International Journal of Management and Economics Fundamental
101
https://theusajournals.com/index.php/ijmef
VOLUME
Vol.05 Issue 03 2025
PAGE NO.
101-109
10.37547/ijmef/Volume05Issue03-15
Increasing the role of Uzbekistan in the international
labor market, focusing on European countries, not Asian
countries
Karimova Munisa Komil qizi
Tashkent University of Economics Faculty of Foreign Economic Activity, group TIF-15, Uzbekistan
Received:
29 January 2025;
Accepted:
28 February 2025;
Published:
31 March 2025
Abstract:
This research compare the disadvantages and opportunities facing Uzbekistan in its efforts to improve
its position in the international labor market. It analyzes the current situation of
state of Uzbekistan’s workforce,
identifies key areas for improvemеnt, and explores strategies for еnhancing competi
tiveness and promoting labor
mobility. The article considers factors such as, minimum wage, unemployment, labor market policies, and the
attraction of foreign investment, offering recommendations for strengthening Uzbekistan's role in the global
economy.
Our study specifically used time series models, namely OLS and VAR models. Through these studies, we can know
exactly which areas are failing and which areas we can focus on to achieve the desired results. However, it also
shows how low the effectiveness of the actions we are currently taking is.
Keywords:
Labor market, migration, employability, workforce, labor migration.
Introduction:
A substantial portion of Uzbekistan's
population is young and of working age. This presents
both a challenge (providing adequate employment)
and an opportunity (developing a skilled workforce).
There's a notable mismatch between the skills
possessed by the labor force and the needs of the
modern global job market. Many workers lack the
necessary technical and soft skills (e.g., language
proficiency, digital literacy). A significant portion of the
workforce is engaged in the informal sector, which
presents challenges for labor rights and tracking labor
market trends. Underemployment and job insecurity
are problems. Many workers may be employed, but not
to their full potential or in secure positions. Uzbekistan
has a history of labor migration, with many workers
seeking employment in Russia and other countries.
Remittances are a significant source of income for
many families. The international labor market is highly
competitive. Workers from Uzbekistan need to
demonstrate competitiveness compared to workers
from other countries. The global economy requires
workers with advanced skills in technology,
communication, problem-solving, and adaptability.
However,
Uzbekistan's
participation
in
the
international labor market is very low. Migration flows
from foreign countries are high only to a few Asian
countries, while the number of labor migration flows to
European countries is very low. Uzbekistan's overall
low participation suggests a lack of connection with the
global labor market. This could be due to limited
awareness of opportunities, language barriers, and
insufficient skills. Most Uzbek workers who are active
in the international labor market often occupy low-
skilled, low-paying jobs. This limits their potential
earnings, skill development, and overall contribution to
Uzbekistan's economy. Many migration flows are
informal, leading to reduced protection for Uzbek
workers abroad and fewer remittances benefiting the
formal economy. [ 2].
The main goal of the study is to increase the role of
Uzbekistan in the labor market and thereby increase
the share of benefits from it in Uzbekistan. The main
questions asked in this regard are:
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• What is the current skill set of Uzbek workers, and
how does it align with international labor market
demands? This probes into the skills mismatch and
identifies areas needing improvement.
• To what extent are current government policies and
labor market regulations enabling or hindering
Uzbekistan's competitiveness in the international labor
market? This explores policy effectiveness and needed
reforms.
• What are the current migration patterns for Uzbek
workers, and what are the economic and social
outcomes of those patterns, both for Uzbekistan and
for workers themselves? This looks at current trends
and their implications.
•
What are the specific barriers preventing Uzbek
workers from accessing higher-paying, higher-skilled
jobs in European and other developed economies? This
focuses on specific challenges in particular regions.[3].
The significance of the research explains why this
analysis is importantand highlighting its potential
impact and how it contributes to foreign exchange. But
currently, the work being done to increase the role of
the labor market in Uzbekistan is ineffective. The
number of unemployed is increasing, but there are few
qualified workers. The majority of the population goes
to neighboring countries only for illegal work. The main
key research questions include:
1.
