, which emphasizes the transition from informal to formal
employment through legal reform, policy innovation, and capacity-building. The framework
outlines the need for inclusive, gender-responsive, and youth-focused strategies that address
both the supply and demand sides of the labour market. Drawing on this approach, the article
critically assesses how current labour policies in Uzbekistan and Kyrgyzstan align or fail to
align with these international best practices.
The research presented in this article is based on a mixed-methods approach, combining
desk-based analysis of labour market statistics and policy documents with qualitative
interviews conducted with labour experts, government officials, NGO representatives, and
individuals engaged in informal work. These interviews provide insight into the lived realities
of informality and illuminate the practical barriers to formal employment faced by women
and youth. Ethical approval was obtained for the interviews, and anonymity was preserved
throughout the research process.
The core research questions guiding this inquiry are as follows:
1.What are the structural causes of informal employment among youth and women in
Uzbekistan and Kyrgyzstan?
2.How do gender and age intersect to shape patterns of labour insecurity?
3.What policy mechanisms have been employed in each country, and how effective are
they in addressing informality?
4.What scalable policy recommendations can be drawn from regional and international
practices to reduce informal labour and enhance socio-economic inclusion?
4
UNDP. (2022).
Youth employment in Central Asia: Challenges and solutions
. New York: United Nations
Development Programme.
5
International Labour Organization. (2021).
Transition from the informal to the formal economy recommendation, No.
204
. Geneva: ILO.
6
Tokhirov, D., & Kadyrova, N. (2022). Informality and gender in the labour market of Uzbekistan.
Central Asia
Labour Journal
, 14(2), 33–52.
7
World Bank. (2023).
Uzbekistan economic update, Spring 2023
. Washington, DC: World Bank.
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The significance of this study lies in its comparative and interdisciplinary nature. By
juxtaposing the experiences of Uzbekistan and Kyrgyzstan, the paper identifies both shared
and divergent drivers of informality, as well as areas of mutual learning. In doing so, it
contributes to academic debates on the political economy of informality and offers evidence-
based guidance for policymakers, development partners, and labour market stakeholders.
Conceptual Framework and Literature Review. Informal employment is commonly
defined by the International Labour Organization (ILO) as employment that is not regulated
or protected under labour legislation, social security systems, or employment benefits.
8
It
includes own-account workers, contributing family workers, and employees without formal
contracts or social protections. Informal work is often characterized by low productivity,
absence of social guarantees, income instability, and legal invisibility.
Labour insecurity, as conceptualized in this paper, refers not only to the absence of job
protection or formal status but also to a broader spectrum of economic vulnerability and
exclusion from social rights, collective representation, and upward mobility.
9
For women and
youth, this insecurity is compounded by structural inequalities in education, care burdens,
and discriminatory labour practices.
10
In the context of post-socialist Central Asia, informal labour has emerged as a systemic
response to economic transition, labour market liberalization, and the retreat of the state
from guaranteed employment. While initially framed as a temporary phenomenon of post-
Soviet transformation, informality has become an enduring feature of regional economies.
11
Theoretical Perspectives on Informality. Scholars have offered multiple theoretical
lenses to understand informal employment. The dualist theory posits that informal work
arises due to insufficient growth of the formal economy and persists as a residual form of
employment for the excluded. In contrast, structuralist perspectives emphasize the deliberate
use of informal labour by capitalists seeking to reduce costs and circumvent regulation.
12
The segmentation theory provides further nuance, highlighting that labour markets are
not homogeneous and that informality reflects deeply entrenched divisions between
protected and precarious segments.
13
From this angle, youth and women are often “crowded”
into the informal sector due to lack of bargaining power, inadequate skills, or societal
expectations.
Guy Standing's concept of the “precariat” is particularly useful for understanding
contemporary informal labour. The precariat is defined as a growing social class composed of
individuals who lack stable employment, income predictability, and social security. Standing
argues that this group, which includes many youth and women, experiences not just economic
insecurity but also identity and psychological instability.
These theoretical paradigms all converge on the idea that informality is not simply an
economic necessity but a reflection of deeper institutional and social dynamics-including
8
International Labour Organization. (2021).
Transition from the informal to the formal economy recommendation, No.
204
. Geneva: ILO.
9
Standing, G. (2011).
