Kazak Towns Empty Following Mass Job Cuts

Experts warn of widespread migration as company closures force residents to relocate.

Kazak Towns Empty Following Mass Job Cuts

Experts warn of widespread migration as company closures force residents to relocate.

The industrial crisis unfolding in Kazakstan could leave a trail of ghost towns in its wake as thousands of laid-off workers head to the big cities in search of work.

Analysts believe the authorities should offer more support to the thousands of former workers affected by the collapse of a string of large enterprises, and some warn that growing discontent among the unemployed could be harnessed by anti-government groups.

When the Goldy wine and vodka plant in the village of Turgen in southeastern Kazakstan ran into difficulties and had to lay off staff, married couple Aliya and Aydar Zhanybekov had to leave for the former capital Almaty to find new positions.

Aliya and her husband decided to leave their two children with her elderly mother during the week, returning only at weekends.

She now works as a shop assistant, while her husband has found an opening as a workman.

“There are no jobs in Turgen, and our small homestead cannot produce enough food for all of us,” she explained. “We have to work hard for little money, but these are the only jobs we have.”

Aydar said that they were not the only ones affected by job cuts at the village’s only large enterprise.

“Many of our friends are also in Almaty looking for jobs – some have moved to other villages, or have gone abroad. What else can we do? We are trying to survive,” he said.

Of all the Central Asian countries, Kazakstan has perhaps proven most vulnerable to the global economic crisis. The country’s oil reserves and advanced banking system, once great strengths, have become weaknesses.

Kazak banks borrowed heavily from international lenders, and have had to drastically curtail lending over the last year, with serious implications for businesses and the construction industry. Last week the government nationalised BTA Bank – the country’s largest – and Alliance Bank.

Meanwhile, plummeting prices for oil and metals have placed a strain on the country’s main export industries.

Official estimates say that thousands have been affected by the closure of businesses across the country.

“There are 25 enterprises employing 7,229 people which have ceased operations,” said Labour and Social Welfare Minister Berdibek Saparbaev at a January 13 government meeting, according to a KazTAG news agency report. “Two hundred and thirty-four companies have cut their working hours. These enterprises employ 72,196 people, of whom 28,818 were asked to take unpaid leave, and other workers have gone onto shorter working hours.”

Analysts believe the real number of closures could be even higher.

Nowhere is this more keenly felt than those towns and villages with just one major employer.

In the village of Ayaguz in East Kazakstan province, 1,000 residents have been made redundant after the main local business, paint plant Alinex, closed.

Locals say that because neighbouring towns are experiencing similar problems, there is nowhere in the area to go and look for work.

“There are four people in my family, and I am the only bread winner. There are very few jobs in our town,” said local man Aydos Zakirov. “We are thinking about leaving this place, but even if we sell all our property, we won’t have enough money to buy a house in Almaty. We are saving all we can.”

As businesses close one after the other in Kazakstan’s small towns and villages, people are drifting to the cities in search of work in order to feed their families, causing massive domestic migration.

Pervomaysky, another village in East Kazakstan region, had 5,000 residents until recently, but only 2,000 remain following the closure of the Irtysh Metals Plant.

When workers realised their jobs were under threat, they set up a committee and staged several unofficial strikes in defiance of rules outlawing industrial action of this kind.

They also sent an open letter to President Nursultan Nazarbaev asking him to prevent the closure of the plant, either by nationalising it or by handing it over to a private investor who would run it under state supervision.

Their efforts were to no avail, and the factory closed at the start of this year.

“As of late 2008, there were 270 workers at the plant, and they hadn’t been paid since March 2008,” said strike committee head Nikolai Mikenin. “Many people left because of delayed payments, and the remaining 165 workers were laid off in early 2009.”

Alexei Toporov, who worked as an engineer at Irtysh, said he was now considering leaving for the nearest city, Oskemen (also known by its Russian name Ust-Kamenogorsk).

“In the city, you can earn at least some money by doing odd jobs, though people there aren’t happy to see newcomers – job numbers are declining, and unemployment is growing,” he said.

Meanwhile, the authorities say they are doing their best to breathe life into the ailing industrial sector.

In late November, the government adopted an anti-crisis programme to tackle the financial problems facing the country. Around 10 billion US dollars are to be redirected from a special fund that holds oil export revenues to support the government budget over the next three years, while about one billion dollars has been set aside to support small- and medium-sized businesses, in particular.