What obstacles to increasing Uzbekistan's role
in the international labor market?
2.
How can Uzbekistan's role in the international
labor market be improved in the short term?
3.What are the useful and effective strategies to
increase the inflow of labor from Uzbekistan in
European countries, especially in developed countries?
This research has important positive implications for
the future of Uzbekistan, not only for the increase in
international cooperation, but also for the economy of
Uzbekistan, which is expected to have a significant
positive impact. Emphasize the interconnectedness of
these benefits. Success in the international labor
market will create ripple effects throughout the Uzbek
economy and society.
• Highlight the long
-term, strategic importance of your
research. Your article is not just addressing a current
challenge; it's helping lay the groundwork for a
stronger, more prosperous future for Uzbekistan.
• Reiterate that your study will provide actionable,
evidence-based recommendations that will contribute
to achieving these positive outcomes.
Literature Review
Such research has been the main focus of developed
countries, especially when they are just entering the
labor market. In such studies, researchers focused on
the number of unemployed people and the average or
minimum wage of the population in the country.
Research aims to identify shortcomings and
recommend perfect solutions in a short period of time.
Solving such problems has been shown to have positive
effects on economic growth.
For example, B.Wilges (2022) emphasizes that the main
area of focus in entering the international labor market
is to further support the improvement of the
knowledge and skills of the population under the age of
40 and ensure their departure to work abroad. The
main problem faced is the lack of practical skills among
the population under the age of 40. The main focus of
his article is on this problem and as a solution he
emphasizes the need to increase the number of
educational institutions that teach courses in
professions that are in international demand. [4].
Similarly, Marjolijn, (2019) purpose that employment
of young adults with chronic physical conditions
entering the labor market after finishing post-
secondary education remains behind compared to
typically developing peers. The aim of this study is to
evaluate changes in their paid employment levels after
following a vocational rehabilitation intervention that
countries
that
focus
on
diversification
into
manufacturing and high value-added sectors tend to
achieve more sustainable economic growth and as a
solution, he insisted on attracting workers to foreign
countries by further increasing their salaries. As a
result, the number of people willing to go abroad is
expected to increase by at least 40 percent. [5].
And another researchers M.Miskelova , P. Adamec
(2022) point out that the main problems in entering the
international labor market are the average salary and
the age range of the unemployed over 40. As a solution
to this, he specifically emphasizes increasing the
population. He explains that when the number of
young people increases, it will be possible to supply a
workforce that can meet foreign demands. And he cites
evidence in his article that the number of qualified
employees is expected to increase in the coming years
as a result of the increase in the population. [6].
Rainer Diaz-Bone(2019) emphasizes that focus is on
the situation of graduates one year after graduation
and interesting them to the internationak market. For
many academic disciplines no clearly defined labor
market does exist. The concept of labor market is a
metaphor, which is used by economists to study
employment and wages. Like any notion of “market” it
presupposes some shared common knowledge about
abilities and skills of academics and common
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knowledge about existing job opportunities in labor
market. The article concludes that it is much easier to
arouse interest in the labor market among young
graduates, and through this they will have the
opportunity to gain foreign experience and a high
salary, and even continue their studies abroad, and
such opportunities do not go unnoticed by young
people. In the coming years, their percentage is
expected to increase by 20 percent. [7].
Khahan Na-NanIn (2013) emphasizes that in Thailand,
increasing the percentage of teenagers sent abroad to
work is a solution that can be solved by increasing their
job satisfaction. When their job satisfaction is high,
other young people will also be interested in working
abroad and improving their skills. As a result of this
study, the number of young people who want to work
abroad is expected to increase by three times [8].
Another researcher Christopher J (2006) explains that a
minimum wage in a country has been shown to
increase the desire of the younger generation to work
and improve their skills abroad. Researcher analyze the
effect of changes in minimum wages on labor market
outcomes and welfare. Although minimum wage rises
may or may not lead to increases in unemployment in
our model, they can be welfare-improving to labor
market participants on both the supply and demand
sides of the labor market [9].