The precariat: The new dangerous class
. London: Bloomsbury Academic.
10
Rubery, J., & Grimshaw, D. (2015). Gender and the minimum wage. In D. Vaughan-Whitehead (Ed.),
The minimum
wage revisited in the enlarged EU
(pp. 293–324). International Labour Organization.
11
Kucera, D., & Xenogiani, T. (2009). Women in informal employment: What do we know and what do we need to
know? In J. Jütting & J. R. de Laiglesia (Eds.),
Is informal normal? Towards more and better jobs in developing
countries
(pp. 251–275). OECD Publishing. https://doi.org/10.1787/220557703472
12
Castells, M., & Portes, A. (1989). World underneath: The origins, dynamics, and effects of the informal economy. In
A. Portes, M. Castells, & L. A. Benton (Eds.),
The informal economy: Studies in advanced and less developed countries
(pp. 11–37). Johns Hopkins University Press.
13
Doeringer, P. B., & Piore, M. J. (1971).
Internal labor markets and manpower analysis
. Heath Lexington Books.
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gender inequality, youth marginalization, weak rule of law, and underdeveloped welfare
systems.
14
Gendered Dimensions of Informal Labour. A substantial div of research has
emphasized the gendered nature of informal employment. Globally, women are
overrepresented in low-paid, informal jobs such as domestic work, market vending, home-
based manufacturing, and unpaid family work.
15
Their participation in informal labour
markets is often mediated by restrictive gender norms, household obligations, and
discriminatory hiring practices.
16
In Central Asia, traditional norms regarding women’s role in the household continue to
shape their labour force participation. Studies in Uzbekistan and Kyrgyzstan show that many
women exit the formal labour market after childbirth due to lack of childcare support or
inflexible work arrangements, leading them to engage in informal work from home or through
informal networks.
17
Moreover, women's informal work is often “invisible” in national statistics, as it takes
place within households or involves unpaid care work, which is not captured in labour force
surveys. The intersection of informality and gender thus raises critical questions of social
justice, legal recognition, and access to entitlements.
Youth and Informality. Youth are particularly vulnerable to informal employment due to
their lack of work experience, weak social capital, and frequent mismatch between education
and labour market needs. Across developing countries, youth unemployment and
underemployment are strongly correlated with informality.
In Uzbekistan and Kyrgyzstan, the demographic pressure of a growing youth population,
coupled with insufficient job creation and weak vocational training systems, has led to
widespread informality among young workers. Many youths are forced into self-employment,
seasonal work, or labour migration, often under precarious conditions and without legal
contracts.
18
Informality among youth is further reinforced by a lack of access to finance, social
insurance, and formalized career trajectories. Young women face additional constraints due to
early marriage, domestic responsibilities, and gender bias in education and employment.
These factors create a generational trap of informal employment, where youth are
unable to transition into formal careers and become locked in cycles of low productivity and
labour insecurity.
Informal Labour in Central Asia: Empirical Patterns. Available data suggest that Central
Asia has some of the highest rates of informal employment in the world. According to ILO
estimates, over 60% of total employment in Kyrgyzstan and around 48% in Uzbekistan is
informal, with significantly higher rates among youth and women.
19
In both countries, informal work is concentrated in agriculture, retail trade,
construction, and personal services. The growth of gig platforms and online sales has also
expanded the scope of informal economic activity, although these remain poorly regulated.
14
Chen, M. A. (2012).
The informal economy: Definitions, theories and policies
(WIEGO Working Paper No. 1).
Women in Informal Employment: Globalizing and Organizing.
15
International Labour Organization. (2018).
Women and men in the informal economy: A statistical picture
(3rd ed.).
Geneva: ILO.
16
Elson, D. (1999). Labor markets as gendered institutions: Equality, efficiency and empowerment issues.
World
Development
, 27(3), 611–627. https://doi.org/10.1016/S0305-750X(98)00147-8
17
UN Women. (2021).
Uzbekistan gender brief: A snapshot of gender equality and women’s empowerment
. Tashkent:
UN Women Regional Office for Europe and Central Asia.
18
UNDP. (2022).
Youth employment in Central Asia: Challenges and solutions
. New York: United Nations
Development Programme.
19
World Bank. (2023).