Speaking in the capital Astana in November, President Nazarbaev urged Kazak investors to help the government overcome the economic crisis.

“The challenges facing the economy and society should be dealt with in an appropriate way – every effort should be made to preserve jobs and people’s earnings,” said Nazarbaev.

However, observers say the president’s appeal merely led to some employers keeping plants open, yet cutting posts or failing to pay wages. Many enterprises in the Aktobe region in western Kazakstan, for instance, have cut staff and working hours.

A worker at the Aktobe Chemicals Plant, AZHS, said around 500 staff there had been made redundant and some full-time workers were now working fewer hours for less money.

This man, who had worked at the plant for 20 years, said that even in a large city like Aktobe (also known as Aktubinsk) this could result in serious problems.

“Although it’s a big town, it’s unlikely that all these 500 laid-off workers will be able to find work,” he said. “Young workers get paid peanuts and can’t always find jobs. What about those of us who will turn 50 soon? I think I’m going to work as a self-employed taxi driver.”

The head of the AZHS plant, Alexei Khimich, denied that any jobs had been cut at the plant.

“We haven’t laid anyone off – all our workers are at work at the plant,” he said, adding, “We are not going to comment further on the situation.”

Staff at the Goldy wine plant in Turgen also reported having to take substantial pay cuts.

“Starting in 2009, staff pay was cut by 40 per cent and 200 people were forced to go on unpaid leave. But what can we do about it? There are no other jobs here,” said a packing worker who had been with the company for ten years.

Marat Nazarov, a journalist from Shymkent, the main town of South Kazakstan province, told IWPR that employers were closing positions and cutting business activities without reporting this to the authorities.

“Many major enterprises have cut their production levels – for instance, the cotton seed, sunflower oil and flour producer Kaynar May, car component manufacturer Kardanval, and cement producer Shymkenttsement to mention but a few,” said Nazarov.

As the ranks of the unemployed swell each day, many people are looking for unskilled jobs in large cities. Yet there, too, businesses are also reporting difficulties.

According to the Almanews.kz news portal, the future of Almaty Heavy Engineering Plant, AZTM, is uncertain after shareholders met on January 19 to discuss possible closure, which would leave more than 1,000 unemployed.

Meanwhile, those who have tried to register as unemployed in order to access support say they face major hurdles.

When the Zhanybekovs were laid off, they said they tried to register as unemployed in Almaty so they could claim benefits. However, they eventually gave up as they decided that the paltry sum on offer did not warrant the bureaucratic procedures they had to pursue to access it.

“To apply for benefits, we had to collect several different documents and spend a week or two standing in long queues to submit them. The benefit [was just] 6,000 tenge [50 US dollars], so we decided not to waste our time and to work instead,” said Aydar.

Almas Nesipkaliyev, deputy head of Almaty’s municipal employment and social programmes department, declined to comment on the arrangements for claiming benefits.

Munavara Paltasheva, executive director of the Kazak Business Forum, said that as many of those who become unemployed failed to register, the true scale of the problem was masked.

“If we had [accurate data], then the authorities would have to face up the situation and take steps to help the population overcome it,” she said.

Experts interviewed by IWPR said the government should to take further action to protect companies and support people who lose their jobs.

Ivan Voitsekhovsky, an economic analyst with Karavan newspaper thinks the authorities should launch social protection and anti-crisis measures similar to those seen in the United States during the Depression of the Thirties.

“What the country needs at the moment is redistribution of its resources, stricter taxation of the rich, an improved social welfare system, and large-scale investment in infrastructure,” said Voitsekhovsky. “However, our government is not taking any of these steps.”

Political analyst Oleg Sidorov called on employers to provide retraining courses for staff who can no longer be employed in their current area of expertise.

He expressed concern that if nothing was done to support the hordes of unemployed, there could be devastating consequences.

“Groups of unemployed people may soon congregate and be targeted by various political parties and for religious, extremist and even criminal groups,” said Sidorov. “The question is which of these groups will be the first to approach them, which of them will attract the most new members, and how they will use these recruits.”

Olga Shevchenko is an IWPR-trained reporter in Almaty. Journalists from various regions of Kazakstan provided additional reporting.

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