Researchers who have done research in this field have
brought about quite positive changes. But there are
some points that have been overlooked in their
research. Their work has been found to be excellent in
the fields of European countries, but in Asian countries,
unlike that, the solutions in it may not show enough
positive results. And one more thing to note is that we
can see that their research lacks some empirical
studies.
It should be noted that Uzbekistan is currently among
the developing countries. It is necessary to learn to
develop its lagging sectors. The main research topic in
this article is one of such controversial situations,
namely, increasing the number of young people in
Uzbekistan going abroad to work, increasing their
interest not only in neighboring countries, but also in
developed countries such as Japan, America, and the
Philippines. Many studies have been conducted in this
field in Uzbekistan, but they have not conducted
empirical research in their work, and the main reason
for this is the lack of accurate quantitative data.
METHODOLOGY
Theoretical framework
The Neoclassical Labor Economics model, which is
considered one of the statistical models, has an
advantage over other models in that it has a logical
foundation for numerical modeling. Another advantage
is that it relies on logic in decision-making. The
neoclassical labor market began to develop at the end
of the 19th century. It is considered to have improved
upon previous classical economic theories by adopting
new approaches. Neoclassical labor economics
originated from economists such as Adam Smith, John
Stuart Mill, and David Ricardo. In 1960, Gary Backer
used it in his theory called Human Capital. He used the
neoclassical labor economics model to analyze the rent
of labor based on education and skills [10].
Another great economist, Jacob Mincer, in his article
Investment in human capital, describes the income
during work using the neoclassical labor economics
model. Jacob Mincer, who widely used the theory of
neoclassical labor economics in his articles, identified
the interaction of factors that affect the performance
of workers through the neoclassical labor economics
model [11].
The most complete statistical method for studying
human capital is neoclassical labor economics because
it closely studies the supply and demand of the labor
market, assumes rational choices, estimates market
equilibrium, and is based on empirical data.
In addition, Marianne Bertrand, in her article "A Field
Experiment on Labor Market Discrimination", made
extensive research on improving the quality of the
labor force and increasing the number of participations
in the labor market, using the Neoclassical labor
economy model. [12].
In 2021, Katherine Meckl, in her article titled " The
role of job training programs in enhancing labor market
participation", explained how specific job training
programs play a positive role for entering the
international labor market and increasing income,
perfectly using the Neoclassical Labor Economy model.
has given. In his article, using the neoclassical labor
economy model, he perfectly explained the difference
between the population entering the international
labor market without special training and the
population with special training. [13].
Another researcher, David Card, in his 1999 article "The
Causal Effect of Education on Earnings", studied the
effect of education on the income of the population in
the labor market through the Neoclassical Labor
Economy and OLS model and made a forecast for the
next years. [14].
In this same year, David Card published his work
entitled Handbook of Labor Economics. In his book,
labor supply and demand covers areas such as human
capital and unemployment. In his book, he uses several
statistical models. One of them is Neoclassical Labor
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Economics. David Card uses this model to increase the
scope of work of workers. mutually researched the
factors that make and reduce the scope of work [15].
Another statistical model is the OLS model. The OLS
model is used to find the direction and mean value of
the regression coefficients of the variables. It has the
possibility to give approximate results. We use the OLS
model as the main model in our research. as an
example, we can mention the researcher Giovanni Peri,
who widely uses the OLS model in many research
works. The Californian researcher analyzed the
statistical results using the OLS model in his 2009 article
The causes and effects of international migrations and
achieved the desired results in this field [16].
Another German researcher, Christian Dustmann,
widely used the OLS model in his research. In 2013,
Christian Dustmann analyzed the effect of immigration
along the distribution of wages using the OLS model
[17].
The famous researcher Richard Freeman (1997) used
the OLS model to study the factors affecting wages in
the international labor market [18].
In our article titled "Increasing the participation of
Uzbekistan in the international labor market", we
conduct research using the Neoclassical labor economy
model and Ordinary Least Squares models.