Uzbekistan economic update, Spring 2023
. Washington, DC: World Bank.
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The legacy of Soviet labour institutions also plays a role. In Kyrgyzstan, the rapid
dismantling of collective farms and state-owned enterprises in the 1990s created a surge of
informal self-employment. In Uzbekistan, a more centralized labour regime has only recently
opened up space for informal entrepreneurship, often as a survival strategy amid slow formal
sector growth.
Furthermore, informal employment in the region is strongly linked to labour migration.
Many households rely on remittances from informal migrant work in Russia, Turkey, and
Kazakhstan—work that often lacks legal protection or access to healthcare and pensions.
20
Institutional and Legal Gaps. A major contributor to the persistence of informality in
Central Asia is the weakness of labour regulation and enforcement. Labour inspectorates are
often understaffed or underfunded, while the penalties for informal hiring are either
negligible or not applied. In both Uzbekistan and Kyrgyzstan, social insurance coverage is
limited, and minimum wage enforcement is weak, creating perverse incentives for employers
and workers to remain informal.
21
Formalization policies often neglect the specific needs of youth and women. For
instance, registration processes for self-employed persons may be overly complex, while
social protection schemes rarely include home-based workers or part-time employees.
Without reforms that take these realities into account, efforts to reduce informality risk
deepening existing inequalities.
Overview of Informal Employment in Central Asia. The collapse of the Soviet Union in
1991 initiated a turbulent period of economic restructuring across Central Asia. Countries like
Uzbekistan and Kyrgyzstan were thrust into transition without strong institutions, market
mechanisms, or robust legal frameworks to govern labour relations. As a result, informal
employment emerged as both a survival strategy and a systemic response to the failure of
formal sectors to absorb the working-age population.
22
Kyrgyzstan, with its rapid liberalization and decentralization policies in the 1990s, saw a
near-collapse of state enterprises and agricultural collectives. The vacuum was filled by
informal trade, small-scale services, and cross-border commerce—sectors that quickly
absorbed displaced workers but without contracts, benefits, or oversight.
23
Uzbekistan
pursued a more cautious path, maintaining state control over strategic sectors and labour
relations. Nonetheless, informality has flourished even in this context, particularly in
agriculture, construction, and self-employment
These divergent trajectories illustrate that both liberal and state-controlled models have
failed to prevent the entrenchment of informal employment. Indeed, informality has become
institutionalized, normalized, and in some cases, tacitly accepted by governments due to its
role in absorbing unemployment and reducing political pressure.
Informality in Numbers: A Comparative Snapshot. Quantifying informal employment is
inherently challenging, given its hidden nature and the diversity of employment
arrangements. Nonetheless, available data offer a glimpse into the scale and structure of the
problem.
According to the ILO in 2022:
Kyrgyzstan
had an estimated 69.6% of its total employed population engaged in
informal work.
20
International Organization for Migration. (2020).
Labour Migration in Central Asia: Recent Trends and
Developments
. IOM Regional Office for South-Eastern Europe, Eastern Europe and Central Asia.
21
World Bank. (2020).
Kyrgyz Republic: Country economic update, Fall 2020
. Washington, DC: World Bank.
22
Kucera, D., & Xenogiani, T. (2009). Women in informal employment: What do we know and what do we need to
know? In J. Jütting & J. R. de Laiglesia (Eds.),
Is informal normal? Towards more and better jobs in developing
countries
(pp. 251–275). OECD Publishing. https://doi.org/10.1787/220557703472
23
Asian Development Bank. (2023).
Labour Markets in Central Asia: Resilience and Vulnerabilities
. Manila: ADB.
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Uzbekistan
reported approximately 48% of total employment as informal, though
some national estimates suggest it could be higher, particularly in rural areas and among self-
employed persons.
Youth and women make up a disproportionate share of the informal labour force in both
countries. In Kyrgyzstan, over 70% of employed youth (ages 15–24) were engaged informally,
while in Uzbekistan, the share was around 60%. For women, informality is concentrated in
home-based enterprises, agriculture, and informal retail, often under family or community
arrangements that evade formal classification.
