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The Soviet system of social welfare, which remained in place in
Kazakstan in the early 1990s, presupposed a very high level of public
services. The 1993 constitution maintained most of the assumptions of the
Soviet era without providing a clear mechanism for paying for "guaranteed"
workers' benefits such as free education, medical care, pensions, and
vacations. The constitution ratified in 1995 somewhat reduces the list and
scale of guaranteed protections, but remaining guarantees include a
minimum wage, pensions for the retired and the disabled, social benefits
for orphans and for people who are elderly or infirm, legal assistance,
housing, and what is called "social defense against unemployment."
In practice, social benefits have proven difficult to supply because of
financial considerations and the lack of a firm organizational structure
for service provision. For example, in the Soviet period housing was
supplied by the state or by employers. In 1990 housing began to be
privatized, a process almost completed by the mid-1990s. The result has
been a healthy resale market for existing housing. In 1995 apartment costs
in Almaty could exceed 15,000 tenge (for value of the tenge, see Glossary)
per square meter, but there had been no corresponding boom in new housing
construction, in part because privatization of the land on which such
housing would stand remained a sensitive and unresolved issue. As a
result, the republic's housing crisis, already acute in the Soviet period,
has grown far worse. In the mid-1990s the housing shortage was especially
serious in Almaty, where tens of thousands were on waiting lists. In 1995
housing construction decreased by about 25 percent.
Perhaps the biggest problems have emerged in the areas of pensions, aid
to large families and other social assistance, and unemployment
compensation. An independent pension fund was created in 1991 on the basis
of a social insurance tax on enterprises (37 percent of wages in 1992) and
contributions by employees (1 percent of wages in 1992). The national
budget nominally covers remaining deficits in the pension fund. Pensions
initially were set at 60 percent of average pay, with minimal pensions
available even to elderly citizens such as housewives who never had drawn
a salary. However, the high inflation of 1991-93 badly eroded existing
pensions; the state has continually adjusted pensions upward in a futile
struggle to keep pace (see Prices, Wages, and Currency, this ch.). In
addition, the administration of pensions has been reconfigured several
times, leading to lengthy delays in the payment even of the small sums
pensioners are owed. Such delays have prompted numerous public
demonstrations. Although the value of pensions has shrunk dramatically in
real terms, by 1992 government expenditures on them were 4.7 percent of
the GDP. In March 1995, the government had to divert 632 million tenge
from the national budget to cover pension arrears.
Similar problems have occurred in other categories of allowances to
citizens, especially lump-sum payments to newborns; child allowances to
large families (those with four or more children) and abandoned children;
assistance to single mothers; and assistance to the children of soldiers.
In 1992 payments in these categories reached 5 percent of Kazakstan's GDP.
Slow payment and the lag between inflation and cost-of-living adjustments
have had a particularly severe effect on Kazakstan's poorer families, for
some of whom government subsidies provide as much as one-quarter of total
income. In 1994 about 2.1 million citizens received retirement pensions,
and about 800,000 received other types of pension.
Unemployment is perhaps the most difficult category of social problem
because it is a phenomenon that officially did not exist until 1991 and
still carries a considerable social stigma. As of January 1, 1995, some
85,700 people officially were registered as unemployed, about 55 percent
of them in rural areas. However, this figure is commonly assumed to be too
low because many workers still are nominally employed, even though their
salaries have been reduced or stopped altogether under a variety of
cutback conditions. In January 1995, some 230 enterprises, with a normal
work force of about 51,000 employees, were standing idle; by April 1995,
the number had grown to 376 enterprises with more than 90,000 employees.
Data as of March 1996