To assess Uzbekistan’s export potential in our study, we
will use OLS to analyze the negative and positive effects
of Uzbekistan on the international labor market
```````such as:
•
Unemployment rate;
•
Working-age population;
•
Minimum wage.
•
Employment rate.
•
Inflation.
•
Corruption.
This approach makes it possible to determine the
statistically significant factors affecting the increase of
the role of Uzbekistan in the labor market and to
develop recommendations for increasing the currency
exchange in the country.
Empirical framework
In this paper, we use a multivariate time series model
to determine the relationship between Uzbekistan's
labor market share and unemployment rate,
employment rate, minimum wage, corruption,
inflation, exchange rate (USD), foreign direct indicators.
we used a quantitative approach. Factors influencing
the hypothesis are expressed as to how much the
factors that we have obtained have influenced the
hypothesis:
Variable name
Variable type
Description
Net Migration
Dependent
Annual Net Migration
Unemployment rate
Independent
Annual Unemployment rate
Employment rate
Independent
Annual Employment rate
Inflation
Independent
Annual inflation rates
Working-age population
Independent
Annual population of working
age
Minimum wages
Independent
Annual minimum wage (sum)
Corruption
Independent
Annual corruption rate
Below is our main hypothesis:
H 0: The share of people going to the international
labor market from Uzbekistan will increase not only to
neighboring countries but also to developed countries.
H 1: The share of people going to the international
labor market from Uzbekistan does not increase not
only to neighboring countries, but also to developed
countries.
In this article, we analysis the above mentioned
indicators for the period from 1996 to 2023 and
developed an econometric model and equations using
multifactor series.This model was developed to
investigate the interaction between dependent and
independent variables:
Linear model:
Net Migration =β0+β1 Unemployment rate +β2
Employment rate +β3 Inflation +β4 Working-age
population +β5 Minimum wages +β6 Corruption +ε i
(1), where: β0: model intercept; ε i : conditional error.
The description of the VAR model is given
below:
Yt = a +β1 Yt −1+β2 Yt −2+
⋯
+β pYt − p +ε i (2)
In this article, the VAR model is applied to multivariate
time series and a forecasting model is developed for
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selected indicators. STATA 18 software, which is
currently widely used worldwide, was used to create
the model and forecast the data.The variables will be
tested using three main cointegration dependent
conditions to achieve the above objective.
Test for stationarity. Unit root was tested using the
Augmented Dickey-Fuller (ADF) test. Do the observed
variables tend to revert to the long-term trend after the
shock, or do the variables follow a random walk? If the
variables follow a random walk after a temporary or
permanent shock, the regression between the
variables is assumed to be spurious.Therefore, OLS will
not give consistent parameter estimates. All series
must be stationary at the same level. The ADF test can
be defined as in equation (3).
(3)
Testable hypothesis:
H 0: δ = 0 (contains unit root, data are not stationary)
H 1: δ < 0 (does not contain a unit root, data are
stationary).
In cointegration testing, considering cointegration, a
linear combination of two or more variables may be
stationary even if the variables are not individually
stationary.
It is no secret that the Johansen cointegration test is
used to assess cointegration. The components in the
vector yt are cointegrated to the degree d and b,
denoted by CI ( d , b ), if:
( i ) All components of Y
t
are I ( d )
( ii ) There is a non zero vector β = ( β
1
, β
2
, …, β
n
) such
that the linear combination βY
t
= β
1
Y
1 t
+ β
2
Y
2 t
+……+
β
n
Y
nt
will be cointegrated to the degree ( d – b ), where
b >0. The vector β is the cointegration vector. In the
case b = d =1, Y
t
is I (1), and their linear combination I
(0).
Johansen (1991) and Johansen and Juselius (1990)
developed a maximum likelihood approach using a VAR
model to estimate the cointegration relationship
between components in a vector variable k variable Y
t
.