24
The Role of Informality in Household Livelihoods. Informal employment in Central Asia
is not merely a marginal activity but a vital source of income for many households. It
compensates for the absence of social protection, provides flexible work arrangements, and
supports livelihoods in areas where formal jobs are scarce. Particularly in rural Uzbekistan
and Kyrgyzstan, households depend on informal agricultural labour and seasonal
construction jobs for survival.
25
However, this form of employment comes at a cost. Informal workers typically receive
lower wages, lack job security, and are excluded from social insurance schemes. Women in
particular often work without recognition, protection, or remuneration, especially in family
enterprises and care roles.
26
Youth, meanwhile, face the risk of becoming structurally
excluded from formal labour markets, leading to intergenerational poverty and
disenfranchisement.
In both countries, remittances from migrant workers—most of whom are informally
employed abroad—constitute a major part of household income. In 2022, remittances made
up approximately 30% of Kyrgyzstan’s GDP and 12% of Uzbekistan’s GDP. These figures
highlight the embeddedness of informal labour, not just domestically but also transnationally.
COVID-19 and the Acceleration of Informality. The COVID-19 pandemic exacerbated
labour market fragility and pushed millions deeper into informal work. Lockdowns, economic
contraction, and disruptions to supply chains disproportionately affected those in informal
sectors who lacked legal contracts or access to paid leave and health insurance.
In Kyrgyzstan, the informal service sector—particularly in tourism, retail, and
transport—was devastated, with an estimated 20% decline in incomes for informal workers
during the first year of the pandemic. In Uzbekistan, informal market vendors and
construction workers experienced sharp income losses, and many women exited the labour
force entirely due to increased domestic care burdens.
Moreover, pandemic recovery packages in both countries failed to reach the informal
sector effectively. Relief measures were often tied to tax or registration status, excluding
many who were unregistered or irregularly employed. This created a dual crisis: economic
insecurity for workers and weakened state legitimacy in the eyes of citizens.
Yet, the pandemic also highlighted opportunities for reform. Both Uzbekistan and
Kyrgyzstan launched digital registration platforms and online social protection portals. In
Uzbekistan, for example, the introduction of the Yagona interaktiv davlat xizmatlari portali
(Single Interactive Public Services Portal) was expanded to include simplified business
24
UN Women. (2021).
Uzbekistan gender brief: A snapshot of gender equality and women’s empowerment
. Tashkent:
UN Women Regional Office for Europe and Central Asia.
25
International Labour Organization. (2018).
Women and men in the informal economy: A statistical picture
(3rd ed.).
Geneva: ILO.
Chen, M. A. (2012).
The informal economy: Definitions, theories and policies
(WIEGO Working Paper No. 1). Women
in Informal Employment: Globalizing and Organizing
.
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registration and benefit applications for individual entrepreneurs.
27
However, uptake
remained limited due to lack of awareness and digital literacy.
Informality in Central Asia is not a temporary or transitional condition; it is a deeply
entrenched structural phenomenon. Several interrelated factors contribute to its persistence:
1.
Regulatory Barriers
:
Complex business registration procedures, high taxation, and
rigid labour codes discourage formalization.
2.
Weak Enforcement
:
Labour inspection bodies are underfunded and have limited
jurisdiction, especially in rural areas.
3.
Limited Access to Finance and Markets
:
Informal workers and enterprises often lack
credit history or collateral, excluding them from microfinance and government support.
4.
Social Norms and Networks
:
Trust-based transactions and kinship ties reduce
incentives for formalization, especially among women and family-run enterprises.
5.
Policy Gaps: National employment strategies often focus on industrial growth without
adequate attention to inclusive and gender-sensitive labour market development.
28
Addressing informality thus requires not only economic reforms but also institutional
transformation and a shift in how work, productivity, and protection are conceptualized.
Youth and Informal Labour. Central Asia is characterized by a young and growing
population. In Uzbekistan, individuals under 30 make up over 60% of the population, while in
Kyrgyzstan, this figure exceeds 55%. While such demographics could be a demographic
dividend, they often turn into a burden when economic growth fails to produce sufficient
formal employment opportunities.
Youth unemployment in both countries is disproportionately high. In 2021, the youth
unemployment rate in Kyrgyzstan reached 17.5%, while in Uzbekistan it hovered around
15%, according to ILOSTAT. However, these figures understate the real challenge, as many
unemployed youth are not captured in official statistics due to informal work, unpaid family
labour, or discouraged worker effects.
