The poverty from Kazakhstani regions will shift to cities amidst COVID-19 in 2021

Poverty to rise in 2021

The level of poverty in the third quarter of 2020 has risen to 1.2 percentage point compared to the same period last year, equaling 5.7%, according to the Statistics Committee.

The yearly estimate of poorness has been on a constant growth since 2016, as the data from the StatCommittee shows. Thus, the steady rise of poverty rates is correct for both quarterly and yearly time-frames.

However, the gradual growth in the proportion of population earning less than living wage seems not to stop in the nearest future, as the upgraded World Bank report about Kazakhstan ‘Navigating the Crisis’ indicates. It has worsened its previous forecast to a 4.4 percentage point.

“A prolonged crisis is likely to increase poorness and can increase inequality in Kazakhstan. Preliminary estimates suggest that the poverty rate may rise in 2020 from a projected 8.3 to 12.7 per cent – equating to more than 800 thousand additional people living in poverty.” writes the World Bank in its report.

According to the World Bank, the growth in people in need in Kazakhstan is linked to the pandemic.

“The shock to the labour market in Kazakhstan due to both the pandemic and the mitigation measures has severe implications for employment, particularly sectors that employ low skilled workers. Unequal access to quality education, especially during a lockdown, can negatively impact human capital development for the poor.”

Poorness will continue to shift from regions to cities

Regarding the areas, the problem has been relevant to mainly less-developed regions and villages for many years, while being less present in several important-to-republic cities. Data from the Statistics Committee displays that the median income in 2019 was highest in the city of republic importance Almaty - 71,917 tenge, while in the poorest region Turkistan it was over two times lower, equaling 32,911 tenges. The estimate can indicate the unequal spread of income throughout the regions.

However, from the start of 2020, the income inequality depending on the geographical location has started taking a different turn. For example, the gap between developed cities, with significantly high income, and both regions and villages, with low income, started to become narrower.

Amidst COVID-19, the growth in average income in Almaty in July-August 2020 was 6.4% and in the Turkestan region - 21.1%. If the share of average income in the city Almaty surpassed the Turkestan region for 1.8 times in the third quarter of 2019, it was higher for only 1.6 times in the same period in 2020.

Apart from the income differences in regions and cities, the same inequality, dependent on the areas one lives in, comes right to the level of poverty-stricken population. Similarly to the income distinction gap in the regions, the gap between poverty in the cities and the villages is shortening. As the data from StatCommittee indicates, the poverty in villages in the July-September 2019 was 2.23 times more, while in villages - 1.86 times.

“Poverty, in the first place, was common traditionally in the regions and villages. But because of the epidemic of coronavirus and the crisis, that happened in the economy, it will rise significantly in cities too.” says political scientist Dossym Satpayev in his Auditorium QZ broadcast on 24th December 2019.

According to the economic reviewer and the editor of media company Ekonomist.kz, Sergey Domnin, the real income has been on drop since spring 2020. The decline has equalled to 4.7% for the October month.

In his words, the estimate has dropped to 0.2% in the third quarter of 2020 compared to the same period last year, specifically with the considerable decline in the cities of republic’s importance such as Nur-Sultan (-7.9%), Almaty (-0.3%) and Shymkent (-2.4%).

Domnin also highlights the worsened income in the oil-producing areas such as Atyrau (-11.8%), West Kazakhstan Region (-8.4%), Mangystau (-8.1%) and Aktobe (-3.3%). In contrast to those regions, in his words, Turkistan has gained 8.5% more income.

He connects the changes in the real income - more positive in regions and villages and negative in cities - to the pandemic consequences.

“Big cities have suffered because of the restricted service sector, to which most of their economy accounts, while the oil regions - because of the shortened investing in project development, curtailment of the volume of oil service work and the withdrawal of field personnel on leave. The incomes of those regions that are more connected with the budget, agro-industrial complex and non-oil sectors of industry survived,” says Domnin.

The share of the population receiving less than the living wage in Kazakhstan in 2019 is 4.3%. The living wage for the second quarter of 2020 is 32,560 tenge.

The population of Kazakhstan is equal to 18 million 833 thousand.