Consider the VAR model for Y
t
:
A(L)x
i
= ε
t
(4)
The parameter can be represented as a vector
autoregressive error correction mechanism:
(5),
where β = (-1, β
2
, …, β
n
) is the vector containing r
cointegration vectors, and the rate of adjustment
parameter is given by α = (a, a
2
, …, a
n
) when the rank
of β = r < k, k is the number of endogenous variables. If
the number of cointegration relationships is known,
hypothesis testing can be performed on α and β. The
lag length specification for the model can be
determined from the VAR equation using the AIC and
SC tests.
In addition, before performing the model forecast, five
Gauss-Markov conditions were applied to determine the
direction and density of the indicators: heteroscedastic
problem, residual autocorrelation problem of the model,
and regression models.
RESULTS
For our empirical study of Uzbekistan’s export
potential, the indicator we chose as a dependent
variable is Uzbekistan’s export volume (Ex), whic
h was
$3,393,714,865 in 2000. In the final period, i.e., in 2023,
this figure reached $24,066,920,244.36, indicating an
almost eight-
fold increase in Uzbekistan’s export
volume over the past 23 years.
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Fig. 1. Results of testing dependent and independent variables for stationarity using
the graph method.
The results of the graphical method of stationarity test
presented in Figure 1 indicate that the dependent
variables of "Migration" are not stationary, as the
average value of the statistics varies according to the
stationarity requirement. These indicators, which
mainly include the years 2010-2023, are graphs
representing changes in migration and factors
influencing it.It helps in finding potential relationships.
For example, changes in migration indicate whether
they are related to wages, unemployment, or
employment. Decreasing the working age population
and increasing wages are also related.
At the same time, migration, which are independent
variables (the mean is variable, the variance is also
variable), wages - (variable of variance),employment -
(the mean is variable, the variance is also
variable),corruption- (mean variable, the variance is
also variable), working age for the specified cases
according to stationarity are considered non-
stationary, since they do not respond to the results. We
see that the remaining independent variables, such as
unemployment (Unemployment) and inflation are
stationary. Because it was observed that their means
and variances do not change.
Table 1. Results of testing variables for stationarity using the Dickey Fuller test.
Variables
Test
statistics
value
1 %
critical
value
5 %
critical
value
1 0 %
critical
value
Number of
observations
Mac
Kinnon's
p-value
Degree of
differentiation
(0, 1, 2)
Net Migration
-5.570 -3.750
-3.000
-2.630
12
0.0000.
0
Unemployment
rate
-11.355 -3.716 -2.986 -2.624
30
0.0000
2
Employment rate
-3.854 -3.716 -3.716 -2.624
30
0.0024.
1
Inflation
-4.835 -3.709 -3.709 -2.630
31
0.0000
1
Working-age
population
-4.611
-4.765 -3.730 -2.626
28
0.0001
2
Minimum wages
-3.709 -3.709 -3.000
-2.623
31
0.0040
2
Corruption
-6.541 -3.750
-3.000
-2.630
18
0.0000
1
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International Journal of Management and Economics Fundamental (ISSN: 2771-2257)
The Dickey-Fuller test is widely used by researchers
around the world to test the stationarity of time series
data . The advantage of this test over the graph and
other tests of stationarity is that it not only allows us to
know whether the statistical data is stationary or non-
stationary, but if the data is not stationary, it allows us
to make the non-stationary data stationary. . According
to the requirement of this test, the value of the test
statistic must be less than all critical values (1%, 5%,
10%). Additionally, the McKenney p-value must meet
the requirement of being less than 0.05. According to
Table 2, Migration Minimum Wage Unemployment
Rate Employment Rate Corruption Inflation Rate
variables are found to be non-stationary according to
the result of this test and some are stationary after
double differentiation to make it stationary. became In
this test, the migration was not need double
differentiation.
Fig.2. Correlation graph between variables
Figure 2 and Table 2 show the correlation analysis
between the factorsThis table is a scatter matrix
showing the pairwise relationships between several
variables. It shows whether there is a relationship
between migration and the variables, whether it is
negative, positive, or no relationship.
Migration and wages: This relationship shows a
*negative* relationship, meaning that if wages are low,
migration will be high. However, in some cases, higher
wages are also associated with higher migration,
indicating a non-linear relationship.