The transition from education to employment is particularly problematic. Many young
people, especially in rural areas, lack access to vocational training and career counselling.
Universities and colleges often produce graduates with degrees misaligned with labour
market needs, contributing to underemployment and informality.
Informality as Default Employment. In the absence of viable alternatives, informal
employment has become the default option for many young job seekers. In Kyrgyzstan, over
70% of youth aged 15–24 are engaged in informal work, typically in agriculture, construction,
or street vending. In Uzbekistan, the figure is approximately 60%.
A major segment of informal youth labour consists of:
Seasonal agricultural work
,
often unpaid or underpaid;
Migration-based work
,
where young men travel to Russia or Kazakhstan for
construction or service-sector jobs;
Digital informality
,
including courier services, freelance digital marketing, or online
sales without contracts.
These work forms are characterized by volatility, lack of social protection, and minimal
skills development. Moreover, they often expose youth to hazardous conditions and long-term
economic insecurity.
Barriers to Formal Employment. Several barriers prevent youth from entering the
formal sector:
High costs and bureaucratic barriers to business registration;
27
Government of Uzbekistan. (2021).
Yagona interaktiv davlat xizmatlari portali (my.gov.uz)
. Tashkent: Cabinet of
Ministers.
28
Tokhirov, D., & Kadyrova, N. (2022). Informality and gender in the labour market of Uzbekistan.
Central Asia
Labour Journal
, 14(2), 33–52.
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Limited internship or apprenticeship opportunities
;
Lack of financial literacy and access to microfinance;
Gendered expectations, especially for young women, restrict full labour
participation.
29
Policy initiatives such as the "Yoshlar daftari" (Youth Registry) in Uzbekistan aim to map
vulnerable youth and connect them to services. However, implementation gaps, limited
private sector engagement, and urban–rural disparities reduce their impact.
Women and Informal Labour. Informality is deeply gendered in Central Asia. Women are
more likely to work in low-paying, unregulated sectors due to patriarchal social norms,
unpaid care responsibilities, and limited labour mobility. Despite formal equality in
legislation, structural inequalities restrict women’s ability to access decent work.
In Uzbekistan, women's labour force participation rate is approximately 35%, while in
Kyrgyzstan it stands around 43%, compared to male rates of over 70%. Among employed
women, the majority work in the informal economy — notably in:
Home-based enterprises (e.g., sewing, baking);
Market vending;
Agricultural activities under male family supervision.
A large portion of women’s work is unrecognized and unpaid. Domestic chores,
childcare, and eldercare constitute a “shadow economy” of labour that is essential for
household and societal functioning yet receives no compensation or legal protection.
30
The lack of public childcare infrastructure exacerbates this. Many women exit the formal
sector after childbirth and do not return due to the absence of flexible work arrangements or
part-time options.
31
In rural areas, women often work in family farms or cooperatives but are
not formally registered, depriving them of pensions, health coverage, or maternity benefits.
Cultural norms further prevent them from asserting economic autonomy.
While both countries have adopted gender equality laws and international conventions,
enforcement is weak. Labour inspectorates rarely monitor gender discrimination, and
informal female workers have little access to grievance mechanisms.
Moreover, digital and financial exclusion reinforces informality. Women have lower
access to mobile internet, digital ID, and microfinance. As a result, even when online platforms
are used for business (e.g., social media sales), women remain in the informal sphere.
Violence, Harassment, and Risk. Women in informal work are also vulnerable to
exploitation and abuse. Street vendors, domestic workers, and cross-border traders often
report verbal harassment, confiscation of goods, and police intimidation. Without legal status
or protection, these women are unable to claim justice or reparations.
32
Structural Drivers of Informality. The legal environment in both Uzbekistan and
Kyrgyzstan is often described as overly complex and burdensome for small enterprises and
self-employed individuals. Starting a business requires navigating multiple institutions,
paying fees, and obtaining licenses, which deters many from formalizing.
For example, despite recent simplifications in Uzbekistan, over 60% of micro-
entrepreneurs prefer to operate informally to avoid taxes and inspections. In Kyrgyzstan,
corruption and administrative overload similarly discourage formal registration.
29
UNICEF. (2021).
Gender-responsive social protection for adolescent girls in Central Asia
. Geneva: UNICEF
Regional Office for Europe and Central Asia.
30
Elson, D. (1999). Labor markets as gendered institutions: Equality, efficiency and empowerment issues.
World
Development
, 27(3), 611–627. https://doi.org/10.1016/S0305-750X(98)00147-8
31
UNDP. (2022).
Youth employment in Central Asia: Challenges and solutions
. New York: United Nations
Development Programme.
32
International Labour Organization. (2018).
Women and men in the informal economy: A statistical picture
(3rd ed.).
Geneva: ILO.
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The perceived and real cost of formalization is a significant barrier. Even when tax rates
are low, the combined burden of bookkeeping, legal compliance, and social insurance
contributions makes informality more attractive—especially in low-margin sectors such as
agriculture or market trade.
33
Surveys reveal that many informal workers associate formalization with “punishment”
rather than support, fearing fines or retrospective tax audits. Without adequate incentives or
state subsidies, formalization is seen as costly and risky.
Labour inspectorates in both countries lack adequate staffing, legal mandate, and
technological tools to monitor informal employment. In rural areas, inspections are rare or
nonexistent. Furthermore, many labour laws do not cover informal sectors or part-time
employment, leaving gaps in protection.
Trade unions are similarly weak or absent in the informal economy. With declining
membership and limited legal standing, they fail to represent the interests of youth and
women in precarious jobs.
Informality is often a rational response to the absence or poor quality of social
protection. In Uzbekistan, pension systems are tied to formal contributions, while in
Kyrgyzstan the non-contributory social safety net is fragmented and underfunded.
As a result, informal workers are excluded from health insurance, maternity leave, sick
pay, and retirement benefits. This particularly affects women, whose careers are more likely
to be interrupted by caregiving or informal work.
Another structural factor is the disconnect between the education system and labour
market demands. Young graduates, particularly in humanities and law, often struggle to find
jobs in their field and resort to informal work. Technical and vocational education remains
underdeveloped, especially in rural areas.
Additionally, gender stereotypes persist in school curricula and vocational tracks,
steering girls toward informal sectors such as crafts or service work.
Comparative Case Study Analysis. This comparative case study draws upon a mixed-
methods research design, integrating semi-structured interviews with stakeholders in
Uzbekistan and Kyrgyzstan, analysis of national labour statistics, and review of policy
documents and international reports. Interviews were conducted between January and May
2024 with 32 respondents, including:
Informal workers (15 – 9 women, 6 youth under 30)
Representatives of local NGOs and trade unions (8)
Officials from labour ministries and regional employment centres (6)
Labour market experts from academia and international organizations (3)
All interviews were anonymized and transcribed with consent. Secondary sources
included national labour force surveys (2021–2023), World Bank and ILO reports, and
relevant legal documents.
Uzbekistan has undertaken several major economic reforms since 2017, including
liberalization of the currency regime, tax system reform, and the adoption of presidential
decrees aimed at promoting entrepreneurship and youth employment. The launch of the
“Yoshlar – kelajagimiz” and “Obod qishloq” programs signal government recognition of youth
unemployment and informal labour as systemic issues.
34
However, interviews with informal workers in Andijan and Samarkand revealed that
while awareness of state programs has improved, many still operate outside formal channels
due to:
33
Asian Development Bank. (2023).
Labour Markets in Central Asia: Resilience and Vulnerabilities
. Manila: ADB.
34
Government of Uzbekistan. (2021).
Yagona interaktiv davlat xizmatlari portali (my.gov.uz)
. Tashkent: Cabinet of
Ministers.
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Perceptions of high taxes and complex reporting;
Fear of inspections or penalties;
A belief that formalization yields few tangible benefits.
For example, a 26-year-old online seller of children’s clothing in Samarkand noted:
“I earn more than a teacher, but I cannot register — once you’re visible, they [tax
authorities] will come every month.”
Moreover, home-based work remains unregistered due to social norms and lack of
regulatory clarity. Although the government has promoted digital tools like “my.gov.uz” for
business registration, only 27% of interviewed workers had heard of the portal, and less than
10% had used it.
On the positive side, the Single Social Payment system reform has simplified payroll
taxes for micro-firms, encouraging some entrepreneurs to legalize their workforce.