Migration and unemployment: This relationship shows
a linear *negative* relationship, meaning that if
unemployment is high, migration will be low.
Migration and employment rate: There is a strong
relationship between high migration and employment
rate, and vice versa.
There is also a slight *positive* relationship between
migration and the working age population.
Migration and inflation: There is no specific
relationship between these indicators.
Migration and corruption: Although not in a constant
state, there is a *negative* trend overall.
Wages and unemployment: There is no constant
relationship between these indicators.
Wages and employment rate: There is also a non-linear
trend between these. Two different relationships can
be identified.
Wages and working age population: There is a slight
negative trend between these indicators.
Wages and inflation: There is a non-linear trend
between these indicators.
Wages and corruption: There is also a non-linear trend.
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Figure No. 3. Export volume from 2023 to 2029 (forecast from 2024 to 2029).
Figure 3 shows the time series with 5-year forecast and
confidence intervals. Ex is the historical observation of
migration represented by the blue line covering the
period from 2010 to 2023. According to the trend in the
data, fluctuations have a positive trend. In the forecast
(ForecastMigration, (2024)) it is represented by a
brown line starting in 2024 and ending in 2030. This
forecast is based on several years of data.
Confidence limits:
95% lower bound
(95% LB for ForecastMigration) - the
green line shows the lower limit of the forecast in this
graph.
95% Upper Limit
(95% UB for ForecastMigration) - The
orange line indicates the upper limit of the forecast in
this graph.
The forecast shows that the growth after 2024 is
positive, but there is a certain degree of uncertainty. It
is shown that the difference between the upper and
lower bounds increases towards the later years of the
forecast period, which indicates an increase in forecast
uncertainty. Thus, this graph shows the forecast of the
dynamics of migration in the following years, taking
into account the confidence intervals that reflect the
possible variability of future values. In addition,
forecasts show that by 2030, the rate of migration in
Uzbekistan will increase sharply.
It is important to note that we believe that the
results and study would have been better if we had
studied migration with other potential factors, but
unfortunately, due to lack of data, we were only able to
study short-term perspectives, not long-term
perspectives. It is important to note that each model
and approach may have limitations. Although cross-
sectional models are only able to capture short-term
relationships between factors, we hope that in the
future, other researchers will use the latter approach
to include other external factors in their studies.
CONCLUSION
According to the results of the research, in recent years,
the level of migration in Uzbekistan has shown a
positive growth rate compared to the current situation.
It is no secret that migration is a key factor that plays a
positive role in the short and long term economic
development
of
Uzbekistan.
Therefore,
its
development in many cases cannot fail to have a
positive impact on other sectors, as it contributes to an
increase in the volume of gross domestic product per
capita, reducing unemployment, increasing the flow of
foreign direct investment, ensuring the influx of
qualified workers, that is, workers who can meet world
standards, and this is the basis for restoring friendly
relations between the countries of the world.
Therefore, we can conclude that one of the most
important policy options for increasing the level of
migration in Uzbekistan is to create conditions for
young people to go abroad, provide them with
sufficient salaries, and increase their sense of
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patriotism by increasing the number of jobs in the
state, reducing the percentage of corruption, and
supporting the introduction of methods of developed
countries in Uzbekistan. According to the positive
results of this study, if these shortcomings are
eliminated, the level of migration in the country is
expected to increase, and as a result, the flow of foreign
currency will increase, and the employment rate will
increase.
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World Bank, Uzbekistan Economy Update 2021
Uzbekistan Toward a New, More Open Economy, 2019
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-term courses on a perspective
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“Entering the labor market: increased employment
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(2019)
“ University graduates entering the labour market:The
importance of developing selected competences for
the labour market during university studies",
M.Miskelova P. Adamec (2022)
" Entering the job market for Swiss sociologists" Rainer
Diaz-Bone(2019)
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Minimum Wage Effects on Labor Market Outcomes
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Gary Backer . (1958). "Investment In Human Capital and
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Jacob Mincer . (1989). "Human Capital Responses to
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