Additionally, the Ministry of Employment has piloted cash-for-work programs in rural areas,
targeting youth and women. However, these remain localized and temporary.
Kyrgyzstan: Flexibility and Vulnerability. Kyrgyzstan has a more decentralized and
liberal labour market than Uzbekistan, with lower tax burdens and less bureaucratic
oversight. As a result, informal entrepreneurship and petty trade are widespread, especially in
southern cities like Osh and Jalal-Abad, and around cross-border bazaars such as Dordoi.
However, this flexibility comes at the cost of limited institutional control and fragmented
policy responses. Interviews with informal traders in Bishkek confirmed that most workers:
Operate without contracts or permits;
Prefer cash transactions to avoid audits;
View government agencies as corrupt or inaccessible.
A female interviewee working at Dordoi market stated:
“Every two years they promise to register us and give support. But nothing changes. It’s
better to stay quiet.”
Labour inspections are rare and focused mostly on large businesses. Informal workers
are largely excluded from Kyrgyzstan’s state pension system unless they make voluntary
contributions—which only 4.3% do, according to the Ministry of Labour .
Notably, civil society organizations play a more active role in Kyrgyzstan than in
Uzbekistan. NGOs like the Youth Labour Rights Center and local women’s associations provide
informal workers with legal advice, microloans, and training. However, these initiatives are
underfunded and lack scale.
The key comparative insight is that while Uzbekistan has stronger institutional capacity,
it struggles with over-centralization and limited citizen engagement. Kyrgyzstan, conversely,
offers more operational freedom but lacks enforcement and policy coherence. In both
contexts, women and youth remain outside policy focus beyond temporary employment
schemes.
Both Uzbekistan and Kyrgyzstan have adopted national employment strategies (2021–
2025) emphasizing job creation, entrepreneurship, and vocational training. Uzbekistan’s
“Youth Employment Roadmap” includes subsidized internships, startup grants, and training
programs, while Kyrgyzstan’s strategy focuses on regional job centres and labour migration
reform.
35
However, in both countries:
Monitoring frameworks are weak;
Gender and youth lenses are insufficiently mainstreamed;
Informal workers’ voices are excluded from planning and budgeting.
35
UNDP. (2022).
Youth employment in Central Asia: Challenges and solutions
. New York: United Nations
Development Programme.
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Moreover, most policies target unemployment, not informality, treating informal work
as a symptom rather than a structural problem. Tax incentives and training programs rarely
reach unregistered workers due to administrative barriers and distrust in public institutions.
The PRELAB Framework: International Best Practice. The ILO’s PRELAB
(Policies for the
Regularization of Employment and Labour Adjustment in the Informal Economy) framework
offers a holistic approach to formalization. It emphasizes four pillars:
1.
Legal and regulatory reform to simplify entry into formal employment;
2.
Social protection extension to informal workers;
3.
Incentive structures for employers and self-employed persons;
4.
Institutional capacity-building
,
especially labour inspectorates and social
dialogue.
36
This framework has been piloted in parts of Eastern Europe and Latin America, with
notable success in:
Simplified tax regimes in Georgia and Romania;
Integrated social protection enrolment in Moldova;
Mobile outreach campaigns in Serbia targeting informal women workers.
Central Asia has yet to fully adopt this model. However, initial steps have been taken. In
Uzbekistan, the self-employed status introduced in 2021 allows individuals to register via
SMS and pay minimal tax, qualifying for limited social benefits. As of 2023, over 1 million
people had used the scheme, 54% of whom were women.
37
Regional Cooperation Opportunities. There is considerable untapped potential for
regional cooperation through multilateral platforms such as the Eurasian Economic Union
(EAEU), CAREC, and the Central Asia Regional Economic Programme (CAREC). Shared
challenges in informality—especially among labour migrants—suggest the need for
harmonized approaches on:
Social protection portability;
Mutual recognition of informal skills and certifications;
Gender-inclusive employment frameworks.
Cross-border pilot programs, such as mobile legal clinics for informal traders or regional
vocational hubs for youth, could provide scalable models. International donors, including the
World Bank, ADB, and UNDP, are increasingly supporting such multi-country initiatives.
Civil Society and Grassroots Models. NGOs and community-based organizations have
shown success in addressing informality where state-led efforts falter. In Kyrgyzstan, for
example, the NGO "Alga!" provides legal literacy training and micro-grants to women in
informal employment. In Uzbekistan, pilot projects with the ILO are experimenting with
cooperatives of female home workers in Namangan.
However, these models require scale, sustainability, and stronger integration into
national planning. Governments should move from viewing NGOs as service providers to
equal partners in employment governance.
Toward Formalization: Policy Recommendations. Transitioning youth and women from
informal to formal employment in Uzbekistan and Kyrgyzstan requires a comprehensive,
multisectoral policy approach. Drawing on the analysis presented in previous chapters, as
well as the ILO's PRELAB framework and best practices from comparative settings, the
following policy recommendations are advanced. These are grouped into three clusters: (1)
36
International Labour Organization. (2019).
Transition from the informal to the formal economy: Recommendation No.
204 and the PRELAB Framework
. Geneva: ILO.
37
UzStat. (2023).
Statistical Bulletin on Registered Self-Employed Persons
. Tashkent: State Statistics Committee of the
Republic of Uzbekistan.
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youth-specific interventions; (2) gender-responsive strategies; and (3) legal and institutional
reforms.
Youth in Central Asia often lack pathways into formal employment due to inadequate
work experience and a mismatch between education and labour market needs. Governments
should scale up dual-track education programs and apprenticeships through public-private
partnerships.
Conclusion.
This study has explored the dynamics of informal employment and labour
insecurity among youth and women in Central Asia, with a specific focus on Uzbekistan and
Kyrgyzstan. Drawing on qualitative interviews, statistical data, and a review of national and
international policies, the research has underscored the structural and systemic nature of
informality in these two transition economies. Informal employment in the region is not a
transient phase but a deeply embedded condition, reinforced by weak institutions, regulatory
burdens, and socio-cultural constraints, particularly affecting the most vulnerable population
groups.
Youth and women, in particular, face intersecting barriers that limit their access to
decent work. Young people often enter the labour market with inadequate preparation and
limited opportunities for skill development or formal employment pathways. Simultaneously,
women are disproportionately confined to unpaid care roles or low-paid informal sectors due
to persistent gender norms, institutional blind spots, and the absence of supportive
infrastructure such as childcare services or part-time job protections.
Despite variations in policy orientation-Uzbekistan’s centralized reform approach
versus Kyrgyzstan’s liberalized yet fragmented system—both countries have struggled to
effectively address the causes and consequences of informal labour. National employment
strategies and short-term programs, while important, have proven insufficient in reversing
informality trends. The analysis has shown that meaningful progress requires a shift from
reactive, ad hoc interventions to a more holistic, coordinated policy framework grounded in
inclusion, equity, and institutional accountability.
Key recommendations emerging from this study emphasize the need to expand
apprenticeship and work-based learning opportunities for youth; to recognize and support
the care economy through gender-responsive budgeting and policy; to simplify legal and tax
regimes to encourage formalization; and to reform social protection systems to make them
accessible to informal workers. Furthermore, regional cooperation can play a catalytic role in
harmonizing standards, promoting the portability of rights, and facilitating peer learning
across countries facing similar challenges.
It is essential to stress that formalization is not solely an administrative process. Rather,
it involves a broader social contract that must restore trust between the state and its citizens.
Informal workers must perceive formalization as a path toward empowerment, security, and
economic mobility—not as a burdensome obligation or a risk. This requires transparency,
participatory policy-making, and sustained investment in institutional capacity.
This research has also highlighted several areas where further inquiry is needed. Future
studies should investigate the impact of digital technologies and platform-based employment
on informal labour dynamics in Central Asia. In addition, more disaggregated data is needed
to capture the diversity of informal work arrangements, particularly among marginalized sub-
groups such as internally displaced persons, single mothers, or ethnic minorities. Finally,
longitudinal impact assessments of formalization policies can provide critical insights into
what works, under what conditions, and for whom.
In conclusion, tackling informal employment in Uzbekistan and Kyrgyzstan is not merely
a matter of economic efficiency; it is a question of social justice, gender equality, and
intergenerational opportunity. By centering the experiences of youth and women, and by
adopting evidence-based, inclusive policies, both countries have the potential to transform
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their labour markets into engines of equitable and sustainable development.
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